Improving Your Smelter Disclosure for Round Two of Conflict Minerals Filings

Improving Your Smelter Disclosure for Round Two of Conflict Minerals Filings

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Monday, March 23, 2015 - 10:35am

CONTENT: Article

June 1st marks the day that conflict minerals Form SD filings are due for Conflict Minerals reporting year 2014.  In a recent article by JD Supra, Conflict Minerals Filings—Round two, Jordan Temple discusses a review from last years filing styles, and recommendations on how to improve your conflict minerals report.

Temple writes that although the SEC is not expecting a perfect report, improvement from last year is important: “Stakeholders will want to see improvement in this year’s filing, which may require more effort than dusting off last year’s Form SD and changing the dates.” Companies are required to complete a CMR if the minerals in their supply chain are from one of the covered countries, or if they are unable to determine that the minerals they use did not come from the covered countries.

In the article, Temple discussed improvements and updates companies should make for a more clear and concise CMR Report:

1. While the SEC requires no specific layout for CMR's, Temple sets out recommendations on a reporting layout that is clear and sufficient.  

“The clearest reports were those that were compartmentalized into separate disclosure sections for such things as program design, due diligence, products, processing facilities, and future action items.”

2. Temple also covers “Improving Smelter and Refiner Disclosure.” According to the article, Director of the SEC’s Division of Corporation Finance Keith Higgins, expresses his concerns from last years smelter and refiner reporting.

“As more companies gain visibility into their supply chain, smelter and refiner disclosure will become increasingly important.  In fact, this is an area where Mr. Higgins expressed concern that companies did not disclose the processing facility when required and when these facilities were known.  Given Mr. Higgins’ comments, this is likely to be an area that will be scrutinized by the SEC.”

3.  The article specifically calls on companies who did not include smelter and refiner data:

“Some of the companies that did include smelter and refiner data last year could have improved their disclosure.  For instance, some filers didn’t clearly state the basis for including this disclosure. This left investors asking whether the processing facilities that were listed are actually in the company’s supply chain or whether it was just a list of the processing facilities that the company identified in its due diligence.”

With the above recommendations in mind, it is important for companies to stay on top of what the SEC will be expecting for the upcoming filing deadline.  The complexity of tracing conflict minerals can pose many challenges for companies trying to increase visibility in their supply chain. However, companies who have sought a manageable smelter verification program that properly manages unknown supplier provided smelter information, are able to ensure a clear smelter and refiner disclosure for their CMR.

In order to help companies with their smelter verification processes, the Conflict Minerals Resource Center (CMRC) has recently added a new feature that alerts CMRC members when there has been a notable change made to smelters and reporting templates. Source Intelligence is currently offering complimentary registration on the CMRC for access to these real-time alerts. Subscribe here in order to register on the CMRC and be on the mailing list for smelter verification alerts.

Read full JD Supra Article here