by Cydney Posner

This recent comment letter sent to the SEC attempts to memorialize informal telephone conversations between the author, acting on behalf of a number of industry associations, and SEC staff members regarding whether chemical compounds manufactured from 3TG are subject to the conflict minerals rules.  The letter also requests written guidance from the staff on this issue.  In the conversations, the author indicates, the staff confirmed that the SEC “does not consider the use of chemical compounds manufactured from tin, tantalum, tungsten, or gold (3TGs) to be covered by the final rule implementing Section 1502” of Dodd-Frank, the conflict minerals rule. These chemical compounds may include, for example, catalysts, stabilizers and polymerization aids. The  various industry associations included industries such as manufacture of adhesives and sealants, coatings, metal packaging (such as cans), food service packaging, plastics and personal care products.


According to the letter, the SEC staff represented that “companies using chemical compounds derived from a 3TG to manufacture products are not required to conduct any inquiry into the country of origin associated with these compounds and are not otherwise required to submit any report to the SEC. The SEC agreed with [the author’s] analysis that these compounds are chemically distinct from the metal derivatives themselves and thus the agency did not intend the scope of the final rule to reach that far. [The staff] made clear, however, that alloys containing a 3TG would remain subject to the rule, as would companies [that] use a 3TG in its raw metal form to manufacture a chemical compound (e.g., a catalyst manufacturer [that] buys and uses tin to produce an organotin catalyst).”

The Elm Consulting Group has re-confirmed some of that informal oral advice directly with the SEC staff.  Elm  writes that “the staff has determined that the disclosure requirements only apply to metallic forms of tin, including alloys containing tin that is intentionally added.  It does not appear that the staff will issue any written documentation of this new interpretation….”  While, at the time, Elm was uncertain whether the interpretation was limited to tin or could be applied to chemical forms of the other three minerals, such as gold salts, Elm subsequently confirmed that the informal guidance related to all 3TG, not just tin.

It is unclear how broad a swath of companies this interpretation may affect.  Although the 2014 reporting period is well underway, reports are not due until 2015, and companies still have plenty of time to make inquiry to determine whether this informal staff advice may relieve some of the conflict minerals compliance obligation through their supply chains. Hopefully, the SEC will include this guidance in the next set of CDIs issued regarding conflict minerals.


Posted by Cydney Posner