This from consultant Elm Sustainability: Elm advises that companies working on their conflict minerals reporting should not be surprised to see a decline in the number of their audited smelters and refiners:

“That’s right – more tin, tantalum, tungsten smelters and gold refiners this past year have chosen not to expend the effort and money on an RMI [Responsible Minerals Initiative] (or similar) audit.  The reason is that they are not hearing enough about it from their customers. Like most businesses, smelters/refiners are keen to keep customers happy and try to control costs by not spending on things that customers don’t want, or that aren’t otherwise required.  So in the absence of a critical mass of requests for RMI audits, some smelters/refiners are cutting back.”

While it’s not entirely clear why the customer requests have declined, Elm speculates that it may be fallout from Corp Fin’s 2017 Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule, under which Corp Fin said that it would not recommend enforcement action if companies filed only a Form SD  and did not file a conflict minerals report—even if they would otherwise be required to do so under the rule. (See this PubCo post.)  (Note, however, that the staff has subsequently indicated that companies that do file conflict minerals reports remain subject to the 2014 staff guidance. See this PubCo post.)  Could be. However, reportedly, the vast majority of companies have not relied on the Statement: the historic 80/20 split—with 80% of companies filing a conflict minerals report as part of the Form SD and 20% filing only a Form SD—has continued, notwithstanding the staff guidance. (See this webcast transcript from Elm also suggests that the decline in requests might stem from a failure by companies to recognize that their direct communications to smelters/refiners have real impact. Elm advises that those in charge of conflict minerals reporting should be prepared to explain the change in results both internally and externally.

Posted by Cydney Posner