Is U.S. Conflict Minerals Disclosure Nearing an End?

SEC Commissioner Mark Uyeda took a pretty big swing at the U.S. Conflict Minerals Rule in his prepared remarks yesterday at Practical Law Institute’s annual “SEC Speaks” conference. Here’s what the Commissioner had to say: 

If the Commission had studied the historical past [referring to the SEC’s recent adoption of climate risk disclosure rules], it would have realized that social change through financial disclosure regulation does not usually work. One need only to look at Section 1502 of the Dodd-Frank Act, which directed the Commission to issue rules requiring certain companies to disclose their use of “conflict minerals” that originate out of the Democratic Republic of the Congo or adjoining countries. The term “conflict minerals” includes gold, tantalum, tin, and tungsten. Granted, this obligation was a directive set forth in legislation, but the abject failure of this provision should give pause to further attempts to use the SEC’s disclosure regime to achieve social or political goals.

You don’t need to take my word with respect to the failure of the conflict mineral rules to achieve their intended objective. The U.S. Government Accountability Office (GAO) reported in 2024 that peace and security in the Democratic Republic of the Congo had not improved with the SEC disclosure rule. The GAO concluded that the SEC rules had “not reduced violence in the Democratic Republic of the Congo (DRC) and has likely had no effect in adjoining countries.” In fact, the GAO found that “the rule was associated with a spread of violence.”

The cost of this rule has created significant regulatory compliance costs for U.S. public companies without clear corresponding benefits. By discouraging public companies from sourcing tin, tungsten, and tantalum from the DRC, the policy has acted as a de facto boycott on such mineral purchases. This result is unfortunate because tin, tungsten, and tantalum have each been classified by the U.S. Geological Survey on a list of mineral commodities critical to the U.S. economy and our national security. 

Tantalum is used in electronic components, mostly capacitors and in superalloys. Tin is used as a protective coating for steel and in alloys. Tungsten is primarily used to make wear-resistant metals. Not only does this rule take away the DRC as a potential source of these critical minerals; it limits the ability of American companies that seek to acquire such minerals from improving the economic conditions in that region of Africa. In so doing, the SEC rules have the unfortunate effect of ceding U.S. influence in that portion of the world to geo-strategic powers that may have less respect for human rights and dignity. Importantly, this SEC rule hurts American companies from competing in a global marketplace.

It is far past time to re-evaluate such obligations with a view to determining whether such disclosure requirements should remain in effect. Key provisions of the underlying statute provide that it terminates on the date on which the President makes certain determinations. Congress can also repeal this statutory provision. In any event, the SEC should cease using financial disclosure regulations to bring about human rights changes in Africa, to the extent permitted by law.

The Conflict Minerals Rule has been controversial since its adoption in 2012. Litigation challenging the Rule went on for more than four years, as discussed in this Ropes & Gray post. The SEC fulfilled its legislative mandate, but it has at most been lukewarm on the Rule. In April 2017, in response to the court’s decision, at the direction of the SEC’s then-Republican leadership, the Division of Corporation Finance issued a Statement indicating that the Division would not recommend enforcement action if companies required to prepare a Conflict Minerals Report only file a Form SD. On the theory that “if it ain’t broke don’t fix it,” and due to a lack of clarity on how to apply the Statement, most companies have continued to include a Conflict Minerals Report exhibit with their Form SD filing. 

As alluded to in Commissioner Uyeda’s speech, there are mechanisms for the Rule to be terminated, as well as postponed. Under Section 13(p) of the Exchange Act, the SEC must revise or temporarily waive the requirements of the Rule for up to two years if the President transmits to the SEC a determination that the revision or waiver is in the U.S. national security interest. In addition to repeal by Congress, the Rule’s disclosure requirements can be terminated by the President if the President determines and certifies to the appropriate Congressional committees that no armed groups continue to be directly involved and benefitting from commercial activity involving conflict minerals.

At the beginning of Trump 1.0, a draft of a Presidential Memorandum suspending the Conflict Minerals Rule was circulating, but it was never signed. Given the Trump 2.0 focus on raw materials security, as well as its goal to cut regulation, perhaps that Memorandum will be taken out of the drawer.  

As reported in the press (see this recent Reuters article), the U.S. also is pursuing a minerals deal with the DRC. If entered into, that might lead to the termination of the Rule, not just a temporary waiver.

None of this matters much for this year’s filings, which cover 2024. With a June 2 due date, many companies already have filed, and in any event most of the work has occurred and the expense has been incurred, although public companies that have not already filed their Form SD and CMR would certainly welcome one less filing.  

However, at least for now, the Rule is still in effect, so it is business as usual. As for calendar 2025 compliance, we'll see.  We would not be surprised if this year is the swan song for the Conflict Minerals Rule. 

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