In July 2010, provisions requiring publically traded companies to report annually to the U.S. SEC if their products contain "conflict" minerals, i.e., tin, tantalum, gold, and tungsten, were included in Section 1502 of the Financial Reform Bill (U.S. Public Law 111-203). Companies are required to identify the country of origin of the minerals and whether the minerals came from mines controlled by rebel parties. Each company must also submit a report on their due diligence with respect to the required inquiries.
The IPC study, "Results of an IPC Survey on the Impact of U.S. Conflict Minerals Reporting Requirements," was part of a set of extensive comments submitted by IPC for the SEC’s Notice of Proposed Rulemaking (NPRM). The study collected data from 60 electronics manufacturing services (EMS) companies, printed circuit board (PCB) manufacturers, materials suppliers and equipment suppliers.
The study reports that companies would experience a median due-diligence burden in excess of 1,300 hours or $65,000 per company in the first year. In addition, estimated costs for tracking software, additional staff, training, legal expenses and third-party audits totaled a median of $170,000.
According to Tony Hilvers, IPC vice president of industry programs, “Although the reporting requirements apply only to publicly traded companies, it is clear that the requirements will rapidly flow down from the publicly traded companies to all of their suppliers, large and small. Recurring costs for companies in the electronic interconnect industry are expected to total approximately $165 million per year.”
In its comments to the SEC, IPC writes: “IPC encourages the SEC to implement the requirements of Section 1502 in a manner that supports the goals of the statute without unduly burdening U.S. manufacturing industries or causing unnecessary disruptions of the minerals trade, which is vital to the livelihood of the people of the Democratic Republic of the Congo (DRC).”
Additionally, "IPC believes that the SEC should not require the use of specific due-diligence standards or guidance as this would impose a significant burden on certain issuers. The SEC should, however, provide assistance to issuers by identifying examples of acceptable due diligence, such as industry-developed smelter validation audits, the bag-and-tag scheme being developed by ITRI, information or standards provided by the U.S. Department of State or other federal agencies, the Organization for Economic Co-operation and Development (OECD) standards, and others."
The full study and IPC’s comments are available at http://www.IPC.org/minerals. IPC will host a free educational session on conflict minerals (BZ02) on April 12, 2011, at IPC APEX EXPO in Las Vegas. The presentation will feature a panel of experts discussing the SEC regulations in detail and how to incorporate them into an already complex supply chain management environment.
IPC (http://www.IPC.org) is a global trade association based in Bannockburn, Ill., dedicated to the competitive excellence and financial success of its 2,800 member companies which represent all facets of the electronics industry, including design, printed board manufacturing, electronics assembly and test. As a member-driven organization and leading source for industry standards, training, market research and public policy advocacy, IPC supports programs to meet the needs of an estimated $1.85 trillion global electronics industry. IPC maintains additional offices in Taos, N.M.; Arlington, Va.; Garden Grove, Calif.; Stockholm, Sweden; Moscow, Russia; Bangalore, India; and Shanghai, Shenzhen and Beijing, China.