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Upcoming Elm Presentations on the First SEC Conflict Minerals Filings

We are participating in a number of upcoming conferences and webinars reviewing the 2013 Form SD/CMR filings, providing lessons learned and thoughts on 2014 program improvements.  We hope you will join us.

Tulane University Post Mortem Conflict Minerals Implementation Cost Analysis

Tulane University is seeking input from companies that implemented conflict minerals compliance programs under Section 1502 of the Dodd-Frank Act. This study will gather data on actual implementation costs and externalities related to company activities behind the first Form SD/CMR filings.

Dr. Chris Bayer, who authored the University’s original cost analysis of the SEC proposed regulation in 2011, will act as the study coordinator, providing continuity of knowledge and expertise.  Several major industry associations from a spectrum of industry sectors are suggesting that their members participate in the study.  

Given the credibility that the SEC gave to the first Tulane cost analysis in 2011, we believe that this study will also be well received by regulators and policymakers.  

All stakeholders stand to benefit from the findings, which will reveal realities of Section 1502 regulatory compliance.  More information about this study can be found at

The deadline for participation is July 31, 2014, so don’t delay.

Conflict Minerals Form SD/CMR Benchmarking – You Pick the Companies

The semi-official final count of Form SDs/CMRs filed with the SEC is 1,300.  We are in the process of reviewing every single one of these against a set of 20 key criteria to produce flexible benchmarking reports.  To date, we have completed full reviews of 125 filings and partial reviews of almost 500.

We have captured the “big names” in the initial 125 full reviews but are now tackling the rest alphabetically.  That may not be the best approach, so we’d like your help in determining the companies you are most interested in having us review first. From there, you can request a benchmarking report that includes the requested filings.

We welcome any comments and suggestions to assist in prioritizing the reviews.   Please feel free to email us directly or via the contact form on our website.

SEC Confirms Exclusion of Nonmetallic 3TG from Conflict Minerals Disclosures

UPDATE:  Last week, the SEC made available the letter from the law firm confirming the teleconference with SEC staff on this matter.  Further, the matter was discussed in detail at last week’s IPC conflict minerals seminar.  We have learned that the exclusion includes 3TG, not just tin.

Yesterday we had an inquiry from Jeff Perry at King & Spalding concerning very recent guidance from the SEC on whether the conflict minerals disclosure applies to chemical forms of tin or is limited to metallic forms of tin.  As a result, we contacted the SEC staff directly about this and received confirmation that indeed 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, but we believe outside counsel representing the group requesting this interpretation will memorialize the position in followup correspondence to the staff.

At this time, it is unclear if the interpretation is limited to tin or applies to chemical forms of the other three minerals.  For instance, gold salts are a common chemical form of gold.

Issuers who filed by yesterday’s deadline should discuss next steps with their legal counsel.  Some companies may choose to amend their disclosures and others may wait until the next filing deadline to address this new information.

As we have volunteered to do in the past, we will attempt to obtain a copy of the documentation and make it widely available.  We are working with to determine an approach to warehousing these documents and related information.

May 30 Conflict Minerals Filings – Our Initial Review and Thoughts

UPDATE:  We have standardized benchmarking analyses/reports available for a nominal fee.  As of late Sunday night (June 1), we began detailed reviews and summary data collection/analysis on over 100 filing companies representing a range of industry sectors.  This will expand over the coming weeks to include the thousands more filings expected by the end of the day today.  If you are interested in obtaining a benchmarking report for your company, contact us.  We can provide custom reporting as well.

Want to help us prioritize our company reviews?  Read this.

Even before we got our first cup of coffee this morning, we went to SEC’s website and perused the recent filings for Form SDs/CMRs. Over the past 48 hours (at least as of about 10am eastern time), close to 150 filings were submitted. And there will certainly be more than that by the time this article is published.

We semi-randomly selected 15 company filings to compare and contrast. In selecting the companies, we tried to select large, well known companies across a range of industries. We excluded companies with whom Elm worked on their program or filing.

Below is summary information of the 15 filings that includes the company name and industry, the link to their SEC filings, excerpts from the documents that we felt we particularly interesting or important, and our comments.  Our general observations are that

  • There is, as expected, wide variability in length, publication of metrics, listing smelters and interpretations of “may have reason to believe CM may have originated in Covered Countries”;
  • Most issuers have defined due diligence to include the RCOI;
  • Most issuers did not include the scrap disclosure in the Form SD;
  • Percentage of direct spend was a common risk screening factor; and
  • Supplier response rates, when identified, varied greatly from 0% to 100%


 Company: Apple Computers

Industry: Electronics, Consumer Goods, Computers

Link to SEC filing

Key excerpts from filing: Based on its due diligence efforts, Apple does not have sufficient information to conclusively determine the country of origin of the Subject Minerals in its products or whether the Subject Minerals are from recycled or scrap sources. However, based on the information provided by Apple’s suppliers, smelters, and refiners, as well as from other sources, Apple believes that the countries of origin of the Subject Minerals contained in its products include the countries listed in Annex II below, as well as recycled and scrap sources.

Our comments: Some may express disappointment that Apple did not file a lengthier disclosure. However, a careful reading of the content will show that Apple actually did far more than just reviewing spreadsheets and looking at smelter lists.


Company: HP

Industry: Electronics, Consumer Goods, Computers

Link to SEC filing

Key excerpts from filing: We have determined that with respect to our 2013 products containing necessary conflict minerals we know or have reason to believe that some of the necessary conflict minerals originated or may have originated in the Covered Countries. Further, we know or have reason to believe that these necessary conflict minerals may not be conflict minerals from recycled or scrap sources. Accordingly, we conducted due diligence on the source and chain of custody of those necessary conflict minerals and have prepared this Conflict Minerals Report.

Our comments: Severalof the issuers in our review took the position that suppliers’ company-level disclosures could not be definitively linked to specific parts/materials provided to the issuer, and therefore it was not possible to identify smelters/countries of origin applicable to the issuer. HP does not appear to have taken this path and disclosed on a broader basis. We offered our views on this point earlier.


Company: Ford Motor Company

Industry: Automotive

Link to SEC filing

Key excerpts from filing: The majority of our in-scope suppliers have provided a company-level completed CMRT that does not identify the smelters or refiners used for a particular part, component, or business customer. In cases where suppliers provided a part-level report, the identification of the smelters and refiners that support our specific products could not be determined due to lower tier suppliers reporting on a company basis. Therefore, we are unable to identify with certainty the specific facilities used to process the 3TG in our products.

However, due to our position in the supply chain, we are unable to identify with certainty the specific facilities used by our suppliers to process the conflict minerals in our products; therefore, it is not possible for us to determine with certainty the origin of the conflict minerals used in our products. As a result, for the 2013 reporting period, our automobiles and automotive components and service parts are DRC conflict undeterminable.

Our comments: Ford did not provide a list of identified smelter/refiners or countries of origin based on their inability to link suppliers’ company-level declarations to the specific parts/materials purchased by Ford.


Company: NewellRubbermaid

Industry: Consumer Products

Link to SEC filing

Key excerpts from filing: As a result of the Company’s RCOI, the Company has reason to believe that some suppliers in its supply chain of in-scope products or components of such products may be sourcing 3TG from Covered Countries. However, the Company was unable to determine the specific source of the 3TG due to insufficient information. Additionally, some suppliers have claimed the 3TG in their products comes from recycled or scrap sources, but they have not provided sufficient evidence to support their claim. Accordingly, the Company undertook the due diligence process described below.

Responses to the CMRT received from targeted suppliers identified 45 unique smelters, 19 of which could be verified to exist, as they were validated against the standard smelter list published by CFSI. Eighteen of the valid smelters could be verified as conflict-free using information published by CFSI. The majority of respondents did not provide smelter information; further, responding suppliers often provided their responses at a company-wide level, rendering the Company unable to conclude whether 3TG from smelters that may have been identified were actually used in the Company’s in-scope products.

Our comments: Although the CMR states that scrap was identified as a source, NewellRubbermaid did not include the scrap disclosure in the Form SD itself. Also, the company did not provide a provide a list of identified smelter/refiners or countries of origin based in part on their inability to link suppliers’ company-level declarations to the specific parts/materials purchased by NewellRubbermaid.


Company: NeimanMarcus

Industry: Retail, Apparel

Link to SEC filing

Key excerpts from filing: The Company identified fifty-seven (57) of its vendors/suppliers who are required to complete the Template and Certification process outlined in 1.4 above.  We have relied on these vendor’s/supplier’s responses to provide us with information about the source of conflict minerals contained in the merchandise sold to us.

As noted above, following its RCOI for the 2013 calendar year, the Company has concluded that based on that inquiry it has no reason to believe that any of the 3TG in its supply chain may have originated in the Covered Countries, or may not have originated from recycled or scrap resources, as the case may be.

Our comments: By only filing a Form SD and not conducting due diligence, NeimanMarcus demonstrated that it had enough faith in the credibility and completeness of its suppliers’ initial representations.


Company: Signet Jewelers

Industry: Jewelry, Retail

Link to SEC filing

Key excerpts from filing: Signet has reasonably determined that supplies of Products containing 3TGs to Signet are “DRC conflict-free” as defined in Section 13(p) of the Exchange Act and Form SD thereunder.

Signet determined through this due diligence process, that some of its necessary conflict minerals originated or may have originated in the Covered Countries, but nevertheless qualified as “DRC conflict free”

Our comments: In accordance with a DRC Conflict Free designation, an IPSA was conducted and filed. The auditor was not a CPA firm and stated that the IPSA was conducted in accordance with GAO Performance Audit standards. At the same time, the auditor chose to offer comments beyond the objective by judging an aspect of effectiveness: “It is clear that Signet has established strong management systems for Conflict Minerals supply chain due diligence and reporting compliance in its supply chain through the implementation of their SRSPs and the integration of these into daily business practices. 

The CMR contains a very long detailed description of the design of Signet’s due diligence measures that includes words that we are unsure how the auditor was able to audit, such as: “conducting a careful review”, “large amounts of gold and/or 3TG,” “suppliers that supply significant amounts of Products containing 3TG”. Such ambiguous words are not considered auditable and are to be avoided.


Company: Anheuser-Busch (AB InBev)

Industry: Food and Beverage

Link to SEC filing

Key excerpts from filing: AB InBev has determined that it manufactures only one product employing necessary conflict minerals within the scope of Form SD. The product in question is a line of glass bottles manufactured by AB InBev’s Mexican subsidiary that utilize the coating Certincoat® TC100, which contains the conflict mineral tin necessary for its functionality. AB InBev is supplied Certincoat® TC100 by a single supplier.

Based on the documentation it has received from its supplier, AB InBev has no reason to believe that its necessary conflict minerals may have originated in the DRC or an adjoining country. 

Our comments: By only filing a Form SD and not conducting due diligence, Anheuser Busch demonstrated that it had enough faith in the credibility and completeness of its suppliers’ initial representations. Also, the tin-containing product appears to be necessary for the production of the glass bottles, and the tin is in organotin form. This disclosure is in contrast to the position taken on organotin by the American Apparel and Footwear Association in their due diligence guidance document.


Company: Armstrong World Industries

Industry: Building Materials, Flooring

Link to SEC filing

Key excerpts from filing: … we concluded that our products containing Conflict minerals are “DRC conflict undeterminable”

Our products and suppliers were assessed by in-house subject matter experts in order to identify our Conflict Mineral scope and risk. Then, as part of our RCOI, all suppliers deemed to be within the scope of the Rule were surveyed using a variation of the EICC/GeSI Conflict Minerals Reporting Template. Based on our reviews, 191 of our 1,550 raw and sourced material suppliers were in scope for having provided materials that potentially contained tin that was not from scrap or recycled sources. We surveyed all 191 suppliers and achieved a 100% response rate, with 97% of respondents reporting the materials they sell us do not contain tin.

We received completed questionnaires from six of our suppliers that said that the materials they sell to us contain tin. To date, only three of those suppliers have provided us with smelter lists. Based on the information provided regarding the smelters we have determined that none of the smelters are located in the Covered Countries.

Notwithstanding our efforts to obtain information from the three suppliers that did not identify the names and locations of the smelters or other sources of the tin, we have, thus far, been unable to identify the smelters or sources for the tin supplied to us by those other three suppliers and, therefore, have been unable to determine the country of origin of that tin. Based on the location of the facilities used to process the tin, we have no reason to believe the source of the tin is from a Covered Country although we can’t exclude that possibility. We are still working closely with our suppliers to obtain the remaining smelter lists and mine locations to assist with a final determination of the country of origin of the tin. 

Our comments: The tin in Armstrong’s products is in organotin form. This disclosure is in contrast to the position taken on organotin by the American Apparel and Footwear Association in their due diligence guidance document.  It is also interesting that although Armstrong received an exceptional response rate, the completeness rate of those responses appears to be quite low.


Company: Eli Lilly

Industry: Medical Devices, Pharmaceuticals

Link to SEC filing

Key excerpts from filing: The current supplier that uses 3TG (specifically gold and tin) (and its respective suppliers) have represented to us that they conducted their own due diligence for the medical device which they manufacture. The supplier was unable to provide complete documentation regarding the country of origin or the smelters from which the gold and tin that is incorporated into the medical device is sourced. As a result of our supplier’s inability to provide us with this information, we had insufficient information from this supplier and were unable to conduct any diligence to determine the mine location of origin for the 3TG minerals used in the Lilly device.

Our comments: Although Eli Lilly stated they were unable to conduct due diligence, they did file a CMR describing their due diligence activities.


Company: BorgWarner

Industry: Automotive Parts

Link to SEC filing

Key excerpts from filing: BorgWarner therefore declares itself “DRC conflict undeterminable” as defined by paragraph (d)(5) of the instructions to Item 1.01 for all products manufactured by BorgWarner.

Our comments: BorgWarner provided detailed numerical metrics on the number of suppliers queried and the response rate. No smelter or country of origin list was disclosed, including the names or number of CFS smelters/refiners.


Company: Navistar

Industry: Automotive, Truck Manufacturing

Link to SEC filing

Key excerpts from filing: For 2013, this approach focused on those suppliers providing material to our North America Truck operating segment, which accounted for approximately 63% of our net sales and revenues for 2013.

We surveyed 125 suppliers of the North America Truck operating sector as of April 21, 2014. This population represents over 70% of the segment’s supplier related expenditures for our most recent full fiscal year. Based on our initial and follow-up efforts, we received responses from 72% of those surveyed.

Based on these initial survey results, Navistar was unable to determine the origin of 3TG in all our North American Truck segment products and therefore cannot exclude the possibility that some 3TG in such products may have originated in the Democratic Republic of the Congo or an adjoining country and are not from recycled or scrap resources for the 2013 calendar year.

Our comments: Navistar’s disclosure includes a smelter list, which identified one CFS smelter, but no countries of origin were disclosed.


Company: Toyota

Industry: Automotive

Link to SEC filing

Key excerpts from filing:

(i)              Conflict minerals’ country of origin: Because sufficient information to identify a portion of the smelters/refiners and the countries of origin of conflict minerals was not provided by its suppliers, Toyota was unable to determine any of its products to be “DRC conflict free”, as defined by Form SD.

(ii)            Facilities used to process conflict minerals: During the course of our due diligence on the source and chain of custody of the necessary conflict minerals, Toyota has collected information on some, but not all, of its smelters/refiners. Among those smelters/refiners, we found some of them processed minerals sourced in the Covered Countries. However, through our due diligence, we were unable to obtain sufficient information to determine whether those conflict minerals were from mines which financed or benefited any armed group.

(iii)           Efforts to determine the conflict minerals’ mines or locations of origin: Through its participation in CFSP and the RCOI survey completed by its suppliers, Toyota has determined that its efforts to seek information about the conflict minerals smelters/refiners in its supply chain represents the most reasonable effort Toyota can make to determine the mines or locations of origin of the necessary conflict minerals contained in its supply chain.

Our comments: No smelter or country of origin list was disclosed, including the names or number of CFS smelters/refiners.


Company: Vishay Intertechnology Inc.

Industry: Electronics, Electronic Components

Link to SEC filing

Key excerpts from filing: Vishay obtained survey responses from In-scope Suppliers representing 80% of the dollar value of 2013 in-scope procurement activities.  Based on the survey responses obtained, we have reason to believe that some of our supplies of 3TG may have originated in the Covered Countries, some from outside of the Covered Countries, some from recycled/scrap materials, and some from sources that are currently unknown.

Our comments: Vishay included a smelter list that identified CFS and Non-CFS smelters, but the company did not include a disclosure of the identified countries of origin.


Company: Baker Hughes

Industry: Oil and Gas

Link to SEC filing

Key excerpts from filing: … secured initial responses from 35.9% of the identified suppliers, each of which registered on the supplier engagement web portal; received completed questionnaires from 34.9% of the identified suppliers

Our comments: Although we had no involvement with BakerHughes in any way, their disclosure is aligned with guidance Elm provided clients regarding the structure and headings of the CMR, the definition of due diligence measures undertaken and listing smelter identified by suppliers, including differentiating between CFS and non-CFS smelters/refiners. However, the company provided no list of countries of origin. The supplier response rate appears low.


Company: Medtronics

Industry: Medical Devices

Link to SEC filing

Key excerpts from filing: The suppliers surveyed represent approximately 42% of our direct material expenditures in 2013. In addition, the suppliers surveyed account for approximately 43% of all electronic and metal expenditures in 2013, which we have determined are categories that have the most potential to contain 3TG.

As of May 15, 2014, we have received responses from 24% of the suppliers surveyed.

The large majority of the responses received provided data at a company, division, or product category level or were unable to specify the smelters or refiners used for components supplied to Medtronic. Based on the information received in the due diligence process, we do not have sufficient information to determine the country of origin of the 3TG in any of our products.

… the Company has reasonably determined that each of the products is “DRC conflict undeterminable,” as defined in the Rule.

Our comments: Medtronics chose to use the “DRC Conflict Undeterminable” language. No smelter or country of origin list was disclosed, including the names or number of CFS smelters/refiners.




US State Department Statement on Continued Conflict Mineral Due Diligence

The US State Department has issued a short statement about its continuing support of corporate due diligence for conflict minerals in light of the recent US Appellate Court decision and related SEC statements.

The State Department’s statement is available here.

Intel Files its Conflict Minerals Form SD, CMR and IPSA

Industry leader and conflict minerals bellwether Intel has filed its conflict minerals disclosure with SEC.  Certainly we aren’t the first to break this news, although it seems this is still not as widely known as one may have expected.

We expect this to be viewed as a reference point for others to use, although few are likely to follow the lead entirely as Intel has put itself into a unique position relative to conflict minerals and has been highly proactive for more than four years.

Our main impressions of the filing:

  • To no one’s surprise, it is far more than a minimalistic document, containing details and some metrics;
  • Some products are classified as DRC Conflict Free and others as DRC Conflict Undeterminable – using the phrasing struck down by the Appellate Court;
  • An IPSA was conducted and included in the filing as required for a DRC Conflict Free determination (we suggest everyone read the IPSA report to get a good understanding of what the IPSA entails, what is specifically excluded, and then assess the value of the IPSA in relation to potential cost);
  • Intel’s definition of Due Diligence measures draws a clear line between RCOI and due diligence activities.  This is done in large part by Intel defining due diligence in the manner Elm has advocated for some time (OECD Steps 3 and 4); and
  • Smelters/refiners that are validated as Conflict Free by the CFSI are specifically identified by name and metal.


Conflict Minerals Filings: Need a Last Minute Quick Third Party Review?

We expect everyone who needs to know is painfully aware that the filing deadline for SEC’s Conflict Minerals Form SD and CMR is only seven calendar days (but five business days) away.

While most companies have likely finished their internal reviews and final approvals of the filings – and are simply awaiting the official filing date – some are still completing last minute preparations.  Based on most of the early filings and some others we have seen, we recommend that issuers have a quick third party review completed before the documents are submitted to the SEC.

We have completed many reviews of SDs and CMRs for companies ranging from Fortune 50 to $120 million annual revenues and have a process and reference template for comparison.  As a result, we can very quickly provide comments and recommendations even with same-day turnaround.  Some firms are charging a minimum of $5000 for such a review.  Because of our experience, existing reference template and efficiency we can complete the task at a cost that can be 50% – 80% lower than others.

Give us a call or send an email to get started.  But don’t delay – time is running out.



Another Early Conflict Minerals Filer, Another Incorrect Conflict Minerals Filing

A third issuer has submitted their Form SD and Conflict Minerals Report.  As with the previous two filings, this one misses the mark.  And unfortunately since they selected to file so early, they stand out and will be put under the microscope by many.

For starters, as with the first filing, this one is very likely too brief.

It appears that the issuer should have conducted an IPSA due to its claim of being “DRC Conflict Free”*.  However, a careful reading of the very short CMR gives the impression that the claim is actually based on RCOI results.  If that is indeed the case, then the company is not technically “DRC Conflict Free” and a CMR and IPSA are not required.  But most issuers are not confident enough in their RCOI data to stop there.

If, on the other hand, the issuer did undertake due diligence measures and appropriately came to this conclusion, then the lack of an IPSA is inconsistent with the SEC requirements.

We wonder what – if any – advantage there is to filing in advance of the deadline given the amount of ambiguity and interpretation that is inherent in the requirements.  Our general view is that early filings invite significant scrutiny that may result in problems rather than a perceived competitive advantage.



*  Yes, we know that the phrase itself is no longer required to be used in the disclosures.  But we will not belabor that point since that is widely known by now.

New Information from SEC on Form SDs and Conflict Minerals Reports

Earlier today, Elm received word from the SEC on two important matters related to Conflict Minerals Reports (CMRs) and future interpretive guidance.

First, for filers that are classified as “undeterminable” and don’t use the specific wording “DRC Conflict Undeterminable” in the text of the CMR, the part of the disclosure concerning improvements to due diligence measures is not required for the CY2013 filing.  However, if an issuer chooses to use the words “DRC Conflict Undeterminable”, the CMR must include a description of the improvements to be made to the due diligence measures.

Second, SEC is attempting to respond to specific requests for interpretations made by individual issuers/entities.  We have been told that in these cases, the SEC expects to provide responses on an individual basis rather than publishing more Q&A.  The SEC hopes that the responses will be more widely disseminated informally by the recipients.

In that regard, we are offering to be a “clearinghouse” for these individual responses to anyone who is willing to submit to us the SEC responses received.  We are volunteering to publish the text of the responses without providing names.  Feel free to submit any such information, responses or letters to us and we will publish the substantive information anonymously.