What Is Conflict Minerals (Dodd-Frank Section 1502)?
Also known as: 3TG, conflict minerals rule, Form SD, CMRT
Definition
Conflict minerals are tin, tantalum, tungsten and gold (3TG) that may finance armed groups in the Democratic Republic of the Congo and adjoining countries. Under Dodd-Frank Section 1502, SEC-reporting companies using them must perform due diligence and file Form SD annually.
Conflict Minerals (Dodd-Frank Section 1502) Explained
Section 1502 of the 2010 Dodd-Frank Act directed the SEC to require companies that file reports and use 3TG in products they manufacture or contract to manufacture to run a reasonably designed country-of-origin inquiry and, where needed, due diligence under a recognized framework such as the OECD Due Diligence Guidance. The result is disclosed on Form SD each year, with a conflict minerals report when required.
Even companies that do not file with the SEC feel it, because public customers push the requirement down through purchase terms. The industry standard data format is the Conflict Minerals Reporting Template (CMRT), maintained by the Responsible Minerals Initiative (RMI), listing the smelters and refiners a supplier uses. Smelters are checked against programs such as the Responsible Minerals Assurance Process (RMAP). The EU has a separate Conflict Minerals Regulation aimed at importers.
In ERP terms the work is supplier and BOM data. You need to know which purchased items may contain 3TG, which suppliers provided a current CMRT, and which smelters appear on those templates. Items link to approved manufacturers or vendors, and the multi-level BOM rolls the exposure up to finished goods and customers. Most mid-market ERPs hold CMRT status as custom fields and attached files, and reporting is often spreadsheet driven. SAP offers product compliance tools for part of this.
The legal duty belongs to the reporting company. Netray does not provide due diligence certification. The value of connecting ERP and document data is speed: finding which suppliers have not responded, which templates have gone stale, and which products are exposed.
Why It Matters
- Missing the annual Form SD deadline is a public-company disclosure failure with reputational risk.
- Customer questionnaires arrive with short deadlines, and supplier response rates drive the workload.
- Smelter lists change, so a template accepted two years ago may now include a non-conformant smelter.
- BOM-level exposure data avoids over-reporting products that contain no 3TG.
In Practice
A connector maker sends CMRT requests to 180 active suppliers. The ERP vendor master shows 140 replies on file, 25 expired and 15 missing. Procurement prioritizes missing suppliers by annual spend on 3TG-bearing items, uses BOM where-used to show which product lines are affected, and escalates only those that threaten a customer report date.
Frequently Asked Questions
What does 3TG stand for?
Tin, tantalum, tungsten and gold, the four minerals covered by the rule.
What is a CMRT?
The Conflict Minerals Reporting Template is a standard spreadsheet from the Responsible Minerals Initiative where suppliers declare 3TG use and list smelters and refiners.
Does the rule apply to private companies?
The SEC rule applies to SEC reporting issuers, but private suppliers are asked for data by customers under flow-down terms.
Related Terms
RoHS (Restriction of Hazardous Substances)
RoHS is the EU Directive 2011/65/EU restricting hazardous substances in electrical and electronic equipment. It limits lead, mercury, cadmium, hexavalent chromium, PBB, PBDE and four phthalates to set concentration limits per homogeneous material.
REACH Regulation
REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) is EU Regulation EC 1907/2006. It requires companies to register chemical substances, communicate hazards down the supply chain and disclose Substances of Very High Concern (SVHC) in articles above 0.1% by weight.
BOM (Bill of Materials)
A BOM (bill of materials) is the structured, hierarchical list of components, sub-assemblies, and quantities required to produce one unit of a parent item, and it is the primary input MRP explodes to calculate material requirements.
Traceability
Traceability is the ability to follow the history, location, and application of a part or material through the supply chain and production process, both backward to its sources and forward to every product and customer it reached.
SOX (Sarbanes-Oxley) Compliance
SOX compliance is a US public company's obligation under the Sarbanes-Oxley Act of 2002 to establish, document, test, and certify internal control over financial reporting, including the IT general controls and segregation of duties in the systems that produce financial data.
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