| WASHINGTON, April 9
WASHINGTON, April 9 Many public companies are on
track to miss a May deadline for complying with new rules that
require them to file disclosures that tell investors whether
their products contain certain "conflict minerals" from a
war-torn part of Africa, a new survey has found.
The survey, conducted by PricewaterhouseCoopers,
comes at the same time as a U.S. appeals court continues to
weigh whether to strike down the conflict minerals rule after
industry groups challenged it.
Despite the pending legal challenge, the U.S. Securities and
Exchange Commission has not granted companies a temporary
reprieve from complying with the rule, which kicks in on May 31.
Of 700 companies surveyed across 15 industries,
Pricewaterhouse said it found that a mere 4 percent of companies
have completed a draft of their SEC conflict minerals filings.
(PwC survey: r.reuters.com/vux38v)
Another 90 percent are not ready with a substantive draft
document, PwC added, noting that conflict minerals compliance
"has proven more intensive" than anticipated.
"Time is running out and companies need to move fast," said
Bobby Kipp, a partner with PwC's risk assurance practice, in a
press release announcing the findings.
The SEC's conflict minerals rule stems from a provision in
the 2010 Dodd-Frank Wall Street reform law.
Human rights groups convinced lawmakers to tuck in the
provision, in an effort to empower consumers who want to avoid
products that encourage mining in areas gripped by rebel
violence and humanitarian conflict.
The measure requires companies to determine if certain types
of minerals, in products such as laptops and car parts, may have
originated from the Democratic Republic of the Congo (DRC)
The results of the inquiry into the minerals' origin also
must be disclosed to the SEC and posted on company websites.
The findings in PwC's survey help bolster some of the
complaints made by the business groups that filed a lawsuit
against the SEC to challenge the rule.
The U.S. Chamber of Commerce, the Business Roundtable and
the National Association of Manufacturers contend the rule
imposes far too many costs.
They claim it is too difficult for companies to trace the
origins of very small amounts of minerals used in manufacturing
through the supply chain.
If there is a reason to believe some of the minerals came
from the DRC region, then companies must also retain outside
auditors and conduct further due diligence.
The survey found that 62 percent of companies that responded
to the survey needed to devote one to two full-time staffers to
help deal with conflict minerals compliance.
The sectors that have made the most progress so far in
performing due diligence checks are technology, energy and
metals, PwC said.
At the same time, however, some data in the survey may also
back up the arguments of human rights groups that support the
rule and say it is needed.
For instance, the extensive amount of compliance and the
business risks from the SEC's rule have led more companies to
try and source their minerals elsewhere, the survey said.
Forty-five percent of the respondents told PwC they plan to
be conflict-free so their revenue does not take a hit.
In addition, a majority of respondents, or 67 recent, also
reported they do not expect to need to hire an outside auditor
in the first two years after the rule kicks in, either because
the minerals are not from the DRC, or because the origin could
not be determined.
PwC said that companies should continue to comply with the
rule and meet the deadline, even though uncertainty looms in the
"The appeals court has no timetable for their decision and
most observers have concluded that a decision before the May
filing deadline is unlikely," the survey says.
(Reporting by Sarah N. Lynch; Editing by Lisa Shumaker)