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California Passes “Conflict Minerals” Law

By Rob Bates, Senior Editor
Posted on September 20, 2011
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California Passes “Conflict Minerals” Law

The California Legislature on Sept. 16 passed SB 861, a law that requires public companies to comply with the Dodd-Frank provision on conflict minerals if they want to do business with the state of California.

Gov. Jerry Brown is expected to sign the California bill, says Matt Brown, a spokesman for the Enough Project, a group active on the issue. This would make California the first state to pass legislation on conflict minerals

The Dodd-Frank provision mandates that publicly traded companies file a conflict mineral report with the SEC, which details the due diligence they have performed on the origin of their minerals, including gold and tungsten. The law aims to insure minerals do not originate from war-torn areas of the Democratic Republic of Congo.

The law “is purely symbolic, as it requires firms to comply with existing law,” says Jewelers of America chief operating officer Robert Headley, who adds that JA “supports the goal of Dodd-Frank in eliminating the link between mining and conflict.”

While acknowledging that the bill “doesn't add any layers of compliance,” the Enough Project’s Brown contends it will have some practical impact.

“Right now we don’t know what the regulations are,” he says. “It could be, if you are not in compliance with the Dodd-Frank conflict minerals provision, the SEC will just impose a fine or probationary period. They are not going to shut you down. This is saying that if you are not in compliance, you won’t be able to do business with the state of California, which is a huge consumer of electronics and other products. Basically, California is taking a step and saying conflict minerals matter.”

Brown says his group is looking at getting other states and cities to pass legislation on the issue.

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