Jewelers of America said that while it was encouraged the Securities and Exchange Commission included some provisions to soften the blow of the new rules on conflict gold, some companies may still find them “difficult and costly.”
“Jewelers of America is in the process of reviewing the SEC’s final conflict minerals rule,” Matthew A. Runci, JA president & CEO, said in a statement. “While we must study the rule more closely in the coming days, we are initially encouraged by the Commission’s decision to not include automatic reporting of recycled minerals and to adopt a phased-in approach for determining whether or not minerals come from conflict sources.”
The organization added that while the law directly affects publicly-traded companies, its impact will likely be felt throughout the gold jewelry supply chain.
The statement added that Jewelers of America believes in the goals of the law and condemns the use of any minerals to fund conflict in the Democratic Republic of Congo.
The association summarized “key points from the final rule”:
- Companies must file their first report on May 31, 2014, for the 2013 calendar year, and annually on May 31 every year thereafter.
- Companies that use recycled or scrap metals are not automatically required to conduct due diligence or file a conflict minerals report. They will have to perform a reasonable inquiry to assure it is in fact recycled and therefore “DRC conflict free.”
- The regulation applies to companies that “contract to manufacture” a product and have some actual influence over the manufacturing of that product. Companies that merely attach their brand or label to a generic product manufactured by another company are not covered.
- There is a phase-in period of two to four years (depending on the size of a company), when firms will be able to use the determination “DRC conflict undeterminable” if they cannot determine whether or not the minerals in their products came from one of the covered countries or contributed to conflict in those countries. No audits would be required for products with this determination.
- Existing stocks of refined gold are exempt from the rule if they are “outside the supply chain” prior to Jan. 31, 2013. Gold is considered “outside the supply chain” if it “has been fully refined” or after, even if not yet refined, it is located outside the DRC and adjoining countries.