SEC Commissioner Slams Conflict Minerals Disclosure Rule

The US Conflict Minerals Rule, a long-standing and often controversial requirement under Section 1502 of the Dodd-Frank Act, may be on its way out. At the SEC’s annual “SEC Speaks” conference, Commissioner Mark Uyeda issued a sharp critique of the rule, calling it a failed attempt to drive social change through financial disclosure regulations.

The rule, which came into effect in 2012, requires US public companies to disclose their use of “conflict minerals,” namely gold, tantalum, tin, and tungsten, if they originate from the Democratic Republic of the Congo (DRC) or surrounding countries. These minerals are often used in electronics, protective coatings, and durable industrial materials. However, Uyeda questioned the rule’s effectiveness and its impact on both US companies and the DRC itself.

Citing a 2024 report from the US Government Accountability Office (GAO), Uyeda stated that the rule had “not reduced violence in the Democratic Republic of the Congo and has likely had no effect in adjoining countries.” The GAO even suggested the policy may have contributed to further instability in the region.

Uyeda also pointed out the economic downsides for American businesses. The rule has led to increased compliance costs without delivering meaningful benefits. As a result, many companies have distanced themselves from sourcing tin, tungsten, and tantalum from the DRC, a harmful move, as viewed by Uyeda. These minerals are considered critical to US national security by the US Geological Survey, and discouraging their import from the DRC may inadvertently benefit rival global powers with fewer human rights concerns.

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“The SEC rules have the unfortunate effect of ceding US influence in that portion of the world,” Uyeda noted, emphasizing the need to reconsider whether such disclosure requirements should remain.

There are processes already in place that could bring the rule to an end. Under Section 13(p) of the Exchange Act, the President can suspend or revise the rule for up to two years if doing so is deemed in the interest of national security. Furthermore, the rule can be terminated entirely if the President certifies to Congress that no armed groups are benefiting from the trade of conflict minerals in the region.

While past efforts to suspend the rule, such as a proposed presidential memorandum under the Trump administration, were never finalized, Uyeda’s remarks may signal a renewed push. With Trump returning to office and a broader push to secure access to raw materials, it’s possible the Conflict Minerals Rule could finally be withdrawn or substantially revised.

Adding to the speculation is the recent news of a potential US minerals deal with the DRC. If that deal goes through, it could pave the way for either a temporary waiver or full termination of the rule.

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For now, however, the rule remains in effect. Companies still need to adhere to this year’s June 2 filing deadline for Form SD and any accompanying Conflict Minerals Reports. At the same time, as the political winds shift, 2025 may be the final year companies have to navigate this complex and increasingly questioned regulatory requirement.

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Source: Ropes & Gray