08/22/2012 12:21 EDT | Updated 10/22/2012 05:12 EDT

SEC mandates that public companies must disclose data on use of minerals from Congo

WASHINGTON - U.S. regulators mandated Wednesday that public companies must disclose information about their use of minerals from Congo, where militias linked to atrocities have profited from mining minerals used in electronics, jewelry and other goods.

The Securities and Exchange Commission voted 3-2 to adopt a rule under the 2010 financial overhaul law. Public companies that use the designated minerals from Congo and neighbouring countries in their products will have to disclose annually their efforts to trace the minerals back to their sources.

The SEC also voted to require producers of oil, natural gas or minerals to disclose any payments involving commercial development that they make to the U.S. or a foreign government. The payments would include taxes, royalties and licensing fees.

The regulators say stricter reporting requirements on mineral use might help curb the violence in Congo. They also say the rules will make companies more accountable to their shareholders.

Some companies have complained about the difficulty of determining whether, or in what quantity, certain products include the affected minerals.

The affected minerals are gold, cassiterite, wolframite and columbite-tantalite, also called coltan. Cassiterite and coltan are used to make cellphones, computers and other electronics. Wolframite is used in metal seals and other components.

Congo has about 80 per cent of the world's supply of coltan and substantial gold deposits.

As with the so-called "blood diamonds" mined in Zimbabwe and used to finance wars in Sierra Leone and Liberia, international rights groups have pushed for more transparency in the use of minerals that have benefited militias in Congo.

Civil wars killed an estimated 5 million people in Congo in the 1990s. The fighting deteriorated into a scramble for Congo's minerals that drew in the armies of eight African nations. Though the conflict ended in the rest of Congo in 2002, armed groups still operate in the mineral-rich eastern portion of the country.

The SEC initially proposed the disclosure rule in December 2010. The activist group Oxfam America has protested at the SEC's headquarters and sued the agency to protest the delay in issuing final rules. At the same time, business groups have lobbied the SEC to make the rules more lenient.

The new requirements will initially cost affected companies a total of $3 billion to $4 billion and up to $209 million each year afterward, the SEC estimates.

Companies have to file the report to the SEC no later than 150 days after the end of their fiscal year. The requirement starts for fiscal years ending after Sept. 30, 2013.