News & Articles
Chain Events
Tuesday, July 19, 2011
Conflict Mineral - Compliance Cost out of Control
An article in CFO magazine provides some quite scary numbers regarding the compliance cost embedded in the new conflicts minerals rule. The National Association of Manufacturers, of which ALOM is a member, estimates that compliance cost is between $9 billion and $16 billion for the 5,550 companies that are most likely to have to comply. The rule requires all publicly traded companies to certify that none of the metals used in their products have been mined in the Democratic Republic of Congo (DRC) and surrounding countries. If a company finds that minerals used in its products or components come from the area, it will need to dig even deeper to determine whether its purchases indirectly help fund ongoing violence in the region. The final version of this rule will likely require that companies publish their findings every year and explain their due-diligence process.
The rule has supply chain practitioners stumped as they try to track metals all the way back through an often convoluted supply chain.
While well-intended, the legislation is once more adding to an increasingly out-of-control compliance cost, and may ultimately impact smaller companies that may be unable to shoulder the compliance cost.
Conflict Mineral - Compliance Cost out of Control
An article in CFO magazine provides some quite scary numbers regarding the compliance cost embedded in the new conflicts minerals rule. The National Association of Manufacturers, of which ALOM is a member, estimates that compliance cost is between $9 billion and $16 billion for the 5,550 companies that are most likely to have to comply. The rule requires all publicly traded companies to certify that none of the metals used in their products have been mined in the Democratic Republic of Congo (DRC) and surrounding countries. If a company finds that minerals used in its products or components come from the area, it will need to dig even deeper to determine whether its purchases indirectly help fund ongoing violence in the region. The final version of this rule will likely require that companies publish their findings every year and explain their due-diligence process.
The rule has supply chain practitioners stumped as they try to track metals all the way back through an often convoluted supply chain.
While well-intended, the legislation is once more adding to an increasingly out-of-control compliance cost, and may ultimately impact smaller companies that may be unable to shoulder the compliance cost.
