WASHINGTON (AP) — U.S. regulators mandated Wednesday that public companies 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 neighboring countries in their products will have to disclose annually their efforts to trace the minerals back to their sources.
The SEC also voted 2-1 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 two Republican SEC commissioners, Troy Paredes and Daniel Gallagher, opposed the adoption of the rule. They said they think SEC rules aren't the proper way to achieve the goal of ending violence in Congo.
Paredes said the reporting requirements could have undesired effects in Congo. For example, he said, the minerals could be smuggled into other countries and sold as if they had originated there.
The affected minerals are gold, and the ores of tin, tungsten and tantalum. Tantalum is widely used in electronics, including cellphones, laptops and game consoles. Tin and tungsten have many industrial uses.
Congo holds about 70 percent of the world's supply of tantalum and substantial deposits of gold and tin.
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 rule brings to light the sourcing of minerals "that help fuel some of the most vicious and violent groups in the world," Sen. Dick Durbin of Illinois, the Senate Democrats' No. 2 leader, said in a statement. Durbin was an author of the provision in the overhaul law calling for minerals disclosure.
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 minerals disclosure 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. The companies will have to file their first reports in May 2014 and annually after that.
"This is going to be very difficult for companies," said Mitchell Harrison, director of London-based Resource Global Consulting Services, which helps audit the extraction of natural resources. "A lot of companies are doing it right now. It's a very extensive process."
The rule applies to public companies, both U.S. and foreign, that use any of the four minerals if the minerals are essential to a product the company makes or contracts to be made.
A company will be affected only if it has influence over the manufacture of a product. A company wouldn't be considered to have influence over the manufacturing if it merely puts its brand, logo or label on a generic product made by a third party, or if it services or repairs such a product.
Companies will have to determine whether any of the minerals in question in their products came from Congo or an adjoining country, or are from scrap or recycled sources.
If the inquiry finds that the minerals might have come from one of the countries, the company must investigate the source and file a report to the SEC. The report also must be posted on companies' websites.
For the oil and natural gas payments, companies must file reports 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.
The oil industry's biggest lobbying group argued that the requirement could put U.S. companies at a competitive disadvantage and hurt the U.S. economy. The rule will give foreign oil companies access to confidential information about their U.S. competitors, John Felmy, chief economist of the American Petroleum Institute, said in a statement.
Paredes and SEC Chairman Mary Schapiro excused themselves from voting on that rule to avoid potential conflicts of interest.
AP Technology Writer Peter Svensson in New York contributed to this report.