January 31 2011
On December 15 2010 the Securities and Exchange Commission (SEC) proposed new rules for resource extraction issuers, on mine safety and on the use of conflict minerals. Final comments on each of these initiatives are due by January 31 2011.
Under the proposed rules for resource extraction issuers, publicly traded company engaged in the commercial development of oil, natural gas or minerals are required to disclose any payments made to the US or foreign governments.(1) The types of payment related to commercial development activities that must be disclosed include:
The proposed rules would require resource extraction issuers to provide the following information about payments made to further the commercial development of oil, natural gas or minerals:
The resource extraction issuer would be required to provide the information in its annual report.
The proposed rules on mine safety outline the way in which mining companies that are US public companies as well as foreign private issuers must disclose certain information about mine safety and health standards.(2) The new rules would implement Section 1503 of the Dodd-Frank Act, which requires mining companies to include information about mine safety and health standards in their annual and quarterly reports filed with the SEC. Mining companies would additionally be required to file a Form 8-K with the SEC when they received certain notices from the Mine Safety and Health Administration (MSHA) regarding requirements under the Federal Mine Safety and Health Act of 1977. Specific disclosures would include:
The proposed rules would also provide instructions to mining companies about the information required to be disclosed about penalty assessments and pending legal actions.
Finally, the SEC is proposing to add a new item to Form 8-K which would require domestic mining companies to file Form 8-K within four business days of receiving from the MSHA three types of notice specified by the Dodd-Frank Act:
On December 15 2010 the SEC voted to prepare revisions that would require new disclosure by reporting issuers concerning conflict minerals that originated in the Democratic Republic of Congo or an adjoining country.(3)
Specifically, issuers would be required to disclose annually whether they use conflict minerals that are "necessary to the functionality or production" of a product that they either manufacture or contract to be manufactured, and that originate from the Democratic Republic of Congo or adjoining countries. Conflict minerals include cassiterite, columbite-tantalite, gold and wolframite, or their derivatives. The proposed rules would apply to an issuer if:
An issuer would be considered to be 'contracting to manufacture' a product if:
The requirements would apply equally to domestic and foreign issuers and to smaller reporting companies.
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