June 26, 2017 4:00 AM, EDT
Trucking Industry Stakeholders Continue to File ‘Conflict Mineral’ Reports to SEC

This story appears in the June 26 & July 3 print edition of Transport Topics.

Trucking industry manufacturers and suppliers have continued to file their annual “conflict minerals” reports despite legislation passed by the House that would eliminate the mandate and a pledge earlier this year by the U.S. Securities and Exchange Commission’s former acting chairman to not enforce the agency’s own rule.

The public company filings submitted last month were a response to a mandate in the Dodd­-Frank Wall Street Reform and Consumer Protection Act in 2010 and a subsequent SEC rule enacted in August 2012 that requires an estimated 6,000 public U.S. companies to search their supply chains for so-called African conflict minerals.

The House already has repealed the requirement, but the Senate has yet to act on the issue. An SEC spokeswoman declined comment on the agency’s future intentions.

A sampling of the most recent reports submitted by several trucking-related companies have again concluded that most have reason to believe, but are not yet certain, that some of their products contain tantalum, tin, tungsten or gold that originated in the Democratic Republic of the Congo.

The four minerals or their derivatives, known as 3TG, have been determined by the U.S. secretary of state to be financing hostilities and human rights abuses in the Congo and nine countries surrounding the Congo.

But in an executive summary, the sponsors of the House repeal bill said there is “overwhelming evidence” that the mandate has done far more harm than good to its intended beneficiaries — the citizens of the Democratic Republic of the Congo and neighboring Central African countries.

Despite signs that the requirement is in jeopardy, the automotive industry, which has been a leader in creating processes to search for the minerals, plans to continue to file reports on their efforts, said Tanya Bolden, director of corporate responsibility for the Automotive Industry Action Group.

AIAG members met in early June to discuss the issue, deciding to “stay the course,” Bolden told Transport Topics.

“Companies realize that we started down the path of conflict minerals in response to legislation,” Bolden said. “However, they have established processes that are yielding benefits that are outside of the reporting requirement.”

Bolden added, “It’s also important to take into consideration what’s happening in other parts of the world. The European Union has enacted conflict minerals legislation that may impact some of our companies.”

Bolden noted that her group’s members have said the reporting process has resulted in better communication with the supply chain.

A sampling by TT of six reports submitted in May by trucking industry-related public companies indicated that they also are continuing their searches:

• Truck maker Navistar International said that in 2016 it surveyed 1,210 direct suppliers in North America for comments on conflict minerals that might be used in their products, but their responses and the company’s analysis “indicates that many contained inconsistencies or incomplete data.”

• Wabco Holdings said in its report that “due to a number of unidentified smelters referred to by our suppliers as the potential source of some of the 3TG materials in our products, we are unable to determine whether our products contain conflict minerals that originate from the covered countries.”

• In its report, Cummins Inc. said its analysis of products “determined that it is possible that 3TG may be found in the majority of our products. However, we believe that the amount and value of 3TG that may be in any given product is generally de minimis compared to the size and value of the product as a whole.”

• Meritor Inc. said that “based on what Meritor’s core team has learned through its association with the AIAG Conflict Minerals Work Group, it is clear that a great deal of work remains to be done in order to identify which smelters are or are not conflict-free.”

• Paccar Inc. said it received responses from suppliers representing 88% of the total cost of its production purchases, but from those responses it “has not been able to fully determine the specific mines and smelters that processed the conflict minerals used in its products, or if the minerals are sourced from a recycler or scrap supplier.”

• Eaton Corp. said a majority of its 3,200 suppliers responded that their materials did not contain the minerals but that they were “unable to determine whether the products they sold to us contained minerals, or they were still in the process of evaluating the source of the minerals in their products.”