Wednesday, August 15, 2012

Ahead of Aug. 22 Open Meeting, Congressional Steel Caucus Asks SEC to Exempt Scrap Steel from Dodd-Frank Conflict Minerals Regulations

In a letter to SEC Chair Mary Schapiro, the Congressional Steel Caucus urged the SEC  to  recognize  the  inherent impossibility of tracking and tracing the conflict minerals in scrap steel and to incorporate in the regulations implementing the conflict minerals disclosure provisions of the Dodd-Frank Act  the  classification of product  produced from  scrap  as  a  conflict-free mineral.  Doing so will uphold  the true  congressional  intent  of the provision, said the caucus, which is stopping the mining of valuable minerals used to fund violent criminals guilty of committing human rights abuses in central Africa. Unless scrap steel is specifically exempted as a conflict mineral, they cautioned, the regulations will put U.S. steelmakers at a severe competitive disadvantage  globally. The letter was signed by Rep. Tim Murphy (R-PA), Chair of the Caucus and Vice Chair Peter Misclosky (D-IND). The caucus is a bi-partisan group of 100 Members of Congress who represent districts with steel manufacturers or care about the health of the US steel industry.

Scrap metal  originating  from  both  new industrial  scrap  generated  by  downstream manufacturers and post-consumer scrap is a primary feedstock for the steel industry. Steelmakers melt, cast and process the steel into semi-fabricated products. During this process, the source for alloying  elements that may include conflict minerals such  as  tantalum  and  tungsten  is  recycled scrap. The tungsten or tantalum contained in the scrap may have been mined years or decades the past or  recycled numerous times over.  The legislators claimed that it is  inherently impossible to  trace,  track or otherwise know the original the  source of these elements.

The proposed regulations under Section 1502 will cause US steelmakers to incur substantial and unnecessary costs of compliance, said the Representatives, including audits and filings with the SEC. This consequence can be avoided if the SEC exempts recycled scrap steel, or alternatively, classifies product using recycled scrap as DRC conflict mineral free.