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.