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Study drops Dodd-Frank Conflict Minerals Regulations cost bombshell

25 Oct 2011

A US university economic analysis has assessed the costs of implementing the Dodd-Frank conflict minerals regulation to be $7.93 billion — more than a hundred times greater than the estimate prepared by the US Securities and Exchange Commission (SEC) of just $71.2 million.

The study, ‘A Critical Analysis of the SEC and NAM Economic Impact Models and the Proposal of a Third Model in View of the Implementation of Section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act’, which drew heavily on an IPC survey of the electronics industry, was prepared by Tulane University at the request of US Senator Dick Durbin of Illinois, a co-sponsor of the conflict minerals provisions included in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Tulane analysis compared the SEC estimates to the findings of a study by the National Association of Manufacturers (NAM). It also relied on data gathered by the IPC survey of manufacturers in the electronics supply chain. The analysis was conducted by Tulane graduate student Chris Bayer with contributions from Dr Elke de Buhr of the Payson Center for International Development at Tulane University Law School.

‘The Tulane study underscores the need for the SEC to be conscious of the high costs of implementation’, says Tony Hilvers, IPC vice president of industry programs. ‘The SEC must utilise all reasonable options to lessen the burden of implementation, the most important of which is a phasing-in of the regulations to allow industry the time to work with their complex global supply chains to develop traceability and compliance data.’

IPC’s report, ‘Results of an IPC Survey on the Impact of US Conflict Minerals Reporting Requirements’, was part of a set of extensive comments submitted by IPC for the SEC’s Notice of Proposed Rulemaking. The survey, which was conducted by IPC’s market research department, collected data from 60 electronics manufacturing services companies, printed circuit board manufacturers, electronics materials suppliers and equipment suppliers.

The Tulane study also supports issues raised by IPC and other industry commentators, including the need to establish, for a transition period, a category for conflict minerals whose origin cannot be determined. The regulations proposed by the SEC require that conflict minerals be identified as either conflict free or as associated with conflict.

For more information about the IPC survey and IPC initiatives in the area of conflict minerals, visit www.ipc.org/minerals.

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