Kraft, GE Officials Say Conflict-Mineral Rule Will Burden Firms
Kraft Foods Inc. (KFT) would have to track as many as 100,000 suppliers for thousands of products to comply with a Dodd-Frank Act rule targeting so-called conflict minerals, according to the company’s chief securities counsel.
“We had no idea this legislation was going to be covering companies like us,” Kraft’s Irma Villarreal said today at a Securities and Exchange Commission forum on the measure’s impact. “We are worldwide. We have 40,000 products. We have promotional material for all those things.”
Under Dodd-Frank, the financial-regulation law enacted in 2010, the SEC is required to have companies report whether they or their suppliers obtain any of four metals from the Democratic Republic of Congo or neighboring countries. The provision was designed to deny African warlords proceeds from mining of tin, tantalum, tungsten and gold, which human-rights activists say are used to fund abuses against civilians.
Villarreal, whose Northfield, Illinois-based company is the world’s second-biggest food company, told SEC officials including Chairman Mary Schapiro that Kraft has a lot of work to do in tracking the metals in packaging and factory equipment.
“The rule has to recognize the situation of all the issuers that have to comply with it,” Sandy Merber, a counsel for international trade regulation and sourcing at General Electric Co (GE), said at the meeting. “We won’t get to the bottom of our products for a little bit of time.”
Responsibility for writing the conflict-mineral rule puts the SEC in unfamiliar territory, stretching into virtually every corner of manufacturing while touching on foreign policy. The agency has delayed adoption of the rule, missing an April deadline, and called today’s meeting to gather additional information from affected companies and other interest groups.
“This part of the world has been one of the most deadly on earth,” U.S. Senator Dick Durbin said at the meeting. “Our demand for products that contain these minerals could inadvertently be fueling this war,” said the Illinois Democrat who was one of the provision’s authors.
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