U.S. public companies that have business operations involving conflict minerals may be required to file a Form SD with the Securities and Exchange Commission (SEC). This disclosure obligation tends to affect companies engaged in the development of minerals, oil, and natural gases.

The Form SD, or Form Specialized Disclosure, implements the rules under Section 13(p) and Section 13(q) of the Securities Exchange Act of 1934 (Exchange Act). It contains three main sections—Section 1 (Conflict Minerals Disclosure), Section 2 (Resource Extraction Issuer Disclosure), and Section 3 (Exhibits).

Item 1.01 requires a company that manufactures or contracts to manufacture products for which conflict minerals are essential to the functionality or production of such products to file a Conflicts Mineral Report. Conflict minerals are defined to include gold, columbite-tantalite (coltan), cassiterite, and wolframite, or derivatives of such minerals, which are limited to tantalum, tin, and tungsten.

The covered countries include the Democratic Republic of the Congo (DRC) or an adjoining country. The company is under an obligation to conduct adequate due diligence to reasonably try to determine the country of origin. In the Form SD, the company should summarize the reasonable country of origin inquiry undertaken to conclude that its minerals did not come from the DRC or an adjoining country.

If after performing diligence the company cannot determine whether the minerals originated from the DRC or an adjoining country, it must describe the steps it will take to mitigate the risks that the minerals benefit armed groups.

Any company that has not found its products to be “DRC conflict free” must describe the nature of the products it manufactures or contracts to manufacture, the facilitates used to process the conflict minerals in those products, and the diligence conducted to determine the location of origin where the conflict minerals were mined.

The Conflict Minerals Report should cover an entire calendar year. It is typically due annually on May 31^st and should cover the prior calendar year. A copy of the report is filed as an exhibit to the Form SD. The Conflict Mineral Report should also be audited by an independent auditor.

The specialized disclosure rules also apply to “resource extraction issuers.” Item 2.01 of the Form SD requires annual disclosures on a Form SD for any “resource extraction issuers.” Resource extraction is defined to include the exploration, extraction, processing, and export of minerals, oil, or natural gas or getting a license to conduct such activities. The deadline is 270 days following the end of the company’s most recently completed fiscal year.

Under Item 2.01, the company must provide information about related payments made to the U.S. government or foreign governments. The payment information must indicate the currency and be on a cash basis. The Form SD must describe the aggregate payments made to government entities for each project relating to the development of minerals, oil, and natural gas. It also must disclose the method of extraction used in the project and the resources being developed by the project.