A draft "conflict minerals" regulation was recently approved by the European Union (EU) parliament. This regulation will require importers of tin, tungsten, tantalum, and gold to conduct due diligence on their suppliers. In addition, large manufacturers will be required to disclose how they intend to monitor their sources of supply to ensure compliance with the rules. The vote on approval was 558 votes For, 17 Against, and 45 abstentions.
"The vicious circle has now been broken. The importers of tin, tantalum, tungsten and gold will have to carry out mandatory due diligence in order to check their suppliers and prevent armed rebels or human rights violations being financed by illegal revenue," said luliu Winkler, Group of the European People's Party, Romania." (1)
Individual EU member states will be responsible for ensuring companies within their jurisdiction are in compliance with the regulation.
Key Points to Know
- The regulation will become effective on January 1, 2021
- Due diligence will be mandatory
- EU firms over 500 employees, subject to EU law on "non-financial reporting", that buy tin, tantalum, tungsten and gold to use in their products will be encouraged to report on their sourcing practices and will be able to join an EU registry
- Sufficient due diligence is defined by the international OECD guidelines (See below)
- Small importers (such as dentists, jewelers, etc...) will be exempted
- It is estimated the regulation will directly impact between 600 and 1,000 EU importers and will indirectly affect about 500 smelters and refiners of tin, tantalum, tungsten and gold, whether they are based inside the EU or not (3)
- The European Commission will create a "white list" of global smelters and refiners which it knows source responsibly
OECD Guidelines include the below Steps (4)
- Strong company management systems
- Adopt and communicate a policy
- Establish traceability
- Identify & assess risks in the supply chain
- Identify and verify treaceability
- Undertake on-the-ground assessments for all red flag locations
- Manage risks
- Report identified risks to senior management
- Disengage from suppliers with the most serious impacts
- Mitigate risk, monitor and track progress
- Audit of smelter / refiner due diligence practices
- Allow auditors to access company documentation, records, and access to suppliers
- Publish summary audit report with conclusions
- Publicly report on due diligence
- Annually describe all due diligence efforts and make the report publicly available
GCSG's compliance experts are closely following the developments with the EU's conflict mineral regulations. Contact us at firstname.lastname@example.org with any additional question's or for more information.
- "Conflict minerals – Tin, tantalum, tungsten and gold are used in the production of many high-tech devices, in the automotive, electronics, aerospace, packaging, construction, lighting, industrial machinery and tooling industries, as well as in jewelry." (2)
- (1) luliu Winkler - Debate 1: "Supply chain due diligence by importers of minerals and metals originating in conflict-affected and high risk areas"
- (2) European Parliament News: "Conflict minerals: MEPs secure mandatory due diligence for importers" - 16-06-2016
- (3) European Commission: The (Conflict Minerals) regulation explained
- (4) OECD Infographic: "Due Diligence Guidance for Minerals - 5 Step Framework for Upstream and Downstream Supply Chains"
- European Commission
- European Commission: Conflict Minerals Legal texts and documents
- European Commission: DRAFT Regulation (EU) 2017/[CODE] of the European Parliament and of the Council of [DATE]
- European Commission: Non-Financial Reporting
- European Parliament
- European Parliament MEPs: luliu Winkler
- European Parliament News: "Conflict minerals: MEPs secure due diligence obligations for importers" - 16-03-2017
- luliu Winkler - Debate 2: "Supply chain due diligence by importers of minerals and metals originating in conflict-affected and high risk areas"
- OECD: "Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas"