The European Parliament has adopted by a large majority the proposed new EU Conflict Minerals Regulation. The Regulation is expected to be passed in May, upon formal adoption by the Council. It would then become applicable as of January 1, 2021, allowing companies time to adapt to its requirements. The Regulation will primarily affect importers of tin, tantalum, tungsten and gold, but also indirectly refiners and smelters of these minerals within and outside the EU.
The Regulation mandates supply chain due diligence, including a five-step framework for its conduct. These include (i) establishing company management systems, (ii) identifying and assessing risks in the supply chain, (iii) elaborating a strategy to respond to these risks, (iv) independent third-party audit of due diligence efforts, and (v) annual reporting on these efforts. Companies will be able to apply to the European Commission for recognition of their compliance schemes’ conformity with these five requirements.
By the end of 2017, the Commission should be issuing guidelines on the identification of conflict-affected and high-risk areas from which the relevant minerals are sourced. A list of such areas will be compiled and regularly reviewed by external experts designated by the Commission. The Commission also intends to produce a global list of responsible refiners and smelters.
Besides aiming to reduce the financing of conflicts in developing nations, the Regulation seeks to address human rights abuses in the affected areas’ mining industries. Therefore, the EU is planning for related development aid to promote sustainable economic growth and investment in education and healthcare in these regions. The EU is also working with third countries to ensure responsible sourcing and the elimination of alternative markets for conflict minerals.