Summary of EU Conflict Minerals Regulation:
- Focuses on upstream portion of supply chain, specifically the more than 400 importers of minerals into the EU
- Creates new, voluntary EU system for supply chain due diligence self-certification
- Offers incentives to companies that undertake the due diligence steps
- Defines “Conflict Minerals” as tin, tantalum, tungsten and gold (same as US conflict minerals rule)
- Is global in scope, and is not limited to central Africa
Earlier today, the EU released a draft conflict minerals Regulation that will create a voluntary process in which importers of tin, tantalum, tungsten and gold into the EU can self-certify that they do not contribute to financing armed conflict. If EU importers opt-in to the process, they will be required to conduct due diligence on their supply chains in accordance with the five steps of the OECD due diligence framework. By March 31st of the following year, the EU importer will have to report its findings to the EU. The EU will gather this information and publish an annual list of “responsible smelters and refiners.”
Incentives benefitting the participating companies include:
- public procurement incentives
- financial support of the due diligence efforts of small and medium sized enterprises
- “visible recognition” for companies that source responsibly
Drafters of the EU conflict minerals regulation insisted that they did not want to create a de facto embargo of conflict minerals, which has been one unintended consequence of the US conflict minerals rule. In addition, drafters wanted to complement, not copy, the US conflict minerals rule. A EU official stated, “This is not a stand-alone proposal. But we don’t want to repeat what has already been done. Dodd-Frank takes care of downstream users, and the European Union is taking care of the upstream.”
Shortly after its release, several NGOs released a joint statement stating their dissatisfaction with the draft of the EU conflict minerals regulation. The statement reads, “Rather than building on the significant momentum generated by legislation passed in the US, thereby raising the bar for responsible sourcing globally, the Commission’s proposal threatens to lower international standards and start a race to the bottom.”
An FAQ accompanying the draft Regulation can be found here.
The EU conflict minerals draft Regulation can be found here.