After months of negotiation, the EU reached a pioneering agreement on conflict minerals. Conflict minerals are minerals that are financing conflict in high-risk areas. Their extraction is often associated with human rights abuses such as child labor. They include tantalum, tin, tungsten, and gold and are known as the “3 TGs.” These minerals are in our smartphones, laptops, microwaves, and more.
Until now, the EU has relied on the voluntary application of the OECD Due Diligence Guidance on Responsible Supply Chains. These guidelines outline how companies should address human rights and avoid supporting conflict in high-risk areas. The new agreement, however, goes several steps further and imposes mandatory obligations upstream on companies that extract and transform these minerals into usable materials. It is the result of extensive negotiations.
Although the details are still being ironed out, it is clear that the EU has a unique strategy compared to the United States. To comply with the US rule, regulated companies are responsible for making sure there are no conflict minerals in their products. In efforts to comply, they have pressured their supply chains to conduct due diligence. The EU is tackling the issue upstream and at the source. The EU regulation targets smelters and refiners (SORs) in the EU as well as direct importers. Those that process or import 3 TGs will have to conduct due diligence if they source from conflict areas.
Here are some other unique aspects of the EU Conflict Minerals Regulation:
- Covered Minerals. Like the US rule, the agreement limits regulation to 3 TGs. However, it will also include a detailed annex describing covered ores, concentrates, and metals.
- Expanded Geographic Scope. The EU regulation will apply to conflict-affected and high risk areas worldwide. In contrast, the US rule limits regulation to the Democratic Republic of the Congo.
- Transparency and Disclosure. The European Commission will provide incentives to promote transparency and voluntary reporting on due diligence practices.
There will be a multi-year transition period before compliance is required. You can learn more about the agreement and how it may affect your company here.