EU: Conflict Minerals agreement reached but exemptions are added

EU: Conflict Minerals agreement reached but exemptions are added

The European Union has taken a positive, step towards cleaning up Europe’s trade in minerals. The new agreement on so-called ‘conflict minerals’; minerals that are mined in conditions of armed conflict and human rights abuses, notably in the Democratic Republic of the Congo.

These minerals are known as the 3 T’s Tantalum, Tin, Tungsten & Gold. Unfortunately other valuable resources like diamonds and other precious stones won’t be checked.

The new law only requires those companies importing raw minerals into the EU to carry out checks on their supply chains to see if they are funding armed groups or human rights abuses, meaning companies that bring the very same minerals into the EU as part of components and products, like mobile phones or cars, are let entirely off the hook.

The proposal is a welcome step forward, the regulations will send a strong message to a limited range of companies, and it will trust many more companies to self-regulate. It is now up to those companies to make sure the trust is well founded; otherwise, lawmakers are set to act.

The Regulators have accepted further concessions from the original 2015 proposal, by allowing volume thresholds. These thresholds, that exempt companies from complying with legislation, are dangerous loopholes they could let minerals worth millions of Euros enter the EU free of any scrutiny—often those with the highest risk of being linked to conflict.

The European Commission has agreed to accredit private industry bodies to which companies have increasingly sought to outsource their obligations to check their supply chains. Members of accredited industry bodies will benefit from limited oversight. In addition, companies will be encouraged to source from a list of “responsible” smelters and refiners, despite few mechanisms being put in place to actually assess the behaviour of all smelters and refiners.

The Regulation will not come into force immediately, with legislators opting instead to insert a lengthy phase-in period. By itself, this trade Regulation cannot bring peace and prosperity to communities blighted by the resource curse. This is only the beginning of the process, not the end.

Update 02-05-2017:

Not applicable until 2021.

On 16 March 2017, the European Commission announced that the European Parliament adopted by an overwhelming majority the European Commission’s proposal to stop trade in conflict minerals. The announced said in part:

“The Regulation brokered by the Commission and voted today by the European Parliament will impose due diligence rules on companies importing tin, tantalum, tungsten and gold. Such metals and minerals are used in the production of everyday products such as mobile phones, car and jewelry”. The rules will cover up to 95% of imports as of 1 January 2021. In the meantime, the Commission and Member States will work to make sure that the necessary structures are in place to ensure EU-wide implementation.

Together with the new rules, the EU will be putting in place measures to support small and medium-sized importers, and development aid to ensure the Regulation is effective and has a positive impact on the ground. The EU has also been reaching out to governments in Africa, Asia and beyond to encourage them to source responsibly and eliminate alternative markets for conflict minerals. To become effective, the Regulation still has to be formally adopted by the Council.

Update 30-05-2017:

On 16th May 2017, the EU published supply chain due diligence obligations for Union importers of conflict minerals i.e. Tin, Tantalum, Tungsten and Gold.

This is to ensure responsibility sourcing of these minerals from conflict areas and avoid illegal exploitation to finance violence and crime. The regulation shall apply from 9th July 2017.

Source: Official Journal of the European Union.

For more information on Conflict Minerals speak to Mike Court . Director. Micksan Consultancy. Offering bespoke International Solutions to Devon Companies.