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Deadline Approaches for New EU Conflict Mineral Regulations

July 13, 2020
The European Union conflict mineral regulations will go into effect in January. Here’s what electronics buyers need to know about these new rules.

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Three years ago, the European Commission adopted a new regulation on mineral imports from conflict-affected areas. With a January 2021 effective date, those new regulations are now just several months away from becoming a reality for companies whose products are manufactured with tin, tungsten, tantalum or gold

According to the Commission, the new law (the “Conflict Minerals Regulation”) will apply across the EU, and aims to help stem the trade of minerals that sometimes finance armed conflict and/or are mined using forced labor.

Inspired by the U.S.’ Dodd-Frank Wall Street Reform and Consumer Protection Act, the new law applies to companies that:

  • Import minerals or metals
  • Smelt or refine these minerals or metals
  • Own a due diligence scheme

The EU regulation focuses on conflict- affected or high-risk areas, which it defines as:

  • Areas in a state of armed conflict
  • Fragile post-conflict areas
  • Areas with weak or non-existent governance and security (i.e., failed states)
  • Areas with widespread and systematic violations of international law, including human rights abuses

National Law Review says the biggest difference between U.S. conflict mineral laws and the new EU regulation lies in the fact that Section 1502 (the U.S. version) applies strictly to minerals mined and refined in the Democratic Republic of the Congo. “The EU Conflict Minerals Regulation expands that scope,” it points out, “to cover minerals mined from conflict-affected and high-risk areas, which could include any country that produces minerals, as long as the political and social structure of the country is compromised in some way.”

Responsible Importing

Starting Jan. 1, 2021, EU importers of tin, tantalum, tungsten and gold will have to carry out due diligence on their supply chains. “In other words, they will have to check where the minerals and metals they import have been mined and processed responsibly,” the Commission explains. “This is to make sure the minerals and metals they are buying or selling are not funding armed groups or security forces in areas of conflict.”

The new regulation covers both individuals and organizations, but it does not apply to:

  • EU importers that import less than a certain amount
  • Recycled metals or stocks created before February 2013

According to the Commission, a supply chain due diligence scheme (also known as an “Industry

Scheme”) is a set of voluntary procedures, tools and mechanisms for carrying out supply chain due diligence. Here’s the five-step framework that it has laid out for companies that will be impacted by the new regulation:

  1. Establish strong company management systems
  2. Identify and assess risk in the supply chain
  3. Design and implement a strategy to respond to identified risks
  4. Carry out an independent third-party audit of supply chain due diligence
  5. Report annually on supply chain due diligence

Feeling the Impacts

These new regulations apply to EU-established importers of the targeted minerals, but Deloitte says companies outside the EU will also be impacted, as EU-companies will need to make sure they source from responsible smelters and refiners.

“The EU Commission will publish white-lists of companies that fulfill requirements set out by Regulation 2017/821,” it adds. “Importers that do not reach the volume-thresholds set out in Annex I of the regulation will be exempt from due-diligence obligations.”

National Law Review says organizations and associations that have already established due diligence policies and procedures may apply for equivalence with the EU. It notes that several well-known associations, such as the LBMA, the International Tin Association and the Responsible Business Alliance, have due diligence policies developed to comply with Section 1502 of Dodd-Frank. Companies that use these policies may benefit from equivalency with EU standards for due diligence.

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.

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