EU Parliament Gives Green Light to Conflict Mineral Regulation
The European Parliament signed off last week on a proposal aimed at tackling conflict minerals trade, bringing the proposed measure closer to becoming law.
The regulation was approved by EU lawmakers on 16 March with 558 votes in favour, 17 against, and 45 abstentions. The minerals of interest are used in the production of several goods in common use, ranging from cell phones and cars to jewellery and lighting products.
Overall, proponents say that the planned regulation would cover 95 percent of the EU’s imports of the minerals in question and could help tackle human rights abuses incurred by forced mining labour. The regulation also aims to cut off the revenue that illegal armed groups receive from the sale of such minerals abroad.
Once the regulation is formally adopted by the European Council, signed into law, and published in the EU Official Journal, the bloc will impose due diligence rules on companies importing tin, tantalum, tungsten, and gold from areas deemed conflict-affected and high-risk.
The projected timeline for these steps would have Council approval secured by April and the remaining steps completed by the end of May. Importers would be required to begin following this regulation from January 2021 – a timeframe which proponents say will give importers, smelters, and other participants in the supply chain some time to make the necessary changes.
“Transparent and responsible supply chains mean revenues will not go into the hands of rebel groups, but to investment in schools and hospitals, supporting a well-governed state underpinned by the rule of law,” said EU Trade Commissioner Cecilia Malmström following the vote, touting the regulation’s sustainable development potential.
The process to develop the conflict minerals regulation has been in the works for several years, with the EU’s executive arm and the bloc’s then-High Representative for Foreign Affairs Catherine Ashton proposing in 2014 a “self-certification scheme” targeting mineral imports from conflict-affected and high-risk areas. (See BioRes, 14 March 2014)
The years since saw the EU institutions engage in detailed negotiations to reach a final conflict minerals regulation, with a political deal announced in June 2016 and a final agreement confirmed later that year. (See Bridges Weekly, 23 June 2016 and 1 December 2016)
The regulation bears some similarities to the conflict minerals provisions within the larger US Dodd-Frank Act, which requires companies to undertake due diligence and disclose the use of minerals imported from the Democratic Republic of the Congo and some neighbouring countries. However, EU lawmakers have designed this regulation to be wider-reaching geographically, among other differences. Proponents say that this will help the regulation to keep pace with current events.
The planned EU regulation follows the Organisation for Economic Co-operation and Development (OECD) guidelines’ five-step framework of due diligence, similar to Dodd-Frank. The Commission will keep an updated, indicative list of conflict-affected and high-risk areas, as well as a list of responsible smelters and refiners taking into account the supply chain due diligence schemes.
The due diligence rules will be mandatory for “upstream companies” – for instance, refiners, smelters, and others involved in minerals extraction. The companies that then process metals into their final product will also be required to meet these “due diligence” rules if those imports are at “metal stage” when brought into the European Union. Some smaller importers will not be subject to the mandatory rules.
The planned regulation would also allow for supporting measures that would make it easier for smaller companies to adapt to these changes.
Compliance will be tracked at the member state level, both through documentation and inspections, with those national-level authorities also tasked with ensuring that any non-compliant importers change their practices.
Across the Atlantic, the fate of the US’ Dodd-Frank Act is uncertain, given that President Donald Trump has expressed an interest in revising some of the legislation’s terms.
Congolese officials have reportedly reached out to the new US administration urging further discussions on the subject, warning that rolling back the conflict minerals part of the US law could have dangerous implications for the country, already devastated by a long history of armed conflict, disease, and poverty.
ICTSD reporting: “European Parliament adopts conflict minerals Regulation,” CHEMICAL WATCH, 20 March 2017; “Final Text of the EU Conflict Minerals Regulation,” GLOBAL COMPLIANCE NEWS, 8 February 2017; “European Parliament approves conflict minerals rules for the EU,” LEXOLOGY, 20 March 2017; “Parliament adopts binding law on conflict minerals,” EURACTIV, 16 March 2017; “Congo Sees Trump Roll-Bank of Dodd-Frank Stoking Insecurity,” BLOOMBERG, 20 March 2017.