by Source Intelligence
on August 8, 2022
Tin, tungsten, tantalum, and gold are essential minerals that make up countless everyday materials and products, such as electronics, jewelry, tools, glass, connecting wires, and more. These four minerals are considered conflict minerals by the U.S. and EU governments. Conflict minerals, otherwise known as 3TG, are typically sourced from areas plagued with governmental instability, armed violence, and human rights abuses. The profits from mining conflict minerals are primarily used to fund the groups responsible for these issues, thus perpetuating a cycle of violence.
In efforts to reduce the negative impacts associated with mining these minerals, increase companies’ accountability for sourcing 3TG, and improve supply chain transparency, the U.S. and the EU passed their own respective conflict minerals compliance requirements. We know these requirements as the U.S. Dodd-Frank Act and the EU Conflict Minerals Regulation. While similar, there are some key differences between the two. Continue reading to learn more.
The EU Conflict Minerals Regulation was enacted on January 1, 2021. The regulation applies to EU-based importers of 3TG sourced from conflict-affected and high-risk areas (CAHRAs). All imported 3TG is subject to regulation, including processed metals, mineral ores, or concentrates.
The OECD Due Diligence Guidance has a 5-step framework for upstream and downstream companies. This resource from the OECD breaks down the process.
The U.S. Dodd-Frank Act was enacted on July 21, 2010, with a specific section – Section 1502 – focused on conflict minerals compliance. Section 1502 applies to publicly traded companies that manufacture products containing 3TG sourced from the Democratic Republic of the Congo (DRC) or any surrounding countries within the scope of the regulation.
If 3TG is necessary for the functionality or production of a product, the product falls within the scope of Section 1502. This requires public companies to conduct due diligence by tracing the 3TG back to the utilized smelter to determine where the minerals originated.
Unlike the EU regulation, Section 1502 of the Dodd-Frank Act has an established 3TG reporting process. Once 3TG is determined to be essential to the functionality or production of a product, the following steps must be taken:
Public companies required to file a CMR must follow the due diligence process of a nationally or internationally recognized framework, such as the OECD Due Diligence Guidance. The due diligence process results in one of three determinations, each with its own set of requirements.
While the EU Conflict Minerals Regulation was inspired by Section 1502 of the U.S. Dodd-Frank Act, they differ in significant ways. The key differences include the following:
The following graphic provides a visual representation of how the EU Conflict Minerals Regulation goes beyond Section 1502 of the U.S. Dodd-Frank Act.
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