What are the EU Conflict Minerals Regulation Compliance Requirements?
The EU Conflict Minerals Regulation was implemented on January 1, 2021. Inspired by Section 1502 of the U.S. Dodd-Frank Act, the European regulation and its reporting framework align with the OECD Guidance due diligence process for responsible mineral sourcing. However, the scope of the EU Conflict Minerals Regulation is broader than that of the U.S., as it applies to companies that import products containing 3TG into the EU from any conflict-affected and high-risk areas (CAHRAs). Continue reading to learn more about the EU Conflict Minerals regulation compliance requirements.
What is the Purpose of the EU Conflict Minerals Regulation?
The EU Conflict Minerals Regulation is intended to prompt importers of minerals and metals containing 3TG to establish secure, transparent supply chains of minerals without contributing to armed conflict, unsafe working conditions, child labor, and other human rights abuses.
Currently, the four minerals considered conflict minerals – which are commonly referred to as 3TG - are tin, tantalum, tungsten, and gold. 3TG minerals are most often utilized in the manufacturing of electronic components, medical devices, retail accessories, and household devices.
Which Countries are in Scope of the EU Conflict Minerals Regulation?The scope of the EU Conflict Minerals Regulation is global, which means it covers any regions experiencing armed conflict and government instability. Importers of 3TG from CAHRAs are required to report on the smelters and mines within their supply chain. The EU defines CAHRAs as:
- Regions in a state of armed conflict
- Areas suffering conflict aftermath
Regions made fragile by weak governance or lack of governance, such as failed states, regions, or countries known to systematically violate international law
Who Does the EU Conflict Minerals Regulation Apply To?
While the EU Conflict Minerals Regulation applies to EU-based importers of 3TG, the OECD guidance addresses both “upstream” and “downstream” companies. Upstream companies include operations involved with mines, smelters, refiners, local traders, or exporters from the mineral’s country of origin. Downstream companies include operations throughout the supply chain, from traders and component manufacturers to product retailers.
Upstream companies are required to conduct a risk-based due diligence process to assess their mineral supply chain from smelters and mines to end-users. Reporting on metals imported in the form of bars, rods, sheets, and other “raw” parts is mandatory.
Downstream companies that source finished components, as well as companies that import or distribute end-user products containing 3TG, are encouraged to report on a voluntary basis. A transparency platform will soon be available for voluntarily publishing conflict minerals information.
What are the Reporting Requirements of the EU Conflict Minerals Regulation?
The EU Conflict Minerals Regulation requires EU importers to share all information gathered through their supply chain due diligence process with their downstream purchasers. Importers are also required to publicly report their conflict minerals due diligence policies and practices, including details about their risk management approach, steps taken to implement their compliance management system, and a summary report of annual third-party audits.
Although an exact format for reporting is not specified in the EU Conflict Minerals Regulation, in general, a report must follow the OECD Guidance process and demonstrate that an importer conducted due diligence and took necessary action to remain compliant with the EU Conflict Minerals Regulation.
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