The European Union Conflict Minerals Regulation (EU) 2017/821 aims to dissuade the illegal exploitation of conflict minerals in conflict-affected and high-risk areas (CAHRAs). Implemented on January 1, 2021, the regulation requires in-scope companies to ensure they import conflict minerals from responsible and conflict-free sources. To comply, companies must meet the responsible sourcing standards set by the Organization for Economic Co-operation and Development (OECD).
The problem with conflict minerals
Currently, four minerals are considered conflict minerals by global standards—tin, tantalum, tungsten, and gold. Commonly referred to as 3TG, these minerals are most often utilized in the manufacturing of electronic components, medical devices, retail accessories, and household devices. Unfortunately, 3TG mines in high-risk areas are often associated with armed groups that perpetuate crime and human rights violations.
The EU and the United States (U.S.) have implemented conflict minerals compliance laws to establish responsible sourcing practices and lessen the unethical practices around 3TG mining. Most global companies must comply with both countries’ laws.
Read our blog comparing the EU Conflict Minerals Regulation and Section 1502 of the U.S. Dodd-Frank Act to learn about their differences in scope and compliance requirements.
Which countries are in scope of the EU Conflict Minerals Regulation?
The EU Conflict Minerals Regulation applies to any CAHRA worldwide. These politically unstable areas foster the illegal trade of 3TG by armed groups, perpetuating unsafe working conditions, child labor, and other human rights abuses.
Notable countries at risk for armed conflict include the Central African Republic, South Sudan, Zambia, and The Republic of the Congo. The EU specifically 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
Establishing secure, transparent supply chains through mandated responsible sourcing helps relieve the devastation caused by 3TG mining in these areas.
Who does the EU Conflict Minerals Regulation apply to?
The EU Conflict Minerals Regulation applies to EU-based importers of 3TG depending on where they are along the supply chain. Upstream companies (that extract, process, and refine 3TG) and downstream companies (that further process metals into a finished product) have different reporting requirements under the regulation.
The regulation identifies upstream companies as:
- Mining companies
- Raw material traders
- Smelters
- Refiners
As this is the riskiest part of the supply chain, upstream companies must comply with the mandatory due diligence rules when importing 3TG into the EU.
Downstream companies are separated into two groups under the regulation:
- Companies importing metal-stage products
- Companies operating beyond the metal stage
The first group of downstream companies is also in the scope of the regulation and must comply with the mandatory due diligence rules. The second group does not have obligations under the regulation but is encouraged to use reporting to make their due diligence more transparent.
Responsible conflict minerals reporting: the OECD Guidance Process
To help stop the exploitation occurring in 3TG-rich regions, The Organization for Economic Co-operation and Development (OECD) established a globally accepted standard for tracking and managing risks in minerals supply chains: the OECD Due Diligence Guidance. The five-step guidance aids companies in responsibly sourcing minerals and maintaining an ethical supply chain.
The EU Conflict Minerals Regulation requires EU-based importers of 3TG to follow the OECD’s five-step framework outlined below.
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How is the EU Conflict Minerals Regulation enforced?
EU importers are monitored by each EU member state to confirm if the importers are compliant with the regulation. The member states’ authorities use documents and audit reports to determine compliance success. When necessary, they will also conduct impromptu inspections of an importer’s site. If the importer in question is found non-compliant with the regulation, they will continue to be monitored and be given a deadline for compliance.
Streamline EU Conflict Minerals Regulation compliance
Source Intelligence offers an industry-leading conflict minerals solution to help you streamline your due diligence and compliance initiatives. Our easy-to-use software automatically collects CMRTs from your suppliers to gather data on the origin of the 3TG in your supply chain. The data is then validated and analyzed so you can roll up all information into one concise report. Our solution is also compatible with the Extended Minerals Reporting Template (EMRT) and the Pilot Reporting Template (PRT) for other minerals of concern beyond 3TG.
