Final EU Conflict Minerals Regulation – Only the Publication Step Remains
On April 3, 2017, the European Council took the last procedural step and approved the EU conflict minerals regulation. Publication in the Official Journal of the European Union will be the next and final step of the process. The publication could occur in 3 to 6 weeks. Here is the text of the official EU Conflict Minerals Regulation.
As discussed in our previous post, the EU regulation applies to importers into the EU of at least 95% of all minerals or metals containing or consisting of tin, tantalum, tungsten or gold. The regulation requires those importers to perform due diligence in an effort to promote responsible sourcing of those minerals and metals to ensure that their supply chains do not contribute to funding of armed conflict. The due diligence requirements will become effective starting on January 1, 2021, but importers are encouraged to apply the due diligence procedures as soon as possible. There will be negative financial and reputational consequences of having relationships with smelters and refiners that do not comply with approved third-party audit process requirements. So, importers would be wise to get an early start and commence their efforts actively to manage their supply chains in advance of the January 2021 effective date.
According to the EU regulation, covered companies will be required to use the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (or other guidelines that may be approved in the future) as the framework for their supply chain due diligence procedures.
One of the key areas for action yet to come is a non-binding handbook to be prepared by the Commission to help companies determine what constitutes a “conflict-affected and high-risk area.” The content of this handbook could be surprising to many because “conflict-affected and high-risk areas” will likely include many parts of the world from which importers source their minerals and metals. Further, having significant commercial relationships in such regions could subject even non-importers to questions about their sourcing and operations.