New EU regulation on conflict minerals
Corporate social responsibility is an important matter in relation to mining and mineral trading. The EU has adopted a new regulation to enhance social responsible mining and trading of minerals. From 1 January 2021, EU importers of so-called 'conflict minerals' must carry out due diligence on their supply chain. The EU Parliament and the Council has adopted Regulation no. 821 of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas (the EU regulation on conflict minerals).
Extraction of natural resources may contribute positively to a country's development, for example by creating wealth, local jobs, insure basic infrastructure and related industries. Sometimes, however, extraction of natural resources may negatively impede standards of living. The term 'conflict minerals' refers to minerals mined in conditions of armed conflict and human rights abuses, and minerals traded by armed groups. Armed groups can thereby obtain significant financial gains from mineral trade. Trade of conflict minerals has significant negative societal consequences, also because it prolongs and intensifies armed conflicts. For example, this has been a problem in the Democratic Republic of Congo. Conflict minerals are typically cassiterite (tin), coltan (tantalum), wolframite (tungsten) and gold, or derivatives of these minerals. The EU has adopted new regulation to limit trade of conflict minerals.
New EU mineral regulation on conflict minerals
On 17 May 2017, the EU adopted a new regulation concerning supply chain due diligence obligations for EU importers of conflict minerals. The new EU regulation on conflict minerals implements the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (the OECD Guidance).
EU importers of conflict minerals are generally required to identify risks and prevent or mitigate the negative impact that mining activities might have on people in areas affected by conflict. Most importantly, the EU regulation on conflict minerals establishes a system for supply chain due diligence (the 'Union system').
The EU regulation on conflict minerals obliges EU importers of conflict minerals to follow a five-step process. EU importers must:
(1) Establish a strong company management system (article 4).
(2) Identify and assess risks in the supply chain (article 5).
(3) Design and implement a strategy to respond to identified risks (article 5).
(4) Carry out an independent third-party audit of supply chain due diligence (article 6).
(5) Report annually on supply chain due diligence (article 7).
EU Member States are responsible for checking that EU importers comply with the regulation (article 11). Member states are also required to adopt the regulation applicable to infringements (article 16).
Consequences for smelters and refiners outside the EU
The new EU regulation on conflict minerals also have implications for companies outside the EU. The regulation affects smelters and refiners of tin, tantalum, tungsten and gold both in and outside the EU. In this regard, EU importers of minerals are required to ensure that the minerals originate from responsible smelters and refiners. The Commission will produce a list of responsible smelters and refiners which are perceived to fulfil the requirements of the regulation. The list will be accessible online (article 9).