EU Moves Toward Strict Conflict Minerals System
The European Parliament adopted May 20 a draft law that would impose a tough monitoring and reporting system along the entire conflict mineral supply chain. Parliament is now expected to enter into informal talks with EU member states, which have backed a less stringent approach, to seek agreement on a final version. The European Council will have the final say on whether the proposal becomes law.
Under the draft law, all EU importers of tin, tantalum, tungsten and gold for manufacturing consumer goods would have to certify that their purchases of those goods are not funding conflicts and human rights abuses in conflict areas. Moreover, downstream companies that use these minerals to make consumer products (estimated to number about 880,000 manufacturers in the auto parts, electronics, packaging, lighting, aerospace, construction, jewelry and other industries) would be required to provide information on the steps they take to identify and address risks in their supply chains with respect to these minerals. These requirements would apply to imports from any conflict-affected high-risk area, which would be defined as an area in a state of armed conflict, with widespread violence, the collapse of civil infrastructure, fragile post-conflict areas and areas of weak or non-existent governance and security, characterized by widespread and systematic violations of human rights.
The draft law goes beyond the voluntary self-certification approach supported by the European Commission, as well as a slightly more stringent proposal by Parliament’s International Trade Committee, and calls for smelters and refineries to undergo a compulsory, independent, third-party audit to check their due diligence practices. Parliament is also insisting on tougher monitoring, with a review two years after implementation and every three years thereafter (instead of three and six years, respectively, under the Commission’s proposal).