The European Union (EU) has implemented the "Conflict Minerals Regulation,” designed to address the issue of conflict minerals. The regulation was adopted in 2017 and came into effect on January 1, 2021.
The European Union (EU) has implemented the "Conflict Minerals Regulation,” designed to address the issue of conflict minerals. The regulation was adopted in 2017 and came into effect on January 1, 2021.
The Conflict Minerals Regulation aims to promote responsible sourcing practices and prevent companies from contributing to conflict and human rights abuses through their supply chains. It is part of a broader global effort to address the issue of conflict minerals and ensure that minerals are sourced responsibly and ethically. The regulation applies to all EU importers of tin, tantalum, tungsten, and gold sourced from conflict-affected and high-risk areas, regardless of their size or industry.
Companies in the EU that import tin, tantalum, tungsten, and gold (3TG) from conflict-affected and high-risk areas must comply with the EU Conflict Minerals Regulation.
Importers are required to conduct due diligence to identify the risks in their supply chains and take steps to prevent the sourcing of minerals that finance armed groups or contribute to human rights abuses.
The due diligence process includes several steps, such as establishing robust company management systems, identifying and assessing risks in the supply chain, and taking action to mitigate those risks. Companies must also report on their due diligence practices and provide information on their supply chains to the European Commission.
Companies must perform their due diligence in accordance with internationally recognized standards, such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In addition, the due diligence process must be documented and available to the competent authorities upon request.
To comply with the regulation, companies must follow a due diligence process that involves the following steps:
Producing goods often involves many supplier and business engagements along the supply chain. Thus, the EU has divided these companies into two groups based on their function.
Companies that extract, process, and refine raw materials are referred to as “upstream companies.”
The EU classifies upstream firms as:
The second classification is for companies that further process the metals produced during the upstream stage into a finished stage. These companies are referred to as “downstream companies.” Companies that sell products to other companies, governments, or individuals are also classified as downstream companies.
Importers in the EU are required to set up internal systems and procedures that supply the information that indicates which country the minerals come from, the imported quantities, and when they were mined.
Furthermore, importers of minerals and metals must:
When minerals come from conflict-affected and high-risk areas, importers must also provide the following:
Businesses that do due diligence first assess the risk associated with obtaining raw materials from unstable or conflict-affected regions. Each EU Member State has an established competent authority responsible for receiving and reviewing the conflict minerals reports submitted by companies. The competent authority may also conduct inspections and audits of companies to verify the accuracy and completeness of the information reported.
The European Commission also has a supervisory role in relation to the implementation of the Conflict Minerals Regulation. It is responsible for publishing a list of the responsible smelters and refiners that have been audited and verified as complying with the regulation's due diligence requirements. The list is updated annually and is available on the European Commission's website.
Companies that fail to comply with the Conflict Minerals Regulation may face penalties or other enforcement measures by the competent authorities. These measures may include fines, public reprimands, or even suspension or revocation of business licenses. Therefore, companies must comply with the regulation and submit accurate and complete conflict minerals reports to the competent authorities.
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