Framework Established for EU Conflict Minerals Regulation

Framework Established for EU Conflict Minerals Regulation

The European Union (EU) Parliament, Council and Commission have agreed upon a framework for an EU conflict minerals regulation.

According to a press release from the European Parliament, a political understanding was reached on June 15th between the three groups. Until now, the primary roadblock has been a disagreement on mandatory due diligence for downstream companies, as well as exemptions for small businesses. However, it seems as though these issues have been worked through and a framework established.

What We Know So Far:

  • Conflict mineral due diligence will be mandatory for importers of tin, tungsten, tantalum and gold (3TGs), in accordance with the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidelines. Member States will be responsible for ensuring compliance and determining penalties for non-compliance. This will be monitored by the EU Commission.
  • The EU will push for companies whose products contain 3TGs to report on their sourcing practices based on a new set of performance indicators. These will be developed by the EU Commission, along with a registry where companies can voluntarily report on their due diligence practices.
  • Small importers of 3TGs will not be required to comply with the regulation. This prevents them from becoming over-burdened with bureaucratic requirements. Recycled metals, existing EU stocks and by-products are also excluded from the regulation.
  • The regulation’s reach far exceeds that of the Dodd-Frank Act, which limits due diligence requirements to 3TGs sourced from the Democratic Republic of Congo (DRC) and surrounding area. The EU regulation will target any 3TGs from from conflict-affected and high-risk areas around the world. The EU Commission will select experts to develop an “indicative and non-exhaustive list” of areas which will be included in a guidance document. Regardless of whether or not companies are sourcing from areas on the list, they will still be responsible for complete due diligence checks on their sources.
  • A review clause will be written into the regulation, requiring the EU Commission to report on the effectiveness of the new law. This includes its impact on the ground and compliance on behalf of EU companies. If the law is not having the desired effect, the clause allows additional mandatory measures to be added to the regulation.

What Happens Now?

Although the framework has been established, actual details of the regulation have yet to be finalized. According to the press release, the Dutch Presidency of the Council has pledged to finish the informal legislative negotiations with MEPs before the end of its term on July 1st, 2016. However, additional trialogues may be required under the Slovak Presidency to finalize the legislation before it can be approved by Parliament.

Assent Compliance’s regulatory experts have been closely following the EU conflict minerals regulation discussion. We will continue to provide updates as they become available. If you have any questions or comments, please contact us at info@assentcompliance.com.


 

For an idea of what the final regulation might look like, read our eBook Conflict Mineral Compliance Toolkit to learn more about the U.S. law, which is also based off of the OECD’s Due Diligence Guidelines. Download it here.

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