On 1 January 2021 the EU Conflict Minerals Regulation will come into force. This regulation aims to stem the trade in four minerals – tin, tantalum, tungsten and gold (3TG) – which can be linked to the finance of armed conflict or are mined using forced labour. The Regulation is applicable to companies that import a certain amount of 3TG. The European Commission will establish a threshold value to ensure that at least 95% of the total import of 3TG in the EU will be regulated. The Regulation aims to:
- Ensure that EU importers of 3TG (tin, tungsten, tantalum and gold) meet the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas set by the Organisation for Economic Co-operation and Development (OECD);
- Ensure that 3TG is sourced responsibly by global smelters and EU smelters;
- Play a part in breaking the link between conflict and the illegal exploitation of minerals;
- Play a part in ending the exploitation and abuse of local communities and support local development.
Under the Regulation, companies will have to conduct due diligence to ascertain whether the minerals that they import are sourced responsibly and do not contribute to conflict or other related illegal activities. By checking the supply chains through the use of due diligence, companies can manage the risks in a responsible manner.
The Regulation is based on the OECD Guidelines for Multinational Enterprises, which set out the process of due diligence that should be embedded within the company structures.
Does your company import 3TG into the EU and is the Regulation applicable? In that case, from 1 January 2020 onwards your company will have to:
- Identify and assess risks in the supply chain;
- Implement a strategy to manage the identified risks;
- Have an independent third party carry out an audit regarding the supply chain;
- Report annually on the supply chain due diligence.
The EU member states will appoint regulators to check if the relevant companies comply with the Regulation. In the Netherlands, the Human Environment and Transport Inspectorate (Inspectie Leefomgeving en Transport) will act as regulator. In her letter of 3 April 2020, the Dutch minister for Foreign Trade and Development Cooperation has communicated to the Second Chamber of Parliament that the regulator will be able to impose and publish an order subject to a penalty for noncompliance. This will be laid down in an Implementation Act.
The Regulation will be evaluated for the first time before 1 January 2023. Subsequently, the Regulation will be evaluated every three years.
Do you have questions about the Regulation? Get in touch with our Business and Human Rights practice group!
Sources:
- EU Conflict Minerals Regulation (Regulation 2017/821);
- The Regulation explained (summary of the regulation);
- Kamerstukken II 26 485, nr. 326 (Brief van 3 april 2020);
- OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas;OECD Guidelines for Multinational Enterprises.