What Is the EU Conflict Minerals Regulation?
The European Union (EU) Conflict Minerals Regulation is intended to prevent or reduce the sourcing of minerals from regions where profits fund armed conflict. The regulation covers tin, tantalum, tungsten and gold (3TGs) sourced from the Democratic Republic of the Congo (DRC) and adjoining countries, though it also addresses minerals sourced from other high-risk areas. The Conflict Minerals Regulation will apply as of January 1, 2021 for importers of minerals and metals into the EU.
How European Union Conflict Minerals Differs From the Dodd-Frank Act
The European Union (EU) Conflict Minerals Regulation introduces new due diligence and reporting requirements to EU importers, and any company trading minerals from high-risk regions. Many of these are more stringent than those outlined by Section 1502 of the Dodd-Frank Act. Some of the differences with the greatest impact on supply chain data management programs include:
Section 1502 of the Dodd-Frank
- In-scope companies produce a Conflict Minerals Report.
- Companies report on 3TGs sourced from DRC and surrounding areas.
- Limited direct enforcement.
EU Conflict Minerals Regulation
- In-scope companies make a data submission to the EU Due Diligence Portal.
- Companies report on high-risk minerals sourced from conflict-affected and high-risk areas (CAHRAs).
- Direct enforcement from member state authorities.
Due Diligence in the Supply Chain
The Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance provides a set of recommendations that ensure companies take the appropriate steps to identify materials that have been sourced from conflict-affected areas. Under the EU regulation, it is mandatory to follow this framework. In-scope companies must create a system to identify and assess risk in the supply chain, carry out independent third-party audits, and report on supply chain due diligence.
To survey the supply chain, many companies will use the Responsible Minerals Initiative (RMI)’s Conflict Minerals Reporting Template (CMRT) to track country of origin, and the smelters and refiners they source from. A solution that tracks suppliers, smelter data, and CMRT responses can help companies streamline the process of complying with the EU Conflict Minerals Regulation.