Five Key Points about the New European Union Conflict Minerals Agreement

Gold NuggetOn June 15, the European Union announced that it had reached a “political understanding” on many of the substantive components of a new conflict minerals regulation. The regulation, once drafted, will be submitted to the European Parliament and Council for adoption. The final regulation will be applicable to all E.U. member states.

The European Union has been engaged in a multi-year process of negotiation and deliberation regarding the sourcing of conflict minerals. The following points summarize key elements of the new understanding and the expected content of the new regulation:

  1. As with the conflict minerals rule in the United States, the European regulation will be applicable to gold, tin, tantulum, and gold.
  2. European Union smelters and refiners and direct importers of conflict minerals will be required to conduct due diligence if they are sourcing from a non-exhaustive list of conflict-affected and high-risk areas. Small volume importers will be exempted from the due diligence requirements.
  3. Unlike the U.S. rule, the European regulation is not aimed merely at sourcing from the Democratic Republic of Congo and adjoining countries. The European Commission has announced that it will develop the list of conflict-affected and high-risk areas in consultation with outside experts.
  4. As with the U.S. rule, companies conducting due diligence will be expected to do so in a manner aligned with the OECD Due Diligence Guidance for Responsibly Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. European Union member states will be responsible for ensuring compliance by companies within their jurisdictions.
  5. Unlike the U.S. rule, the rule does not impose direct obligations on companies that manufacture products containing gold, tin, tantulum, and gold. Companies subject to the E.U. Directive on Non-Financial Reporting will be “encouraged” to report on their sourcing of conflict minerals. These reports will be expected to be based on a set of performance indicators to be developed by the European Commission. The Commission also intends to establish a transparency database through which companies can voluntarily report on their due diligence efforts.

Negotiations are underway in Europe with regard to the ultimate text of the regulation. The European Commission has stated that aims to submit the final text for adoption “in the coming months.”

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