Key Points Regarding the New European Union Conflict Minerals Agreement

Gold NuggetOn November 22, the Presidency of the European Council and the European Parliament announced agreement on the text of a new conflict minerals regulation. The agreement is based on the “political understanding” that was previously announced in June.

On December 7, the text will be presented for approval to ambassadors of E.U. member states. Final adoption by the Council is expected to occur in early 2017 and a final vote by the Parliament is expected in the first six months of 2017.

The European Union has been engaged in a multi-year process of negotiation and deliberation regarding the sourcing of conflict minerals. Key points with regard to the new agreement include:

  • As with the conflict minerals rule in the United States, the European regulation will be applicable to gold, tin, tantulum, and gold.
  • 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. The European regulation is focused on a broader set of conflict areas than just the Democratic Republic of Congo and adjoining countries.
  • 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. Companies will be able to achieve designation as “responsible importers” if they submit declarations in writing to competent authorities in the relevant member state that they observe the regulations’s due diligence obligations. European Union member states will be responsible for ensuring compliance by companies within their jurisdictions.
  • The rule does not impose direct obligations on companies that manufacture products containing gold, tin, tantulum, and gold. All companies subject to the E.U. Directive on Non-Financial Reporting will be “encouraged” to report on their sourcing of conflict minerals.
  • Small volume importers will be exempted from the due diligence requirements. The threshold for “small volume importers” had not yet been made publicly available, but the regulation is intended to cover more than 95% of all conflict mineral imports.

The new regulation is scheduled to go into effect on January 1, 2021. We will provide additional information regarding the final text once it is available.

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