Responsible trade in minerals from high-risk or conflict areas

SUMMARY OF:

Regulation (EU) 2017/821 on the obligations of importers of tin, tantalum and tungsten, their ores, and gold from conflict-affected and high-risk areas

WHAT IS THE AIM OF THE REGULATION?

The European Union (EU) regulation aims to:

ensure that EU importers of tin, tungsten, tantalum and gold (3TG) meet international responsible sourcing standards set by the Organisation for Economic Co-operation and Development (OECD);
ensure that global and EU smelters and refiners* source 3TG responsibly;
help break the link between conflict and the illegal exploitation of minerals;
help put an end to the exploitation and abuse of local communities, including mine workers, and support local development.

KEY POINTS

In politically unstable areas, trade in minerals such as 3TG can be used to finance armed groups, lead to forced labour and other human rights abuses, and support corruption and money laundering.
These conflict minerals are then used in everyday products, such as mobile phones, cars or jewellery.

Due diligence

The term due diligence means to act with reasonable care and investigate an issue before making a decision. It is an ongoing, proactive and reactive process by which companies put in place systems and processes to identify, manage and report on risks in their supply chains.
For the minerals covered by the regulation, it means that companies must check that what they buy is sourced responsibly and does not contribute to conflict or other related illegal activities.
Companies that practise due diligence initially check how risky it is to source raw materials from a fragile or conflict-affected area. They assess the likelihood that these raw materials could be financing conflict, forced labour or other risks set out in the regulation. By checking their supply chains, they can make sure that they manage these risks responsibly.
The regulation builds on the 2011 OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, which sets the international benchmark for supply chain due diligence, and the 2014 joint communication ‘Responsible sourcing of minerals originating in conflict-affected and high-risk areas: Towards an integrated EU approach’.

Under the regulation, EU mineral importers must:

identify and assess the risks in their mineral supply chain;
implement a strategy to respond to these risks;
carry out an independent third-party audit of supply chain due diligence;
report annually on their policies and practices for responsible sourcing.

The competent authorities of the EU Member States must carry out checks to ensure that EU mineral and metal importers comply with their due diligence obligations.

Supply chain due diligence schemes

Governments, industry associations and groups of interested organisations with due diligence schemes in place may apply to have their schemes recognised by the European Commission as complying with the regulation. A delegated act, Delegated Regulation (EU) 2019/429 sets out the methodology and criteria allowing the Commission to assess whether supply chain due diligence schemes concerning 3TG meet the requirements of Regulation (EU) 2017/821, and to recognise such schemes.
The Commission will establish a register of recognised supply chain due diligence schemes, publicly available on the internet, and a list of global responsible smelters and refiners.

Guidelines

In consultation with the European External Action Service and the OECD, the Commission has prepared non-binding guidelines for economic operators that explain how best to apply the criteria for the identification of conflict-affected and high-risk areas. Recommendation (EU) 2018/1149 provides in its Annex non-binding guidelines for the identification of conflict-affected and high-risk areas and other supply chain risks under Regulation (EU) 2017/821 of the European Parliament and of the Council.

Review

By 1 January 2023 and every 3 years thereafter, the Commission will review the operation, effectiveness and impact of the new system, and will propose new measures in order to ensure a continuing responsible global supply chain for minerals.

Amendment to Regulation (EU) 2017/821

Delegated Regulation (EU) 2020/1588 amends Annex I to Regulation (EU) 2017/821 by setting volume thresholds for tantalum or niobium ores and concentrates, gold ores and concentrates, tin oxides and hydroxides, and tantalates and carbides of tantalum.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 1 January 2021.

BACKGROUND

For more information, see:

Conflict minerals — the regulation explained (European Commission)
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD).

KEY TERMS

Smelters and refiners. Individuals or businesses performing forms of extractive metallurgy involving processing steps with the aim of producing a metal from a mineral.

MAIN DOCUMENT

Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas (OJ L 130, 19.5.2017, pp. 1–20).

Successive amendments to Regulation (EU) 2017/821 have been incorporated into the original document. This consolidated version is of documentary value only.