EU and Canada Consider Conflict Minerals Rules

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April 4, 2013Kirsten WallerstedtBlog

The European Union and Canada may soon join the United States in requiring certain companies to perform due diligence to investigate whether minerals that are used in their products originated in conflict-affected or high-risk areas.

The so-called “conflict minerals” in the original U.S. legislation are tin, tungsten, and tantalum (the “3 T’s”) as well as gold. The proceeds from sale of these minerals are known to fuel conflict in the Democratic Republic of Congo (DRC) and its neighboring countries. The United States has already implemented legislation passed in 2010 as part of the Dodd Frank Wall Street Reform and Consumer Protection Act, which requires companies to perform due diligence to investigate whether conflict minerals that are used in their production originated in one of the ten countries covered by the regulation.

Affected U.S. companies are currently working to evaluate their supply chains to determine the origin of the conflict minerals in their products; the first reporting period is for the 2013 calendar year, and the first reporting deadline is 31 May 2014.

The EU is considering modeling its own regulation off of this Act, and has also looked to the Organization for Economic Cooperation and Development (OECD) guidance that was published on the same topic in 2011. On 27 March 2013, the EU Directorate-General for Trade announced a public consultation on a possible EU initiative on responsible sourcing of minerals originating from conflict-affected and high-risk areas. Many of these minerals end up in products sold to European consumers, though few companies, States, nor consumers are aware of this extremely violent source. The EU push to make supply chains more transparent has been led in part by the  EU Trade Commissioner Karel De Gucht.

The EU has opened a public questionnaire to get interested parties’ views on a potential EU initiative for responsible sourcing of minerals. The initiative might require companies sourcing minerals to do checks, or due diligence, on their supply chains. The motivation is to help prevent natural resource-fuelled conflict.

The EU consultation’s questionnaire asks such questions as whether an EU initiative should target specific segments in the minerals’ supply chain, and whether such an initiative should include exemptions for small and medium-sized enterprises (SMEs). It also asks whether an EU conflict minerals initiative should follow the EU Timber Regulation (Regulation (EU) No 995/2010 ) by requiring that the entity first placing a selected mineral (processed or not) on the EU market must provide evidence of due diligence, thereby giving reasonable assurance that its supply chain is conflict-free.

The Commission indicated that it will use the results of the questionnaire to help it decide whether – and “how in a reasonable and effective manner” – to complement and/or continue on-going due diligence initiatives and support for good governance in mineral mining, especially in developing countries affected by conflict. The consultation is open until 26 June 2013.

Another leader on such global issues, Canada is also considering a so-called “private member’s bill” that would ensure Canadian companies are not using conflict minerals in their supply chain. Mr. Paul Dewar introduced Bill C-486 on 26 March 2013, addressing corporate practices related to the extraction, processing, purchase, trade and use of conflict minerals from the Great Lakes Region of Africa. Mr. Dewar introduced a similar bill in 2010, which would have created a due diligence mechanism for Canadian companies to ensure that they are not purchasing minerals that finance conflicts. Mr. Dewar has launched an awareness campaign on the issue, however, private member’s bills in Canada are allocated restricted time for consideration and few become law.








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