by Source Intelligence
on July 10, 2019
After years of negotiations between the EU Commission, EU Parliament, & the EU Council, and pressure from NGO’s and special interest groups, the European Union agreed on legislation to regulate the usage of 3TG in their member states. The law will apply to importers of 3TG into the EU and will be implemented in January, 2021.
The EU regulation covers the sourcing of conflict minerals from anywhere in the world. This is somewhat of a blockbuster change from the US rule, and will require all members of the supply chain to collaborate in their communication and conflict minerals data exchange efforts.
The EU legislation also focuses on importers of materials and substances used to make finished products such as cell phones, computers, light bulbs, automotive components, medical devices, and retail accessories.
The origin of the term conflict minerals derives from the extraction of tantalum, tin, tungsten and gold in the Great Lakes Region of Central Africa, most notably the eastern part of the Democratic Republic of Congo. These four minerals have played a distinct role in this region, and countless human rights violations have been attributed to their extraction.
Conflict minerals are by no means the only minerals which have perpetuated conflict in the past three decades. In particular, diamonds were central to the conflicts in Sierra Leone, Liberia, Cote d’Ivoire and Angola in the 1990s and the early 2000s. More recently, the so-called Islamic State has attempted to bankroll its war machine with proceeds from crude oil.
Nevertheless, for understanding the legislation, the term conflict minerals refers to tantalum, tin, tungsten, and gold. In its first iteration, the EU conflict minerals legislation will only apply to these minerals, commonly referred to as 3TG.
However, the European Parliament seeks to add additional minerals to the list. Of these, Cobalt is quickly becoming the “next conflict mineral” and is even showing up in future drafts of product regulations like the European Union’s RoHS - an electronics and electrical components restricted substance regulation.
To get a better sense of the EU regulation, let’s establish the points of difference between the regulation in the EU, to the US Dodd-Frank conflict minerals regulation we are all familiar with. The EU conflict minerals legislation is unique in the following ways:
Companies who are involved in products that make their way to the European Union will either have to outline their due diligence efforts to their customers, or directly to the European Union’s respective member states. Here is an example of a general process flow that takes into account best practices for conflict minerals reporting.
Products companies choose to include in the request will impact the suppliers in scope. Many times companies don’t have complete or accurate lists of their suppliers. Make sure you provision and clean your supplier lists. This will lead to stronger supplier response rates and more accurate reporting.
Reasonable Country of Origin Inquiry (RCOI) is conducted to determine whether a supplier is in-scope for 3TG content originated directly in the DRC, one of the covered countries, or is recycled from scrap sources.
Due diligence is the process of identifying the potential risk associated with the data collected. This is no easy task. The quality of the Due Diligence process is determined by Supplier Engagement.
The focus during data analysis is to identify any red flags you find or areas of data that just don't make sense. Use data management techniques like supplier tagging to sort your data by elements like geographic risk, or product type risk. These actions will allow you ensure your conflict minerals data is substantiated with validated information.
Once the assessment process is complete, you can now focus on creating the reports. Make sure your report contains consistent documents that detail the efforts made by all parties, and offer comprehensive compliance information. Learn more about EU conflict minerals reporting.
There's quite a bit of information in these 5 steps. If you're overwhelmed, click the button below to speak with a conflict minerals compliance expert.