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Efforts to Reduce the Use of Conflict Minerals Expand to the EU

July 2, 2015

As many U.S. companies struggle to meet the conflict minerals reporting requirements imposed by U.S. Securities and Exchange Commission (SEC) under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the European Parliament voted to require EU importers of tin, tantalum, tungsten, and gold and downstream users to be certified that they also do not fuel conflicts and human rights abuses in conflict areas.

The Dodd-Frank Act and the SEC's implementing regulations require companies to investigate and publicly disclose whether their products contain conflict minerals—or any other mineral or derivative whose purchase and use finances armed conflict in the Democratic Republic of the Congo (DRC) or any adjoining country. A 2014 conflict minerals survey by PricewaterhouseCoopers LLP found that many respondents were still in the early stages of establishing compliance with the SEC requirement, and only 45% had sent a reasonable country of origin inquiry (RCOI) to more than three-quarters of their suppliers. Furthermore, 62% of respondents stated that they needed 1-2 full-time resources for the compliance efforts, and 21% needed 3-5.

European efforts to break the link between minerals extraction and trading, and the financing of armed conflicts initially involved a proposed voluntary, self-certification system for EU importers of conflict minerals. (See the PackagingLaw.com article, EU Draft Regulation Would Establish Voluntary Program for Importers of Conflict Minerals, for more details.) However, the European Parliament voted on May 20, 2015, to reject the voluntary program proposed by the European Commission (EC), and instead require certification by the EU.

The European Parliament also expanded the number of companies that would be impacted. The original EC proposal applied only to the estimated 400 smelters and refiners that import the conflict minerals to the EU. The amendments proposed by Parliament now also include "downstream" companies, which could potentially affect 880,000 EU firms that use tin, tantalum, tungsten, or gold in manufacturing consumer products. The next step is for the 28 EU Member States and Parliament, with input from the EC, to reach a consensus on the final version of the legislation.

The amendments adopted by the European Parliament on the proposal for a regulation establishing a Union system for supply chain due diligence certification of importers and downstream users of conflict minerals can be found on the EU website, and a press release on the European Parliament's vote can be found here.