Under the terms of the interinstitutional agreement concluded on Tuesday 22 November (see EUROPE 11673), the EU regulation aimed at keeping the lid on financing military and armed groups in conflict areas – particularly the Democratic Republic of Congo (DRC) and the Great Lakes region – through the extraction and trade of tin, gold, tantalum and tungsten should ensure a sustainable supply for over 95% of imports of these minerals into the EU, which will be covered, from 1 January 2021 by due diligence arrangements established by OECD guidelines.
Under the draft regulation concluded by the three institutions, which is still due to be approved by the member states at the level of their ambassadors (Coreper) on 7 December, all European importers (except the smallest) of these minerals will have to operate due diligence checks on their suppliers. Big manufacturers will have to divulge exactly how they intend to control their sources so as to apply the new rules.
The Commission and Council had initially proposed simple voluntary checks. In the end, the member state authorities will be responsible for monitoring the respect by companies of these requirements and also for determining sanctions for cases on non-respect. This is a process which the Commission will monitor.
Aiming at an almost complete coverage of minerals and imported metals, the Slovak Presidency and European Parliament agreed that the smallest importers (dentists and jewellers, for example) would not be obliged to fall into line with the system, so as to avoid unreasonable administrative costs. Recycled metals, existing European stocks and by-products are also excluded from the regulation.
In addition, thanks to the Parliament, the Commission will have to make a statement ensuring the close monitoring of the market for gold and imports of gold into the EU so as to reduce negative secondary effects.
In the negotiations that finished successfully with an interinstitutional agreement in principle last July (see EUROPE 11574), the Parliament also obtained that big EU companies (with over 500 employees), which buy and use tin, tungsten and tantalum or gold to manufacture their products, should be encouraged to communicate their supply practices on the basis of a new series of performance indicators. These companies will also have to belong to a European register and to present their due diligence practices voluntarily.
The regulation stipulates that the existing control systems in this sector will be used to avoid double charges, but the Parliament ensured that these systems be checked regularly in order to ensure the respect of high international standards based on OECD guidelines.
In addition, the agreement requires the Commission to assess and report to the Council and Parliament on the effectiveness of the new legislation two years after the date of application, and every three years after that. This assessment covers both its impact on the ground, and in respect of the regulation by EU companies, as well as possible further obligatory measures in cases where the application of due diligence by companies is not satisfactory.
"The rest of the way to achieving clean global supply chains is still long. We will remain extremely vigilant throughout the regulation implementation process, so that it contributes effectively to the objective of breaking the link between armed conflicts and trade in minerals, and to avoiding potential circumvention of the new rules", warned Belgian MEP Maria Arena, the rapporteur on this issue for the Parliament's S&D Group.
The negotiations on 22 November enabled the technical details of the text to be refined so as to ensure the text's optimum effectiveness, especially on the issue of import thresholds, and on the white list of operators – refineries and smelters – acting upstream in the production chain, Arena told EUROPE. Aware of potential shortcomings in the regulation, the MEPs secured a minimum coverage of 95% of the import volume, while underlining their desire to reach 100%.
"Our insistence has paid off because the Commission has committed to review the thresholds so as to cover, in the long term, 100% of the import volume of tin, tantalum, tungsten and gold, and to pay particular attention to gold. The announced implementation of binding measures for companies importing processed or finished products downstream is also an important signal in support of a strong regulation", Arena concluded. (Original version in French by Emmanuel Hagry)