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Conflict Minerals
Conflict minerals
Conflict minerals are minerals sourced from con-flict-affected locations, the sale of which can contribute to the perpetuation of armed violence, instability, inse-curity and associated human rights violations. From a regulatory perspective, conflict minerals are most often referred to as the 3TGs: columbite-tantalite (the metal ore from which tantalum is extracted); cassiterite (the metal ore from which tin is extracted); wolframite (the metal ore from which tungsten is extracted); gold; or their derivatives. While there are a range of locations around the world in which minerals are extracted in conflict-affected conditions, state, national and regional conflict mineral regulations currently in existence focus on 3TGs sourced from the Democratic Republic of Congo (DRC) and the adjoining countries where these minerals are often smelted and traded.
REGULATORY EXPECTATIONS
Around the globe, concerns over responsible sourc-ing in the corporate sector have fuelled the creation of regulations and membership standards requiring companies to conduct conflict mineral due diligence. These include:
REGULATIONS:
- Section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act
- U.S. state mineral sourcing disclosure obliga-tions (California, Maryland and Massachusetts)
- EU Conflict Minerals Regulation
- EU Non-Financial Reporting Directive
- Emerging Chinese conflict mineral guidelines
STANDARDS:
- EICC members and their supply chain (electronics)
- Companies adhering to optional conflict mineral attributes of IPC-1754 standard (aerospace, de-fense and heavy equipment)
- Companies adhering to optional conflict mineral attributes of IPC-1752A standard (electronics)
- Any company adhering to the IPC-1755 standard (conflict minerals specific)
- Company and supplier codes of conduct
- Corporate social responsibility (CSR), environmental and social governance (ESG) programs
- Sustainable investment funds and other investing requirements
- Responsible Minerals Initiative (RMI) members and their supply chain
- Responsible Jewelry Council membership
- London Bullion Market Association membership
- Institutional purchasing and public procurement
THE EU CONFLICT MINERALS REGULATION & THE EU NON-FINANCIAL REPORTING DIRECTIVE
THE EU CONFLICT MINERALS REGULATION
On January 1, 2021 the EU conflict minerals regulation (EU 2017/821) will come into effect, with the intention of reducing the sourcing of minerals from conflict affected and high-risk areas (CAHRAs) where the profits from mining may fund armed conflicts. The regulation will apply to all parties importing minerals and metals into the EU and establishes requirements for businesses to maintain documentation demonstrating compliance with the regulation and the results of mandatory third-party audits.Similar to the U.S. Dodd-Frank Act, the EU rule focuses on 3TGs, however, the regulation differs by expanding the scope beyond the DRC and into conflicted-affected regions as a whole. The EU defines CAHRAs as areas “that are currently or could be affected by conflict and other related illegal activities.”3 The official list of CAHRAs is being compiled by a group of external experts and will be updated regularly. The list is considered non-exhaustive, and companies in scope of the regulation must also comply with the requirements when operating on conflict-affected areas that aren’t listed.4
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