What to Expect in 2021 Conflict Minerals EU Regulation

The year 2021 is sure to bring a lot of updates in EU regulations to ensure optimum organization and security for the materials used in products. Conflict Minerals is one of the most intricate and attentive domains of regulations in the EU. This regulation brings forth a very important element in ensuring the safety of products using “materials” that can be potentially harmful in many ways. So, what are conflict minerals? Let’s find out.

Conflict Minerals EU Regulation – Ushering of New Regulation Era in EU

Minerals trade has always been a conspicuous domain, which can be used to finance dangerous armed groups, fueling human rights abuse, or inflaming forced labor. This can directly lead to supporting illegal activities such as money laundering or even supporting corruption.

In mineral trade, the EU has identified primary ‘conflict minerals’, which are tin, tungsten, tantalum, and gold, which are also referred to as 3TG. These minerals can be used in the production of everyday products, which include cars, smartphones, jewelry, etc. However, it might be difficult for consumers to identify if the products they are buying are aiding any of the aforementioned criminal activities in their country, or even overseas.

The Conflict Minerals EU regulation aims to be a barrier to this aiding, by ensuring that these minerals are not able to generate any income for armed groups, militias, corrupt officials, or any other entity. This is a step towards ensuring that it becomes extremely difficult for these criminals to continue their activities and ensuring the state of human rights abuse is tackled affluently. The Conflict Minerals EU regulation has come into effect since 1st January 2021. Let’s take a look into what it entails and who it affects.

Who Gets Affected by Conflict Minerals EU Regulation?

According to the EU, any manufacturer, company, exporter, or any other entity that imports the 3TG and metals into the EU will have to comply with the Conflict Minerals EU regulation. A competent group of external experts will be selected by the European Commission and tasked with providing a list of any and all conflict-affected areas, unstable countries, and high-risk areas that can be funded via conflict minerals. This list would be updated by this team of experts on a regular basis to ensure strict regulation. This list would be:

● Indicative: Would highlight areas or countries that are currently affected or can potentially be affected by illegal activities and conflict.

● Non-Exhaustive: The list won’t be including every area across the globe affected by any form of conflict. This would mean that companies would have to comply with this regulation if they are operating out of areas that aren’t listed as well.

How Many Companies Does This Regulation Apply To?

The Conflict Minerals EU Regulation directly applies to around 600 to 1000 EU importers. This regulation will also affect smelters and/or refiners of 3TG, whose number would amount to around 500 in total. This would be applicable to smelters and refiners across the globe.

Conflict Minerals would also be directly applicable to all of the importers based in the EU dealing with 3TG, regardless of the form they are traded in; whether processed metals, mineral ores, or concentrates.

It would also be necessary for all of the EU importers to identify the refiners and smelters and if they have proper due diligence maintained in their practices. This would indirectly promote very healthy and responsible sourcing of the 3TG from the smelters’ and refiners’ ends. EU importers will have to manage and/or report if any of their associated smelters or refiners have insufficient due diligence with the Conflict Minerals regulation. The European Commission has also laid a helping hand to companies, by committing to creating a “white list”, which would include a huge collection of smelters and refiners across the globe, who are sourcing 3TG responsibly.

What Industry Will be Affected The Most?

The mining trade industry is going to be affected the most by the Conflict Minerals EU regulation. According to a recent report by the UN, the flow of 3TG has seen a significant improvement in terms of legal and responsible sourcing. Moreover, this report also conveys that mining governance has seen a significant refinement with reporting ensuring that the main aim of this regulation starts showing positive effects. This will directly result in a significant increase of exports of 3TG from the non-conflict areas.

However, conflict-affected areas are expected to face some problems in exporting conflict minerals, which would result in the deterioration of the governance in the mining sector, which could potentially increase smuggling and fraud outside the EU regions for conflict minerals. The Democratic Republic of Congo, which is a conflict area, is already reporting this, as the rising unemployment coupled with rising poverty in the country has left thousands of people in cahoots, whose livelihood depended on artisanal mining.

Wrapping Up

While the rollout of Conflict Minerals EU regulation is sure to bring about a lot of changes for companies dealing with any of the 3TGs in their products; it is always a safe bet to rely on a competent compliance consulting firm like APA Engineering to ensure that your company is aptly following all the terms of the regulations. Streamlining submission process and regular checking of conflict minerals to ensure that your company stays up to the mark for conflict minerals compliance in 2021. Contact us today to get in touch with our SMEs and get to know more about how to navigate through this new regulation rollout.