EU Firms Face Minerals-Sourcing Obligation in Draft Law

Men work in an open pit gold mine in Chudja, Congo.

Photographer: Lionel Healin/AFP via Getty Images

Smelters and refiners in Europe that import minerals would be required to limit the risk of such trade funding armed groups in conflict zones under draft legislation approved by the European Parliament.

The European Union assembly voted on Wednesday to force smelters and refiners that process and import minerals and concentrates to apply a due-diligence system regarding sourcing from strife-torn areas such as the Democratic Republic of Congo.

The step by the 28-nation Parliament in Strasbourg, France, tightens a March 2014 proposal by EU regulators for a purely voluntary certification system to encourage the responsible importing of tin, tantalum, tungsten and gold. The law would take the form of a regulation, directly applicable across the bloc.

“European smelters and refiners are key actors in the supply chain,” said Iuliu Winkler, a Romanian member who steered the draft law through the EU Parliament. “Compliance with this regulation should be mandatory for them.”

The draft law also needs the support of EU governments, which have yet to give their verdict. They may seek a common position among themselves in the second half of the year. Any differences between the governments on the one hand and the EU Parliament on the other would have to be ironed out in negotiations.

Europe is stepping up efforts to curb trade in so-called conflict minerals, saying its market weight requires actions that build on due-diligence guidance from the Organization for Economic Cooperation and Development.

Gold Ores

The EU is among the world’s largest importers of tin, tantalum, tungsten and gold ores and concentrates with a share of almost 35 percent of global trade, according to the commission, the EU’s regulatory arm in Brussels.

“We need to promote transparent, responsible mineral supply chains so that we can keep the money out of the hands of the rebel groups,” European Trade Commissioner Cecilia Malmstroem told the EU Parliament on Tuesday.

Malmstroem expressed support for the commission’s original plan for a voluntary EU system, which she called “reasonable and effective.”

Saying “difficulties” have resulted from a U.S. requirement that publicly listed companies report on the origin of minerals and on due-diligence measures, she warned of the risks of driving trade away from central Africa and of harming local communities that mine minerals legitimately through a mandatory EU system.

Conflict Regions

“If we impose a mandatory scheme without making sure that the conditions on the ground in the conflict regions are right in order to support the implementation of such a system, we run a high risk of further disrupting global supply chains and driving them away from Africa altogether,” Malmstroem said.

In its verdict Wednesday, the EU Parliament also voted to make “downstream companies” provide information on due-diligence practices -- a step that would expand the scope of a European mandatory system even more.

“Downstream companies shall take all reasonable steps to identify and address any risks arising in their supply chains for minerals and metals coming within the scope of this regulation,” the EU assembly said in an amendment that was drawn up by Louis Michel, a former Belgian foreign minister and an ex-European commissioner for development, and that was approved over the opposition of Winkler.

That prompted hasty deliberations among Parliament members and a decision to authorize Winkler to seek talks with EU governments in a bid to reach a fast-track final agreement. Such a tactic can bolster the assembly’s leverage in negotiations with the governments. In the absence of a speedy deal, the European legislative process can last another year or more.