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Article

Commentary: EU conflict minerals regulation falls short of existing standards and US Dodd-Frank Act

"The battle for stronger EU conflict minerals legislation", 4 February 2020.

...The EU's new conflict minerals regulation (EU 2017/821) is due to come into force on 1 January 2021...The EU...is only just starting to catch up in the area of conflict minerals. A number of mining industry initiatives have already been developed in response to OECD Guidance for Conflict Affected and High Risk Areas...Many companies that will be required to comply with the EU regulation will have already adopted one of these voluntary initiatives or, if they are publicly listed in the US, may be subject to Section 1502 of the US Dodd-Frank Act, relating to minerals from in and around the Democratic Republic of the Congo (DRC)...

As with much EU regulation, enforcement of Regulation (EU) 2017/821 will take place in Member States, i.e. by competent national authorities. However, there is currently no basis under the regulation for member states to impose penalties for infringement...In addition, the obligations within the regulation do not apply to all actors in the supply chain (unlike the Dodd-Frank Act), but sit solely with the importer of the offending minerals, and only if they exceed certain thresholds...

While the US rules are limited to minerals sourced from DRC and contiguous countries, the EU rules cover all countries exporting 3TG minerals into the EU – an admirably broader scope, but one which seems slightly meaningless given the lack of penalties for infringement...Another positive from an ethical perspective is that the EU has the opportunity to review the legislation and toughen it up before the 1 January 2023 deadline...While it currently compares unfavourably to Dodd-Frank, which places due diligence obligations and corresponding harsh penalties across entire supply chains handling conflict minerals, the EU regulation still has room to become tougher. Harder hitting provisions will most likely be affected in response to pressure from civil society...