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June 16 — The European Parliament claimed a partial success June 16 in ensuring that profits from minerals and metals do not reach armed groups by including mandatory obligations for some companies in a regulation that will be the European Union's version of Section 1502 of the U.S. Dodd-Frank Act.
Parliament negotiators reached a provisional agreement with counterparts from the Council of the European Union, which represents the governments of EU countries, that importers that bring gold, tantalum, tin or tungsten into the bloc from conflict regions should be required to carry out due diligence checks on their suppliers to ensure that profits are not being funneled back to warlords.
The provisional agreement marks a strengthening of a plan, published in March 2014 by the European Commission, the EU's executive, under which companies were encouraged to participate in a voluntary self-certification program.
The provisional agreement would require mandatory reporting from some companies—like those that import into the EU the minerals and metals as raw materials—and request voluntary disclosure from other companies, like those whose finished products contain some of the so-called conflict minerals.
Bernd Lange, a German center-left lawmaker who chairs the European Parliament's trade committee, said agreement on the regulation, or uniform EU-wide law, was a “big, big step” that will “change the situation of people on the ground in conflict regions.”
The regulation would cover all conflict regions worldwide, unlike Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires declarations of conflict minerals only from the Democratic Republic of Congo and adjacent countries and has led to “discrimination” against those countries, Lange said.
In practice, the mandatory due diligence requirements in the EU regulation would cover a few hundred companies involved in the smelting or import of the minerals. Smaller companies trading in minerals for specialist applications, such as dentistry, would be exempt.
The much larger number of companies, such as electronics manufacturers, that use the minerals in their products would not have a due diligence obligation, but would be asked to voluntarily disclose details of their sourcing of the minerals.
Amnesty International criticized this element of the agreement. Iverna McGowan, Amnesty International EU office head and advocacy director, said the deal “leaves companies that import minerals in their products entirely off the hook,” and “will only hold companies importing the raw materials to basic checks.”
But Iuliu Winkler, a Romanian center-right lawmaker who led negotiations for the European Parliament on the draft regulation, said a review clause was included that would allow an assessment of “the degree of uptake by European Union companies” of voluntary disclosure.
The review would allow EU lawmakers to “improve if necessary the regulation,” Winkler said.
The draft regulation would require—at a date to be specified—the drawing up of a list of areas considered to be conflict areas, to which the due diligence obligations would apply.
Recycled metals and minerals would be excluded from the scope of the requirements.
The provisional agreement on the regulation is subject to ratification by the European Parliament. No date was given for the draft regulation to be put to a vote.
The Parliament previously backed a stricter version of the law, voting in May 2015 for the mandatory due diligence requirements to be extended to all companies using minerals from conflict areas in their products.
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The European Parliament procedure file on the conflict minerals regulation is available at http://src.bna.com/fYB .
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