Following our report on the EU Conflict Minerals Regulation adopted in 2017 and which finally came into effect on 1 January 2021, we wondered what the reactions of the industry were.
In fact, this event has not been so much in the spotlight and very little media coverage has been found so far. Because similar regulations already exist (Section 1502 of the Dodd-Frank Act in the US and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas) and major companies concerned are already complying to these or one of them, the timing of the introduction of this EU Regulation and its effectiveness have been questioned among some experts in the legislation even before it came in effect.
What are the implications on the sector concerned and how do they view this Regulation?
We asked these questions to the following two specialists, Mr. Roman Stiftner representing industrial associations and Ms. Candida Owens, CEO of CONDOR Minerals Bolivia Srl.
Mr. Stiftner, Managing Director of several associations, such as Austrian Mining and Steel Association, Austrian non-Ferrous Metals Federation, Austrian Copper Institute as well as EUMICON:
A: The obligations for Union importers of 3 T and Gold, as set out in the EU Conflict Minerals Regulation 2017/821, have become effective as of January 1st 2021. In Austria, the EU Regulation is accompanied by national law which is determining the Austrian competent authority responsible for the application of that regulation. In general, responsible sourcing is not a new concept, but a principle that Austrian upstream companies have been adhering to already in the past. Austrian upstream companies are following already today relevant international standards and due diligence schemes. What has changed due to EU Conflict Minerals Regulation is the fact that due diligence obligations have become mandatory. As mentioned before, many Austrian upstream companies are audited already according to voluntary industry due diligence schemes. The EU Conflict Minerals Regulation foresees in article 8 the possibility of recognizing such existing supply chain due diligence schemes, which is a very crucial provision. If the law would not recognize existing efforts, union importers would have to bear a double burden.
In fact, several existing international due diligence schemes have applied for recognition. But unfortunately, the adoption of the Commission´s implementing acts granting those schemes a recognition of equivalence with the requirements of the EU conflict Minerals Regulation, are being delayed. It is very important that missing recognitions are granted soon, because the companies need clarity. Also the publication of conflict areas -an indicative list - was published very late in December 2020, so that Union importers did not have much time to take due consideration of this information for their preparations. In general, we observe that implementing measures are delivered very slowly by the Commission, despite the very long transition period foreseen in this regulation.
It is too early to judge already today if the conflict minerals regulation will reach its intended goals and become a “success story”. There are several loopholes in the legislation. In particular, it is very unfortunate, that the downstream industry is not included in the scope of this legislation. Only minerals and metals listed in annex 1 of the EU Regulation, are within the scope of the EU Conflict Minerals Regulation. Articles containing 3T and Gold that are not listed in annex 1 of this regulation, are outside the scope and can be imported to the EU without the need for the Union importer to comply with any due diligence obligations. It remains to be seen how these loopholes will influence the effectiveness of the legislation in practice. In any case, in our view the responsibilities between upstream and downstream are distributed in an unbalanced way. For our member companies, it is important, that the conflict minerals legislation is enforced in a uniform way within all EU Member States. On the other hand, competent authorities of EU member states should also allow for pragmatic solutions, if possible. In any case, the focus should now be on the enforcement of existing legislation, and not in creating new legislation by extending the scope to other minerals and metals. The EU Conflict Minerals Regulation foresees a review in 2023, and by that time, it will become obvious, if and to what extent, changes are needed in order to make the existing rules more effective.
Ms.Candida Owens, CEO of CONDOR Minerals Bolivia Srl:
A: I have spoken to a few traders, but all of them do not seem to be that bothered about the new EU regulations. This is probably because in our field of Ta, Nb, Sn and W there are not many EU consumers. Taniobis (Formerly HC Starck) is the EUs biggest importer of Ta & Nb units, but they have been so strict and tough with their suppliers on traceability and due diligence, that they easily comply with the new EU regulations. Most EU consumers of Tin process scrap rather than ore and they are equally knowledgeable about the various regulations they must adhere to.
I think this is true of most of the major players in the 3T business. We have had 10 years of Dodd Frank regulations and OECD guidance, that we are all well versed in what is required of us from a regulatory point of view. I think that those businesses most affected will be the smaller casting and fabricating businesses, who are further down the supply chain, therefore might not have had to deal with all these regulations in the past.
(Y.SCHANZ)
