European Union External Action

Responsible sourcing of minerals

15/06/2016 - 17:48
Policy - Activity

An integrated EU approach to stop profits from trading minerals being used to fund armed conflicts.

On 5 March 2014 former High Representative of the EU for Foreign Affairs and Security Policy Catherine Ashton and EU Trade Commissoner Karel De Gucht  proposed an integrated EU approach to stop profits from trading minerals being used to fund armed conflicts. The package of measures will make it more difficult for armed groups in conflict-affected and high-risk areas to finance their activities through the mining of and trade in minerals.  The focus of the approach is to make it easier for companies to source tin, tantalum, tungsten and gold responsibly and to encourage legitimate trading channels.

"We are committed to preventing international trade in minerals from intensifying or perpetuating conflict," said the former HR/VP and EU Trade Commissioner. "Today's initiative on 'conflict minerals' will ensure that trade works for peace, for communities and for prosperity in areas around the globe affected by armed conflict. The EU's integrated approach will be an effective tool because it's based on the consensus reached by business, civil society and governments in OECD countries to help communities benefit from their natural resources."

The integrated EU approach has a draft Regulation and a number of accompanying measures set out in a joint Communication.

The draft Regulation proposes setting up an EU system of self-certification for importers of tin, tantalum, tungsten and gold who choose to import responsibly into the Union.  To make the supply chain more transparent and to make it easier to source the metals and their ores responsibly, the EU aims to publish an annual list of EU and global "responsible smelters and refiners".  With more than 400 importers of such ores and metals into its territory, the EU is among the largest markets for tin, tantalum, tungsten and gold.

The Communication presents the overall comprehensive foreign policy approach on conflict and fragile areas and on how to tackle the nexus conflict-minerals extraction. Its sets out the EU's further engagement in support of the OECD due diligence guidance and the EU's foreign policy outreach and project support in this regard. With the communication, the Commission and the HR/VP confirm that "conflict minerals" are part of the EU's foreign policy agenda and that the EU will take concrete action at country and international level – ranging from project support to policy dialogues and diplomatic outreach to smelter countries. The communications supports the commitment by the Commission and the High Representative to promote a strong and coherent EU raw materials diplomacy, addressing the security-development nexus in a joined-up and strategic manner.

On 23 June 2014 the Council of the European Union adopted conclusions on the Union's approach on the responsible sourcing of minerals.

In its conclusions the Council stressed that breaking the links between conflict and minerals extraction requires a broad range of policies and actions, including appropriate incentives for EU companies, capacity building and outreach activities, to be deployed in a strategically coherent way in order to effectively tackle the root causes of conflict and fragility. The Council acknowledged that the Commission and the High Representative will continue to promote a strong, comprehensive and coherent EU raw materials diplomacy, addressing the security-development nexus in a joined-up and strategic manner. The ongoing mapping exercise by the EEAS on raw materials projects in third countries should increase the EU's capability to address the foreign and security policy aspects of raw materials in a comprehensive way. Such exercise should include the identification of areas of added value of EU action in relation to Member States' action on foreign and security policy aspects of raw materials, thus ensuring synergies and a coherent and effective use of EU instruments.

When governments, the international diamond industry and NGOs came together to stem the flow of ‘blood diamonds’ – rough diamonds used by rebel movements to finance wars – the result was a unique agreement known as the Kimberley Process.

The agreement was born out of a desire in Kimberley (South Africa) to find a practical way of preventing illicit diamonds from entering the legitimate diamond trade. Launched in 2003, the Kimberley Process Certification Scheme (KPCS) requires traders to present certificates of origin. It also imposes trade controls, a ban on trade with countries not signatories to the Process, and the publication of statistics on diamond production and trade.

The KPCS now counts 75 countries as members, including all major diamond-producing, trading and processing countries.

The European Union is a major centre for diamond trading – cities such as Amsterdam, Antwerp and London attract buyers and sellers from across the globe. Within the Union, a Regulation sets out the criteria to which anyone wishing to import or export rough diamonds must adhere. It also creates a uniform European Community Kimberley Process certificate that must be used for all shipments to and from the EU, and puts in place provisions for self-regulation by the EU’s diamond industry.

Armed groups and security forces in conflict regions can finance their activities from the proceeds of mining and trading of minerals which later enter the global supply chain.  As a result, companies further down the production chain run the risk of supporting armed activities and have an interest in sourcing from such regions responsibly.

The concept of 'responsible sourcing' is referred to in the updated OECD Guidelines for Multinational Enterprises and is in line with the objectives and principles of the United Nations Guiding Principles on Business and Human Rights.  Both aim at encouraging businesses to proactively and reactively verify i.e. exercise due diligence, that their commercial activities are not contributing to conflict.

In 2010, the US passed the Dodd Frank Wall Street Reform and Consumer Protection Act.  Section 1502 requires companies listed on US stock exchanges using "conflict minerals" in their production processes to declare the origin of such minerals and perform due diligence as appropriate.

In June 2013, G8 leaders also expressed their commitment to make extractive industries more transparent and to support responsible sourcing of conflict-free minerals from conflict regions.

On 7 October 2010, the European Parliament passed a resolution calling for the EU to legislate along the lines of the US "conflict minerals" law; and the Commission announced in its Communications of 2011 and 2012 its intention to explore ways of improving transparency, including due diligence, throughout supply chains .

The EU is actively engaged in an OECD initiative on conflict minerals – the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas - and made a commitment to promote its observance at the May 2011 OECD Ministerial Council.

As from 1 January 2014 the EU is providing financial support for the implementation of the OECD Due Diligence Guidance and for the ICGLR's Regional Initiative on Natural Resources.