The European Union (EU) regulation on conflict minerals took effect on January 1, 2021, following several years of consultations and preparations. Related but not identical to the United States Dodd-Frank legislation on conflict minerals, the EU regulation applies only to direct importers of minerals, and it is global, not only focused on the Democratic Republic of Congo (DRC) and its immediate neighbors. Germany’s Federal Ministry for Economic Cooperation and Development and the Responsible Minerals Initiative (RMI) and recently hosted a conference on this regulation.
There has already been important impact from the US Dodd-Frank legislation and the Organization for Economic Cooperation and Development’s guidance on conflict and high-risk minerals. In 2010, when the Dodd-Frank Act was signed, no smelters went through audits that looked at their sourcing practices on conflict minerals. Today, 73% of smelters worldwide have passed independent, third-party conflict minerals audits by RMI, the London Bullion Market Association (LBMA), and others. Additionally, 111 Congolese organizations wrote to the US government saying that Dodd-Frank had helped reduce violence, and they demanded that it not be suspended, which was a threat in 2017. In the words of 31 civic groups based in eastern Congo, suspending the law would “lead to the reactivation of armed groups and the feeding of terrorist and mafia networks.”
The EU deserves credit for enacting the recent conflict minerals regulation, as mandatory regulation is a necessary first step toward reforming the artisanal mining sector, particularly as relates to human rights issues. Regulations on supply chain transparency help level the playing field for companies across multiple industries by mandating that all companies report, rather than just relying on their goodwill.
However, the EU regulation does not go far enough in that end-user companies are not required to report, something that NGOs had pushed for. Instead, its focus is only on a much narrower group of direct importers, which are already being squeezed from different angles. The end-user focus should be reviewed in 2023 as part of the comprehensive review of the regulation.
Until then, if the EU wants the regulation to have a positive impact on the conflict and high-risk minerals trade, it needs to put serious energy into accompanying diplomatic and aid initiatives. Regulation alone will not solve this complex problem. To strengthen the legislation’s impact, the EU should:
1. Establish consequences for illicit actors.
2. Engage on policy to address obstacles to formalization.
There are concrete reasons why artisanal and small-scale miners (ASM) are often deemed to be illegal, why their working and safety conditions are so poor, and why they are so frequently exploited. Corrupt governments put in place deliberate policies or badly implement existing policies so that crooked officials or businesses can illicitly profit from the sector.
To address this, the EU and EU member states should engage key global mineral trading centers and work with mining ministries to reform policies toward formalizing artisanal mining, working together with the US Department of State and USAID. For instance, policymakers could focus on:
3. Draft accompanying measures to support artisanal mining communities.
The EU agreed to accompany the regulation with measures to support artisanal mining communities. Livelihoods, microfinance, miner health and safety, and alternative livelihood initiatives should be priority areas.
4. Take smuggling countries into account in assessments of conflict and high-risk areas (CAHRAs).
The EU regulation includes a public list of conflict and high-risk areas, which was put together by the RAND Corporation this year. As The Sentry recently highlighted in our advisory on conflict gold, the majority of conflict and high-risk gold is exported by neighboring countries, not producer countries. The next CAHRA list needs to take this into account, as the recent CAHRA list did not include key neighboring countries involved in significant smuggling of conflict gold.
5. Tie conflict minerals to broader human rights reporting
There is a current push to broaden companies’ supply chain due diligence under discussion in the EU. Building on the United Nations Guiding Principles on Business and Human Rights, this would require corporations to analyze the human rights impacts of their operations and have a victim-centered perspective. Companies should integrate their conflict minerals assessments and reporting with this broader human rights reporting.