JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Responsible sourcing of minerals originating in conflict-affected and high-risk areas Towards an integrated EU approach
Date: 2014-03-05
Institutions: European Commission, High Representative of the Union
Subjects: OECD, conflict prevention, international trade, mineral resources, mining extraction, surveillance concerning imports













EUR-Lex - 52014JC0008 - EN











|



52014JC0008

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Responsible sourcing of minerals originating in conflict-affected and high-risk areas Towards an integrated EU approach /* JOIN/2014/08 final */










Introduction

International trade in minerals sourced from unstable regions of the
world can play a role in intensifying and perpetuating violent conflict. Although
rarely the root cause, such trade provides significant financial means to armed
movements to sustain their fighting ability, with serious consequences for
millions of people caught in the violence. 
This problem is most acute in Africa, particularly in the Great
Lakes Region (GLR). The Heidelberg Institute[1]
reports that the combination of natural resources and conflict is present in
about 20% of the almost 400 conflicts it has registered: resource-related
conflicts are currently prevalent in Africa (27 cases) and the Americas (21
cases), but less prevalent in Asia and Oceania (11 cases), the Middle East and
Maghreb (7 cases) and Europe (4 cases). The overall global situation is not
static and the risk of deeper or new conflicts, in which natural resources play
a role, remains.
Breaking the
link between minerals extraction and conflict is a complex challenge. The root
and proximate causes of the problems must first be identified as should the triggers
of conflicts and structural fragility, their dynamics, and the roles of the various
actors involved. Solutions must take account of instability drivers such as weak
governance, absence of security, inability to ensure the rule of law, poverty,
lack of services and infrastructure, endemic corruption and on-going political
and land disputes, and involve a broad range of actions – domestic,
international, political, trade and educational, a large number of which are
already underway.
Any new trade-related EU action in this area needs to be placed in
this broader context and complement the EU's foreign policy and development
cooperation initiatives. It must also take account of the situation of EU
companies and EU's policies in their regard. 
This joint Communication
by the European Commission and the High Representative presents a series of
initiatives reflecting these considerations. It is based on the view that responsible
behaviour by companies operating in conflict-affected or high-risk areas can
play a powerful and positive socio-economic role in affected areas. It builds
on the 2011 and 2012 Communications[2]
in which the Commission outlined its intention to explore ways of improving
transparency, including due diligence, throughout supply chains, for situations
where revenues from extractive industries are used to fund wars or internal
conflicts in resource-rich developing countries.
 
This Communication accompanies
a Commission proposal for a Regulation of the European Parliament and the
Council setting up a Union system for supply chain due diligence self-certification
of responsible importers of tin, tantalum and tungsten, their ores, and gold[3] originating in
conflict-affected and high-risk areas[4].
It outlines accompanying measures that will enhance the impact of the
Regulation and an integrated EU approach, drawing on a public consultation,
stakeholder meetings and an impact assessment carried out in 2013[5]. 
The integrated approach
set out in this Communication addresses three main issues: reducing the opportunities
for armed groups to trade in tin, tantalum, tungsten and gold in conflict-affected
areas; improving the ability of EU operators − especially in the downstream
section of the supply chain − to comply with existing due diligence
frameworks; and reducing distortions in global markets for the aforesaid four
minerals sourced from conflict-affected and high-risk areas as is currently the
case in the Great Lakes Region. 

1.         Context

1.1       Natural resources as a driver for
development 
Mineral
extractive industries have the potential to significantly contribute to
economic development around the world. The UN Industrial Development
Organisation reports[6]
that mining output accounts for 24% of Africa's GDP and for 9.9% and 20.4% in
Latin America and Asia respectively. Africa[7]
alone hosts 30% of the world's mineral reserves and an even higher proportion
of deposits of gold, platinum, diamonds and manganese. Asian and Pacific
countries are among the principal producers of tungsten, nickel, copper, tin
and iron ores, and host a sizeable share of the world's metal smelters. Mineral
exports also account for large economic gains in Latin America[8], particularly Bolivia, Columbia and Peru and, more recently, Guatemala.
However, many of
the countries endowed with vast natural resources score low on the UN Human
Development Index. One explanation is that resource extraction presents a range
of risks and challenges for development including through increased exposure to
corruption, a tendency for resource exports to crowd out higher value-added
economic activity, and increased environmental damage. Resource extraction is
frequently linked to conflict and instability, the subject of this
Communication. 
The need to reduce some of these risks by improving the
governance of natural resources has now gained a global profile. Three
noteworthy examples, which the EU supports, relate to diamonds, financial
transparency in the extractives sector and endangered plant and animal species,
including timber:

 In 2000, the UN General Assembly unanimously
     passed a resolution condemning the role of diamonds in financing conflict
     and supporting the establishment of a global certification regime leading
     to the Kimberley Process Certification Scheme (KPCS). The EU implements the scheme through Regulation (EC) No
     2368/2002.
 At the World Summit on Sustainable Development
     in 2002, the Extractive Industries Transparency Initiative (EITI) was
     launched to reduce corruption by encouraging the public reporting of
     company payments to governments on the exploitation of natural resources.
     EU Directive 2013/34/EU contains provisions to promote financial
     transparency in the extractive and logging sector. 
 In line with the 1973 UN Convention on
     International Trade in Endangered Species of Wild Fauna and Flora (CITES),
     the EU adopted Regulation (EU) No 995/2010 requiring all operators placing
     timber products on the EU market to exercise due diligence to stop illegal
     wood supply.

Experience in
these areas can be used for the development of an integrated EU approach to
promote the responsible sourcing of minerals from conflict areas. Through due
diligence, companies can ensure that they respect human rights and do not
contribute to conflict[9]
and contribute to better governance in the extractives sector. However, due
diligence must be encouraged in a way that does not deter legitimate mining
activity and related trade in conflict-affected and high-risk areas. 
1.2       Existing international responsible
sourcing initiatives 
The concept of responsible
sourcing is referred to in the
updated OECD Guidelines for Multinational Enterprises[10] and in line with the
objectives and principles of the United Nations Guiding Principles on Business
and Human Rights[11].
Both aim at encouraging businesses to proactively and reactively verify, through
an ongoing process known as due diligence, that their commercial activities are
not contributing to conflict and adverse impacts.
At the highest
international level, UN Security Council Resolution 1952 (2010) - specifically
targeted at the Democratic Republic of Congo (DRC) and its GLR neighbours - called
for due diligence in supply chain management. In June
2013, G8 leaders expressed their commitment[12]
to increase transparency in extractive industries and to support responsible
sourcing of conflict-free minerals from conflict-affected regions. The G8 also
announced partnerships with Burkina Faso, Colombia, Ghana, Guinea, Mongolia, Myanmar/Burma, Peru and Tanzania, that will see increased collaboration around
natural resource management in support of policy reforms in these countries. 
The EU is
actively engaged in an OECD initiative on conflict minerals – the Due Diligence
Guidance[13] -
and made a commitment to promote its observance at the May 2011 OECD
Ministerial Council. The Guidance seeks to help companies
respect human rights and avoid contributing to conflict through their sourcing
practices for tin, tantalum, tungsten and gold. It is global in scope and provides
a process in which companies can voluntarily implement a system of controls and
transparency over their mineral supply chain: collecting and disclosing
information to immediate purchasers on inter alia the mine of origin, trade
routes and conditions in order to identify, assess and act on supply chain
risks. An independent third-party audit is required at specific points in the
supply chain. Companies are to publish an annual report on their policies and
practices to generate public confidence in the measures they are taking.
In 2010, the United States passed the Dodd-Frank Wall Street Reform and Consumer Protection Act - the
Dodd-Frank Act. Section 1502 thereof introduces supply chain transparency by
requiring companies listed on US stock exchanges using "conflict
minerals"[14]
in their production processes to declare the origin of such minerals and
perform appropriate due diligence. Section 1502 provisions are enforceable as
of 31 May 2014 by which time affected companies must submit their first annual
conflict minerals reports to the US Securities and Exchange Commission. Although
the scope of the legislation is formally restricted to US-listed companies, it is
having considerable effects abroad, including in the EU, mainly through global supply
chains, because suppliers to US-listed companies are being asked to contribute
due diligence information. 
In 2010, the Heads of State and Government of the GLR - in the
context of the International Conference for the Great Lakes Region (ICGLR) – pledged
to fight the illegal exploitation of natural resources and approved a Regional Initiative on Natural Resources and its six dedicated tools, namely: the adoption of a regional
certification mechanism; the harmonisation of national legislations; a regional
database on mineral flows; the formalisation of the artisanal mining sector;
the promotion of EITI and the deployment of a whistle blowing mechanism. This
regional initiative has led to the enactment by the DRC and Rwanda in 2012 of legislation establishing due diligence requirements for their operators
based on the OECD Due Diligence Guidance. Other GLR countries have also begun
to implement the ICGLR framework. 
These three initiatives have spawned or stimulated the further
development of more specific public and private initiatives. A non-exhaustive
list includes the International Tin Research Institute Tin Supply Chain
Initiative, Certified Trading Chains Initiative, Conflict-Free Smelter Program,
Analytical Fingerprint, Solutions for Hope, Conflict-Free Tin Initiative,
Public Private Alliance for Responsible Minerals Trade, PROMINES, Trading
Centres Initiative, Conflict-Free Gold Standard of the World Gold Council, the
London Bullion Market Association's Good Delivery List, and the Responsible
Jewellery Council's practices and standards.[15]
1.3       Operating
environment for EU companies 
Figure 1 shows a simplified representation of a supply
chain for minerals and metals. Upstream activities involve extraction, trade
and smelting and are performed in the producing country. In most
conflict-affected countries smelting takes place in a third country. Downstream
activities involve trade, further transformation and assembly into a final
product sold on to consumers. A broad range of industrial sectors trade or
process tin, tantalum, tungsten and gold including
automotive, electronics, aerospace, packaging, construction, lighting,
industrial machinery and tooling as well as jewellery. Potentially, this
includes some 880,000 EU companies, the majority small or medium-sized. The
impact assessment carried out for the Regulation estimates that there are about
300 EU traders and around 20 smelters/refiners importing ores and metals
derived from the four minerals and more than 100 EU component manufacturers importing
derived metals. Globally, there are around 140 gold refiners and 280 smelters
for the other three minerals.
Figure 1
     
Minerals from conflict
regions continue to be subject to demand from smelters/refiners. These
operators are well placed to identify the origin of the purchased mineral. They
are the last stage in the supply chain where it is still technically feasible
to trace back the origin of minerals and can leverage responsible supply
behaviour in producer countries. Existing due diligence initiatives recognise
the value of working with responsible smelters. Based on European Commission own
research only 16% of smelters worldwide and 18% of EU smelters for tin,
tantalum and tungsten currently conduct due diligence. About 40% of the world's
gold refiners and 89% of EU gold refiners are engaged in due diligence schemes. [16] 
Although the OECD Due
Diligence Guidance provides a framework for action,
current compliance efforts are fragmented and interested companies are offered
limited incentives to act. Half of downstream respondents to the public
consultation expressed an interest – or are legally compelled mainly by the
Dodd-Frank Act – to source responsibly and perform supply chain due diligence.
Non-regulatory drivers of compliance include corporate social responsibility
policies, image and consumer demand.
A 2013 study[17] shows that EU due
diligence is not widely spread. Only 12% of companies listed on EU stock
exchanges not directly subject to the US legislation refer to conflict minerals
on their websites. This is partly because the OECD Due Diligence Guidance, the
Dodd-Frank Act and the ICGLR framework are recent, but also because EU
companies face implementation challenges (i.e. length of supply chains,
multiple operators, lack of awareness). However, 150,000-200,000 EU companies -
mostly downstream operators - are involved in the supply chains of the 6,000
affected US-listed companies. 
In the specific case of the
GLR, further capacity-building is required in the region to ensure the successful
implementation of the ICGLR framework. Compliance with the Dodd-Frank Act in
particular presents an additional challenge. There are indications that this Act
has worked as a deterrent to source minerals from the GLR, regardless of whether
the minerals are legitimately extracted or not[18]. Some affected companies are pursuing a no-risk strategy and source
from mines outside the region or even outside Africa. The remaining “conflict-free”
minerals struggle to reach US or EU markets and are frequently traded at below
market prices. Loss of trade means loss of local livelihoods in a setting where
alternative employment opportunities are scarce, in particular in the case of
artisanal and small-scale mining. 
An integrated EU approach to
promote responsible sourcing needs to build on existing initiatives and support
the uptake of the OECD Due Diligence Guidance. It should stimulate better
compliance at the level of smelters, including outside the EU, and facilitate a
better flow of due diligence information down the supply chain at relatively
low cost[19].

1.4       Existing EU foreign, development and other policy action
Breaking the
link between resource extraction and conflict requires a comprehensive approach
that addresses the root causes of the problem: conflict, weak governance and lack
of development. Tackling these problems is part of the EU's external action and
the specific goal of the EU's strategy to support developing countries' efforts
to eradicate poverty as outlined in the 2011 Agenda for Change Communication[20]. The Agenda gives a high profile both to good governance and human
rights and to inclusive economic growth. It also promotes joint work not just
with the EU's development partners – the governments of developing countries –
but also with the private sector as well as international organisations such as
the UN. In implementing the Agenda, the EU pays special attention to the role
of civil society, empowerment of local communities and transparent and
accountable decision-making processes.
Another relevant
initiative is the 2008 EU-UN Partnership on land, natural resources and
conflict prevention[21],
supported by the EU through the Instrument for Stability and through which
joint assistance is provided to third countries to prevent and address natural
resources-related conflicts. Through this Partnership, the EU is fostering a UN
inter-agency approach in this sector, in line with the report of the UN
Secretary-General "Peacebuilding in the Aftermath of Conflict"
(2012). 
The EU has a
coherent and integrated strategy on access to raw materials for the European
Union. The Raw Materials Initiative[22]
and the European Innovation Partnership on Raw Materials[23] are comprehensive EU
policies covering sustainable access to raw materials which also address
governance, infrastructure and skills in third countries.
Through the EU Corporate
Social Responsibility (CSR) Strategy[24],
the Commission promotes responsible business conduct, in particular with
respect to compliance with internationally agreed CSR principles and guidelines
such as the OECD Guidelines for Multinational Enterprises and the UN Guiding
Principles on Business and Human Rights.
In 2013, the EU published Guides on implementing the UN Guiding
Principles on Business and Human Rights in three business sectors, including
the ICT and the oil and gas sector[25].
In the context of EU foreign policy, further relevant regional
action is underway:
Africa's resource dilemma was acknowledged in the 2007 Joint Africa-EU
Strategy, which identifies the good governance of natural resources as an
important target for cooperation. 
The EU is
supporting the African Mining Vision endorsed by the African Union in 2009 to
ensure a transparent, equitable and optimal exploitation of mineral resources
as well as its implementing body, the African Mineral Developing Centre. It is
increasing support for other joint actions including the African Legal Support
Facility, which assists African governments with the negotiation of complex
contracts with the private sector and thereby enhances the sustainability and
inclusiveness of these transactions. Work on geological cooperation will be
supported under the EU's new Pan-African Programme. The EU also supports the
implementation in the region of global responsible sourcing initiatives on conflict
diamonds, transparency and forestry products (KPCS, EITI, CITES). 
The EU has also
taken more specific action for the GLR. In June 2013, the European Commission
and High Representative adopted a Joint Communication on a "Strategic
framework for the Great Lakes Region"[26]
laying down a coherent and comprehensive EU approach at regional, national and
local level to the different roots of the crisis.
In this context,
the EU has made policy proposals to address the linkages between the
exploitation and trade of natural mineral resources and the conflict and instability
in the GLR. The EU also supports the ICGLR's Regional Initiative on Natural
Resources and the OECD Due Diligence Guidance implementation programme through
funds from the Instrument for Stability. In future, consideration could be
given to cross-border projects including border and customs management.
 
In Asia and the Pacific,
the EU is working on resource issues by promoting adherence to EITI, where an
encouraging trend of participation can be observed (participating countries:
Mongolia and Timor-Leste; candidate countries: Afghanistan, Indonesia and
Solomon Islands; Myanmar/Burma and Papua New Guinea have announced their
intention to apply EITI, and the Philippines has applied for EITI candidate
status). Asia is home to about 65% of the 280 worldwide
known smelters for tin, tantalum and tungsten, located in countries such as China (73), Malaysia (5), and Indonesia (34). Also in view of their economic
development and corresponding sourcing need, these countries will be priority
partners for EU engagement.
In Latin America, the EU and the Andean countries have started a dialogue on extractive
industries and responsible sourcing, identifying possible areas of cooperation
including the wider socio-economic and environmental impact of mining
activities. Addressing these issues is part of the EU's external action. EITI
compliance in the region is low with only one complying country Peru, but the interest for the initiative is growing especially in Honduras, Guatemala and Colombia. 

2.           An integrated EU approach to Responsible Sourcing

Against this background, there
is a need to work towards an integrated EU approach to promote the responsible
sourcing of minerals from conflict-affected and high-risk areas. To this end,
the Commission proposal for a Regulation and a series of accompanying measures aim to reduce the opportunities for armed groups to resort to trade
in tin, tantalum, tungsten and gold in conflict-affected areas; to improve the
ability of EU operators − especially in the downstream section of the
supply chain − to comply with existing due diligence frameworks and
reduce distortions in global markets for the aforesaid four minerals sourced
from conflict-affected and high-risk areas. 
More generally, the EU's
integrated approach and its policies and initiatives on responsible sourcing
are embedded in its wider comprehensive approach on conflict-affected and
high-risk areas. These promote inter alia conflict resolution, peace and
security, respect for human rights including the need to address trafficking in
human beings, good governance and the rule of law and sustainable development. Examples
are the Strategic Framework for the Great Lakes Region with the issue of
illegal exploitation of natural resources, but also the Horn of Africa Strategic
Framework and the EU strategy for Security and Development in the Sahel. 
2.1       Proposal for a Regulation setting up a
Union system for a voluntary EU 'responsible importer' self-certification
 
The Commission proposal
for a Regulation setting up a Union system for supply chain due diligence self-certification
of responsible importers of tin, tantalum and tungsten, their ores, and gold aims
to support EU companies exercising due diligence to help minimise the risk of
financing armed groups. It also seeks to promote the responsible sourcing of these
minerals from conflict and high-risk regions, in order to increase the volume
of legitimate trade. The EU approach would concentrate due diligence on
upstream supply chain operators and facilitate the downward transmission of
quality information and best practices. In line with the main message of
respondents to the public consultation, the approach is designed to respect the
global nature of complex supply chains and relies on and supports further
compliance with the OECD Due Diligence Guidance. With this in mind, the
geographical scope for both the Regulation and accompanying measures is global
and the focus of activities is primarily process-oriented.
Operationally, the draft
Regulation creates a voluntary self-certification system for importers seeking
to import any of the four minerals or metals into the EU in a responsible
manner. Importers who opt in will need to implement the OECD Due Diligence Guidance,
provide audit assurances and disclosure information to the Member States competent
authorities. Based on the information disclosed, the EU, after consultation with
the OECD, will annually issue a list of smelters and refiners that are
considered responsible suppliers. This will provide increased visibility and stimulate
better public accountability. The list will also specifically identify those
smelters/refiners that source responsibly from conflict zones, so as to incentivise
legitimate trade. The scheme will be evaluated after three years, or before in
case available information will allow it, and the results will be used for
decision-making needs on the future of the EU approach and for amendments to
the regulatory framework, making it mandatory, if appropriate and on the basis
of a further impact assessment. 
2.2       EU accompanying measures to promote responsible sourcing
The following accompanying measures are foreseen to further
encourage the responsible sourcing of minerals. 
Incentives for companies to promote responsible sourcing
The Commission
calls upon EU businesses to use their market position to promote responsible sourcing.
The following measures provide incentives for them to do so.

 Promotion
     of responsible practices by smelters and refiners 

The EU has provided financial support for the implementation of the OECD
Due Diligence Guidance since January 2014 and will continue to do so through
the Instrument for Stability. Support will focus on capacity-building and
outreach activities, targeting public authorities, the private sector and civil
society organisations involved in the supply chain of minerals from
conflict-affected and high-risk areas. The Commission will further assess the
feasibility of providing financial assistance to the OECD or other bodies for programmes
to promote transparency and due diligence practices among EU and non-EU
smelters/refiners. 

 Funding
     possibilities for SMEs for the voluntary certification scheme

The Commission will explore funding to promote the uptake of the future
voluntary certification scheme amongst EU importers. The funding would be
explored within the Competitiveness of Enterprises and SME's Programme (COSME)[27], which was adopted on
5 December 2013. 

 Public Procurement incentives

The
Commission will promote the uptake of both the responsible importer certificate
and the list of responsible smelters/refiners through performance clauses in the
European Commission's own public procurement contracts. Products purchased through
public procurement containing tin, tantalum, tungsten and/or gold will
therefore need to respect OECD Due Diligence Guidance or equivalent due
diligence schemes in order to satisfy contractual obligations.

 Use of government-to-business
     networks to facilitate uptake of the EU 'responsible importer' certificate

To promote the
certification procedure established under the draft Regulation the Commission will
call upon the National Contact Points established under the OECD Guidelines for
Multinational Enterprises and other relevant networks to help raise awareness. The
 Enterprise Europe Network (EEN) – a business support network that offers
services supporting European enterprises – could raise the awareness of EU
operators about the EU's integrated approach, the importance of due diligence and
the consequences of non-responsible sourcing from conflict zones. 

 "Letters of Intent" – industry commitments

EU business operators
have signalled their readiness through the public consultation, position papers
and studies to increase their engagement in the responsible sourcing of
minerals from conflict-affected and high-risk areas. The EU will take action to
provide visibility to the efforts of companies that provide letters of intent announcing
relevant commitments. 
Policy dialogues with third countries and other stakeholders 
·        
Building on existing policy dialogues
The EU will use its political, development, trade and security dialogues
and contacts with governments in mining, producing, processing and consuming
countries to further develop a common understanding – at country and regional
level – of the needs, challenges and opportunities of conflict-free and
responsible mineral extraction. By way of example, the EU will address
responsible sourcing and its contribution to sustainable development in its dialogues
with the South American and Caribbean countries giving due attention to
sustainability challenges of artisanal and informal mining. Parallel
complementary engagement will be sought with the private sector and civil
society, in particular, in producing countries.

 Reaching out to countries hosting smelters

The EU will engage with the countries where the majority of the
world's smelters/refiners are located, notably China, Malaysia, Indonesia,  Thailand and Russia to promote its integrated approach for responsible
sourcing and to secure a greater buy-in from companies in non-EU jurisdictions.
The EU will hold an international conference on responsible sourcing of
minerals originating in conflict-affected and high-risk areas in 2015. 
·        
A responsible sourcing chapter in raw
materials dialogues 
The EU will use its raw
materials dialogues inter alia with China, Japan and Mongolia to promote the integrated
responsible sourcing approach. The Commission has recently launched a raw
materials dialogue with Myanmar/Burma. More in general, the Commission and High Representative will continue to promote strong
and coherent EU raw materials diplomacy, addressing the security-development
nexus in a joined-up and strategic manner.
Development cooperation with third countries 
The EU will also use its existing cooperation relations with governments
in Africa, Asia, Latin America and the Caribbean to address conflict-free and
responsible mineral extraction and commercialisation. The key lines of
intervention through which the EU may support partner countries are:

 Transposing the OECD Due Diligence Guidance into
     national due diligence frameworks and legislation.
 Building further capacity to implement the
     national due diligence frameworks.
 Supporting advocacy and political dialogues in
     the countries concerned between local and central government authorities,
     civil society organisations and business operators. 
 Creating visibility for the actions carried out
     and the results achieved by the producer countries. 

The EU will also
foster cooperation between producer and consumer countries, including through
joint projects, for instance on sustainable mining and good governance, also
taking into account the specificity of artisanal mining.
Honest broker – raw materials diplomacy
The EU stands
ready to act as an honest broker in the context of multi-stakeholder
initiatives, supporting and encouraging responsible sourcing and trade between
participants. The Commission services and the EEAS will gather and analyse data
regarding multi-stakeholder initiatives. Public-private alliances will be given
due consideration. 
EU Member States
The Commission and
the High Representative call upon EU Member States to support due diligence
efforts by companies within their jurisdiction through appropriate action at
national level. Complementary initiatives could be developed in the area of
consumer information and labelling and further incentives for responsible
corporate behaviour created. Moreover, the Commission will encourage EU Member
States to foster the uptake of OECD Due Diligence Guidance or equivalent
schemes through performance clauses of procurement contracts signed by their
authorities as foreseen under the EU Public Procurement Directive. To this end,
the Commission will develop recommendations and implementing guidance to Member State authorising officers.

3.                     Working together towards
an integrated EU approach

A clearer EU
framework based on the OECD Due Diligence Guidance is expected to facilitate
ongoing efforts by EU business operators to establish appropriate due diligence
processes. As the world's largest market for minerals and metals, greater
cohesion within the EU should help stimulate demand for responsible sourcing
and, by extension, facilitate the trade of minerals extracted in compliance
with domestic or OECD due diligence requirements. 
The success of
this initiative will depend to a large extent on the buy-in of the EU private
sector, in particular companies importing tin, tantalum and tungsten ores or
derived metals and gold. The Commission and the High Representative invite EU
business operators to embrace the proposed integrated approach, help
consolidate its achievements and develop it further.
The Commission
and the High Representative call upon the Council and the European Parliament
to endorse the integrated EU approach for responsible mineral sourcing. 
 
[1]     Conflict Barometer, Heidelberg Institute for
International Conflict Research, 2012.
[2]     COM(2011) 25 FINAL and COM(2012) 22 FINAL.
[3]     Two leading international due diligence instruments cover those
four minerals; see also section 1.2. 
[4]     Proposal for a Regulation of the European Parliament and of the
Council setting up a Union system for supply chain due diligence self-certification
of responsible importers of tin, tantalum and tungsten, their ores, and gold
originating in conflict-affected and high-risk areas.
[5]     Commission Staff Working Document, Impact Assessment, Accompanying
the document Proposal for a Regulation of the European Parliament and of
the Council setting up a Union system for supply chain due diligence self-certification
of responsible importers of tin, tantalum and tungsten, their ores, and gold
originating in conflict-affected and high-risk areas.
[6]     World Statistics on Mining and Utilities 2010 – mining
output data 2007.
[7]     Africa Progress Report 2013.
[8]     In 2012, in Bolivia, the mining sector averaged 7.3% of GDP and
27.8% of total exports and in Colombia: 2.4% of the GDP and 17.1% of total
exports. In 2011, in Peru, it averaged 14.5% of the GDP and 59% of total
exports.
[9]     OECD (2013), OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from conflict-Affected and High-Risk Areas: Second
Edition, OECD Publishing, http://dx.doi.org/10.1787/9789264185050-en, page
8.
[10]    OECD Guidelines
for Multinational Enterprises, OECD 2011 edition.
[11]    Guiding Principles on Business and Human Rights, UN Human Rights
Office of the High Commissioner, New York and Geneva 2011. 
[12]    G8 Leaders' Lough Erne Summit, Communique, Paragraph 40, 18 June
2013.
[13]    OECD (2013), OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-affected and High-risk Areas: Second
Edition, OECD Publishing, http://dx.doi.org/10.1787/9789264185050-en.
[14]    Defined in the Act as tin, tantalum,
tungsten or gold, originating from the DRC or a neighbouring country.
[15]    Conflict minerals - an evaluation of the Dodd-Frank Act and
other resource-related measures. Öko-Institut e.V. Freiburg, August 2013, Chapter 6.
[16]    Gold data is sourced from the London Bullion Market Association
most of whose members conduct due diligence. An estimated number of 50
refineries worldwide operate outside the Association.
[17]    Conflict due diligence by European Companies, Stichting
Onderzoek Multinationale Ondernemingen, October 2013.
[18]    Conflict minerals - an evaluation of the Dodd-Frank Act and
other resource-related measures. Öko-Institut e.V. Freiburg, August 2013,
page 27.
[19]    See footnote 5. The Commission Staff Working Document in Annex
III contains an external study on the assessment of due diligence compliance
cost, benefit and related effect on selected operators in relation to the
responsible sourcing of selected minerals (tin, tantalum, tungsten and gold).
The main finding of the survey of concerned industries conducted in the context
of this study is that a majority of respondents reported a relatively low level
of costs for due diligence and reporting efforts. Expenditures are
predominantly estimated at €13,500 for initial efforts (74%) and €2,700 for
subsequent ongoing efforts (63.8%).
[20]    COM (2011) 637 Final.
[21]   http://www.un.org/en/land-natural-resources-conflict/index.shtml 
[22]    COM (2008) 699 Final.
[23]    COM (2012) 82 Final.
[24]    COM (2011) 681 Final.
[25]    http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/humanrights/index_en.htm
[26]    JOIN (2013) 23 Final.
[27]    Regulation (EU) No 1287/2013 of the European Parliament and of
the Council of 11 December 2013 establishing a Programme for the
Competitiveness of Enterprises and small and medium-sized enterprises (COSME)
(2014 - 2020) and repealing Decision No 1639/2006/EC - the COSME programme
foresees actions to facilitate SME access to markets inside and outside the
Union, such as providing information on existing barriers to market entry and
business opportunities, public procurement and customs procedures, and
improving support services in terms of standards and intellectual property
rights.