{"id":20632,"date":"2021-01-07T12:45:31","date_gmt":"2021-01-07T11:45:31","guid":{"rendered":"https:\/\/ipisresearch.be\/\/?post_type=weekly-briefing&p=20632"},"modified":"2025-09-17T22:15:54","modified_gmt":"2025-09-17T20:15:54","slug":"ipis-briefing-december-2020-potential-risks-to-a-successful-implementation-of-the-eu-conflict-minerals-regulation","status":"publish","type":"weekly-briefing","link":"https:\/\/ipisresearch.be\/nl\/weekly-briefing\/ipis-briefing-december-2020-potential-risks-to-a-successful-implementation-of-the-eu-conflict-minerals-regulation\/","title":{"rendered":"IPIS Briefing December 2020 – Potential risks to a successful implementation of the EU Conflict Minerals Regulation"},"content":{"rendered":"

The IPIS briefing offers a selection of articles, news and updates on natural resources, armed conflict, Business & Human Rights and arms trade.\u00a0 Every month, an editorial and related publications shed a light on a specific topic in IPIS\u2019 areas of research.<\/i><\/span><\/em><\/span><\/p>\n

In focus: Potential risks to a successful implementation of the EU Conflict Minerals Regulation.<\/b><\/i><\/span><\/span><\/strong><\/p>\n

In the news: Ethnic profiling of Tigrayans heightens tensions in Ethiopia<\/b><\/i><\/span><\/span><\/strong>; The secret war in Tigray; EU adopts a global human rights sanctions regime.<\/span><\/span><\/strong><\/em><\/p>\n

New subscribers can register\u00a0here<\/a>\u00a0to receive the briefing and updates on IPIS\u2019 new maps and reports.<\/i><\/span><\/span><\/em><\/p>\n

This briefing is produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of IPIS and can under no circumstances be regarded as reflecting the position of the European Union.<\/i><\/span><\/span><\/em><\/p>\n

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IN FOCUS:\u00a0<\/span><\/span>POTENTIAL RISKS TO A SUCCESSFUL IMPLEMENTATION OF THE EU CONFLICT MINERALS REGULATION<\/h1>\n

The EU Conflict Minerals Regulation (EU CMR) has entered into force on 1 januari 2021. The EU CMR intends to ensure that ores and metals of tin, tantalum, tungsten and gold (3TG) which enter the EU are subject to mandatory due diligence in line with the standards developed by the OECD<\/a>. The EU reasons that responsible behaviour by companies operating in conflict-affected or high-risk areas (CAHRAs) can play a powerful and positive socio-economic role in these areas (1).<\/p>\n

In this briefing we highlight three potential risks to the successful implementation of the EU CMR. First of all, the limited preparedness at the level of producing countries can increase the risk of an economic disengagement from CAHRAs. Secondly, implementation and enforcement at Member State level risks to be non-transparent and unaligned. Thirdly, the import volume thresholds for EU importers could result in partly excluding the riskiest imports from CAHRAs. These risks are explained in more detail below.<\/p>\n

The risk of disengagement from CAHRAs<\/strong><\/em><\/p>\n

Companies importing 3TG into the EU above certain thresholds must make all reasonable efforts to identify, prevent and mitigate risks and provide evidence that their operations are not financing conflicts or human rights violations along the supply chain. By sourcing responsibly, the EU CMR aims to improve the impact of 3TG mining in producing countries. Yet, in order for the EU CMR to have the desired effect on the ground, 3TG producing countries, especially CAHRAs, should be aware and prepared for the due diligence requirements this regulation imposes on companies sourcing from their mines. Effective measures at both artisanal and small-scale (ASM) and large-scale (LSM) mining operations should be put in place to avoid human rights abuses and conflict financing. Moreover, transparency and accessibility of data is needed to assure potential buyers of the absence of red flags on the ground.<\/p>\n

Without these efforts, there is a risk that industry actors (including smelters and refiners on the so-called EU White List (2)) will disengage from CAHRAs and\/ or stop purchasing artisanally mined minerals. Mining actors in CAHRAs may increasingly depend on a reduced number of purchasers e.g. from China, which can negatively impact their trading position in the market.<\/p>\n

The EU has committed to a series of accompanying measures specifically intended to support responsible mineral sourcing in CAHRAs. These accompanying measures aim at supporting artisanal miners, state and non-state actors in creating the conditions on the ground for transparent and responsible supply chains. Despite these efforts, stakeholders in producing countries have little knowledge of the upcoming EU CMR and how this might impact their mining sector. During an online event<\/a> that brought together representatives from civil society organizations from 3TG producing countries in Africa and South-America, it became clear that very few were aware of the EU CMR. Moreover, except for the DRC and its neighbouring countries (3), stakeholders such as government officials, mining operators and civil society have little to no experience with regulatory measures concerning responsible sourcing. This limited preparedness in producing countries increases the risk of an economic disengagement from CAHRAs, which would negatively impact the (ASM) mining communities in these countries.<\/p>\n

The risk of non-transparent and unaligned implementation<\/em><\/strong><\/p>\n

The EU Member States are responsible for checking that EU importers respect the requirements which the EU CMR sets out. Member States are also responsible to establish the rules applicable to infringements of the EU CMR. While there is hence an important role for EU Member States, the state of implementation, and the transparency on this process, varies greatly among Member States. To date, there are still many uncertainties on how things stand with the implementation and the harmonization of the EU CMR implementation at Member State level. A Joint Policy Note dedicated to this subject will be published in January 2021 by a consortium of European NGOs, giving an overview of the state of implementation, including an analysis of gaps and risks (4).<\/p>\n

The risk of excluding the riskiest imports<\/em><\/strong><\/p>\n

EU importers that fall below certain annual volume thresholds will not be subject to the requirements of the EU CMR (5). All volume thresholds are set at a level that ensures that no less than 95% of the total volumes imported into the EU of each mineral and metal is covered. The initial motivation for the thresholds was to avoid an excessive compliance burden on small and medium-sized enterprises (SMEs). The thresholds, however, do not guarantee that only lower risk imports will be exempted from the requirements of the EU CMR. On the contrary, there are good reasons to suspect that many of the highest-risk imports into the EU are transacted in relatively low quantities, some of which may fall below the thresholds and therefore will fall outside the scope of the EU CMR.<\/p>\n

The EU has not disclosed a dataset with imported volumes and their origin disaggregated by individual EU importers. Hence, it is currently difficult to anticipate whether direct EU imports from specific countries, such as the Central African Republic, Sudan and Colombia, will be affected by the EU CMR. For example, based on their value (6), as volumes are not available, gold imports from several countries on the recently published list of CAHRA countries<\/a>, would likely fall below the EU\u2019s thresholds if these were imported by companies that do not import additional gold from other countries.<\/p>\n

Where in reality possibly few direct imports into the EU from CAHRAs will be covered by the EU CMR, the above-mentioned accompanying measures and enforcement efforts could more productively focus on indirect imports via trading hubs. Trading hubs are however not included on the CAHRA list. Yet, some notorious trading centers such as Dubai (UAE) (7), can be considered as high-risk areas in the context of illicit trade and conflict financing.<\/p>\n

Concluding remarks<\/em><\/strong><\/p>\n

The EU Regulation on Conflict Minerals has entered into force, but as is summarized in this briefing, to date there are several risks to the successful implementation of the EU CMR. Successful implementation includes positive impact on the ground, reduced number of serious human rights violations during the exploitation and trade of 3TG minerals and, by controlling the trade in minerals from conflict areas, eliminating the financing of armed groups. In 2023 the EU CMR will be reviewed. Baseline data and continuous monitoring are essential to assess the risks mentioned in this briefing. With the EU CMR just entering into force, stakeholders from civil society, government institutions and industry should start sooner rather than later with identifying and mitigating potential adverse impacts along the supply chain.<\/p>\n

Lotte Hoex<\/p>\n

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Notes:<\/p>\n