This Regulation establishes a Union system for supply chain due diligence (‘Union system’) in order to curtail opportunities for armed groups and security forces to trade in tin, tantalum and tungsten, their ores, and gold. This Regulation is designed to provide transparency and certainty as regards the supply practices of Union importers, and of smelters and refiners sourcing from conflict-affected and high-risk areas.
Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas
Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas
Article 1 Subject matter and scope
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This Regulation lays down the supply chain due diligence obligations of Union importers of minerals or metals containing or consisting of tin, tantalum, tungsten or gold, as set out in Annex I.
3.
This Regulation shall not apply to Union importers of minerals or metals where their annual import volume of each of the minerals or metals concerned is below the volume thresholds set out in Annex I.
All volume thresholds are set at a level that ensures that the vast majority, but no less than 95 %, of the total volumes imported into the Union of each mineral and metal under the Combined Nomenclature code is subject to the obligations of Union importers set out in this Regulation.
4.
The Commission shall adopt a delegated act, in accordance with Articles 18 and 19, if feasible by 1 April 2020 but no later than 1 July 2020, to amend Annex I by establishing the volume thresholds for tantalum or niobium ores and concentrates, gold ores and concentrates, tin oxides and hydroxides, tantalates and carbides of tantalum.
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The Commission is empowered to adopt delegated acts in accordance with Articles 18 and 19 to amend the existing thresholds listed in Annex I every three years after 1 January 2021.
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With the exception of Article 7(4), this Regulation shall not apply to recycled metals.
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This Regulation shall not apply to stocks where a Union importer demonstrates that those stocks were created in the current form on a verifiable date prior to 1 February 2013.
8.
This Regulation shall apply to minerals and metals referred to in Annex I that are obtained as by-products as defined in Article 2(t).
Article 2 Definitions
For the purpose of this Regulation, the following definitions apply:
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‘minerals’ means the following, as listed in Part A of Annex I:
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ores and concentrates containing tin, tantalum or tungsten, and
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gold;
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‘metals’ means metals containing or consisting of tin, tantalum, tungsten or gold, as listed in Part B of Annex I;
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‘mineral supply chain’ means the system of activities, organisations, actors, technology, information, resources and services involved in moving and processing the minerals from the extraction site to their incorporation in the final product;
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‘supply chain due diligence’ means the obligations of Union importers of tin, tantalum and tungsten, their ores, and gold in relation to their management systems, risk management, independent third-party audits and disclosure of information with a view to identifying and addressing actual and potential risks linked to conflict-affected and high-risk areas to prevent or mitigate adverse impacts associated with their sourcing activities;
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‘chain of custody or supply chain traceability system’ means a record of the sequence of economic operators which have custody of minerals and metals as they move through a supply chain;
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‘conflict-affected and high-risk areas’ means areas in a state of armed conflict or fragile post-conflict as well as areas witnessing weak or non-existent governance and security, such as failed states, and widespread and systematic violations of international law, including human rights abuses;
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‘armed groups and security forces’ means groups referred to in Annex II to the OECD Due Diligence Guidance;
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‘smelter and refiner’ means any natural or legal person performing forms of extractive metallurgy involving processing steps with the aim to produce a metal from a mineral;
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‘global responsible smelters and refiners’ means smelters and refiners located inside or outside the Union that are deemed to fulfil the requirements of this Regulation;
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‘upstream’ means the mineral supply chain from the extraction sites to the smelters and refiners, inclusive;
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‘downstream’ means the metal supply chain from the stage following the smelters and refiners to the final product;
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‘Union importer’ means any natural or legal person declaring minerals or metals for release for free circulation within the meaning of Article 201 of Regulation (EU) No 952/2013 of the European Parliament and of the Council(1) or any natural or legal person on whose behalf such declaration is made, as indicated in data elements 3/15 and 3/16 in accordance with Annex B to Commission Delegated Regulation (EU) 2015/2446(2);
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‘supply chain due diligence scheme’ or ‘due diligence scheme’ means a combination of voluntary supply chain due diligence procedures, tools and mechanisms, including independent third-party audits, developed and overseen by governments, industry associations or groupings of interested organisations;
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‘Member State competent authorities’ means authorities designated by Member States in accordance with Article 10 with expertise as regards raw materials, industrial processes and auditing;
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‘OECD Due Diligence Guidance’ means the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (Second Edition, OECD 2013), including all its Annexes and Supplements;
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‘grievance mechanism’ means an early-warning risk awareness mechanism allowing any interested party, including whistle-blowers, to voice concerns regarding the circumstances of extraction, trade and handling of minerals in and export of minerals from conflict-affected and high-risk areas;
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‘model supply chain policy’ means a supply chain policy that conforms to Annex II to the OECD Due Diligence Guidance outlining the risks of significant adverse impacts which may be associated with the extraction, trade, and handling of minerals in and export of minerals from conflict-affected and high-risk areas;
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‘risk management plan’ means the written response of a Union importer to the identified supply chain risks based on Annex III to the OECD Due Diligence Guidance;
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‘recycled metals’ means reclaimed end-user or post-consumer products, or scrap processed metals created during product manufacturing, including excess, obsolete, defective, and scrap metal materials which contain refined or processed metals that are appropriate for recycling in the production of tin, tantalum, tungsten or gold. For the purposes of this definition, minerals partially processed, unprocessed or a by-product from another ore are not considered to be recycled metals;
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‘by-product’ means a mineral or metal falling within the scope of this Regulation that has been obtained from the processing of a mineral or metal falling outside the scope of this Regulation, and which would not have been obtained without the processing of the primary mineral or metal falling outside the scope of this Regulation;
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‘verifiable date’ means a date which can be verified by the inspection of physical date stamps on products or of inventory lists.
Article 3 Compliance of Union importers with supply chain due diligence obligations
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Union importers of minerals or metals shall comply with the supply chain due diligence obligations set out in this Regulation and shall keep documentation demonstrating their respective compliance with those obligations, including the results of the independent third-party audits.
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Member State competent authorities shall be responsible for carrying out appropriate ex-post checks pursuant to Article 11.
3.
Pursuant to Article 8(1), interested parties may submit supply chain due diligence schemes for recognition by the Commission with a view to facilitating the compliance of Union importers with the relevant requirements set out in Articles 4 to 7.
Article 4 Management system obligations
Union importers of minerals or metals shall:
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adopt, and clearly communicate to suppliers and the public up-to-date information on, their supply chain policy for the minerals and metals potentially originating from conflict-affected and high-risk areas;
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incorporate in their supply chain policy standards against which supply chain due diligence is to be conducted consistent with the standards set out in the model supply chain policy in Annex II to the OECD Due Diligence Guidance;
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structure their respective internal management systems to support supply chain due diligence by assigning responsibility to senior management, in cases where the Union importer is not a natural person, to oversee the supply chain due diligence process as well as maintain records of those systems for a minimum of five years;
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strengthen their engagement with suppliers by incorporating their supply chain policy into contracts and agreements with suppliers consistent with Annex II to the OECD Due Diligence Guidance;
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establish a grievance mechanism as an early-warning risk-awareness system or provide such mechanism through collaborative arrangements with other economic operators or organisations, or by facilitating recourse to an external expert or body, such as an ombudsman;
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as regards minerals, operate a chain of custody or supply chain traceability system that provides, supported by documentation, the following information:
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description of the mineral, including its trade name and type;
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name and address of the supplier to the Union importer;
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country of origin of the minerals;
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quantities and dates of extraction, if available, expressed in volume or weight;
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where minerals originate from conflict-affected and high-risk areas or, where other supply chain risks as listed in the OECD Due Diligence Guidance have been ascertained by the Union importer, additional information in accordance with the specific recommendations for upstream economic operators, as set out in the OECD Due Diligence Guidance, such as the mine of mineral origin, locations where minerals are consolidated, traded and processed, and taxes, fees and royalties paid;
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as regards metals, operate a chain of custody or supply chain traceability system that provides, supported by documentation, the following information:
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description of the metal, including its trade name and type;
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name and address of the supplier to the Union importer;
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name and address of the smelters and refiners in the supply chain of the Union importer;
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if available, records of the third-party audit reports of the smelters and refiners, or evidence of conformity with a supply chain due diligence scheme recognised by the Commission pursuant to Article 8;
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if the records referred to in point (iv) are not available:
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countries of origin of the minerals in the supply chain of the smelters and refiners,
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where metals are based on minerals originating from conflict-affected and high-risk areas, or other supply chain risks as listed in the OECD Due Diligence Guidance have been ascertained by the Union importer, additional information in accordance with the specific recommendations for downstream economic operators set out in that Guidance;
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as regards by-products, provide information supported by documentation as from the point of origin of those by-products, namely the point where the by-product is first separated from its primary mineral or metal falling outside the scope of this Regulation.
Article 5 Risk management obligations
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Union importers of minerals shall:
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identify and assess the risks of adverse impacts in their mineral supply chain on the basis of the information provided pursuant to Article 4 against the standards of their supply chain policy, consistent with Annex II to, and the due diligence recommendations set out in, the OECD Due Diligence Guidance;
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implement a strategy to respond to the identified risks designed so as to prevent or mitigate adverse impacts by:
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reporting findings of the supply chain risk assessment to senior management designated for that purpose, in cases where the Union importer is not a natural person;
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adopting risk management measures consistent with Annex II to, and the due diligence recommendations set out in, the OECD Due Diligence Guidance, considering their ability to influence, and where necessary take steps to exert pressure on suppliers who can most effectively prevent or mitigate the identified risk, by making it possible either to:
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continue trade while simultaneously implementing measurable risk mitigation efforts,
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suspend trade temporarily while pursuing ongoing measurable risk mitigation efforts, or
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disengage with a supplier after failed attempts at risk mitigation;
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implementing the risk management plan; monitoring and tracking performance of risk mitigation efforts; reporting back to senior management designated for this purpose, in cases where the Union importer is not a natural person; and considering suspending or discontinuing engagement with a supplier after failed attempts at mitigation;
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undertaking additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances.
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If a Union importer of minerals pursues risk mitigation efforts while continuing trade or temporarily suspending trade, it shall consult with suppliers and with the stakeholders concerned, including local and central government authorities, international or civil society organisations and affected third parties, and agree on a strategy for measurable risk mitigation in the risk management plan.
3.
Union importers of minerals shall, in order to design conflict and high-risk sensitive strategies for mitigation in the risk management plan, rely on the measures and indicators referred to in Annex III to the OECD Due Diligence Guidance and measure progressive improvement.
4.
Union importers of metals shall identify and assess, in accordance with Annex II to the OECD Due Diligence Guidance and the specific recommendations set out in that Guidance, the risks in their supply chain based on available third-party audit reports concerning the smelters and refiners in that chain, and, by assessing, as appropriate, the due diligence practices of those smelters and refiners. Those audit reports shall be in accordance with Article 6(1) of this Regulation. In the absence of such third-party audit reports from the smelters and refiners in their supply chain, Union importers of metals shall identify and assess the risks in their supply chain as part of their own risk management system. In such cases, Union importers of metals shall carry out audits of their own supply chain due diligence via an independent third-party in accordance with Article 6 of this Regulation.
5.
In cases where they are not natural persons, Union importers of metals shall report the findings of the risk assessment referred to in paragraph 4 to their senior management designated for this purpose and they shall implement a response strategy designed to prevent or mitigate adverse impacts, consistent with Annex II to the OECD Due Diligence Guidance and with the specific recommendations set out in that Guidance.