17 February 2022
Introduction:
In 2017, the European Union (EU) adopted 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 areas1 (“the EU Regulation” hereinafter). The EU Regulation entered into force on 8 June 2017 and its key requirements apply to EU importers since 1 January 2021.
The EU 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. It 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. In its Article 19(2), the EU Regulation confers powers upon the Commission to adopt delegated acts in respect of: (1) establishing and amending the import volume thresholds of minerals and metals, and (2) establishing the methodology and criteria for the recognition of supply chain due-diligence schemes.
The EU Regulation lays down supply chain due-diligence obligations in accordance with the OECD Due Diligence Guidance2 including its Annex II. These obligations apply to Union importers of minerals and metals as set out in Annex I of the EU Regulation. To ensure the proper functioning of the Union system, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union is delegated to the Commission in respect of amending Annex I by establishing and amending the volume thresholds of minerals and metals.
The EU Regulation further stipulates that owners of supply chain due-diligence schemes may apply to the Commission to have their schemes recognised as equivalent to the requirements of the EU Regulation. Such schemes should be aligned to the specific recommendations of the OECD Due Diligence Guidance. To facilitate the assessment of due diligence schemes that might be recognised under the EU Regulation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union is delegated to the Commission in respect of establishing the methodology and criteria for that assessment for recognition.
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