Conflict Minerals Regulation (EU) 2017/821: due diligence obligations for importers of tin, tantalum, tungsten and gold

What this is about

Regulation (EU) 2017/821 establishes a Union system for supply chain due diligence for tin, tantalum, tungsten, their ores, and gold, often referred to as "3TG". Its aim is to curtail opportunities for armed groups and security forces to trade in these minerals and to provide transparency on sourcing practices (Article 1(1)). The core obligations have applied since 1 January 2021 (Article 20(3)).

The benchmark is the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Conflict-affected and high-risk areas are areas in a state of armed conflict or fragile post-conflict as well as areas witnessing weak or non-existent governance and security, and widespread and systematic violations of international law (Article 2, point (f)).

Who is covered: Union importers and volume thresholds

The obligations apply to Union importers. This means any natural or legal person declaring minerals or metals for release for free circulation (Article 2, point (l)).

The Regulation covers the minerals and metals listed in Annex I by customs tariff code. An annual volume threshold applies to each item. Where import volumes are below it, the Regulation does not apply (Article 1(3)). The thresholds are set so that at least 95 % of imported volumes are covered. Some examples from Annex I:

• tin ores and concentrates: 5,000 kg,
• tungsten ores and concentrates: 250,000 kg,
• gold with a concentration below 99.5 % and refined gold: 100 kg each.

Delegated Regulation (EU) 2020/1588 set the thresholds for certain items, such as tantalum and gold ores. Recycled metals are in principle excluded (Article 1(6)).

The obligations at a glance

Management system (Article 4). Union importers must:

• adopt a supply chain policy and communicate it to suppliers and the public,
• incorporate standards consistent with the model supply chain policy in Annex II of the OECD Guidance,
• assign senior management to oversee the process,
• keep records for at least five years,
• establish a grievance mechanism as an early-warning system,
• operate a chain of custody or supply chain traceability system.

Risk management (Article 5). Risks of adverse impacts in the supply chain must be identified and assessed. A strategy must be implemented in response to identified risks. Options are continuing trade while pursuing measurable risk mitigation, temporarily suspending trade, or disengaging from a supplier after failed attempts at mitigation.

Third-party audit (Article 6). Union importers have their due diligence practices audited by an independent third party. Importers of metals are exempt where they show that they source exclusively from smelters and refiners on the Commission's list under Article 9.

Disclosure (Article 7). Audit reports must be made available to the competent authority. Immediate downstream purchasers receive the information gained. Union importers also report publicly each year, including on the internet, on their policies and practices.

Interested parties may submit supply chain due diligence schemes to the Commission for recognition. Such schemes are meant to help importers comply with Articles 4 to 7 (Article 3(3), Article 8).

Checks and enforcement in Germany

Member States designate competent authorities. These carry out risk-based ex-post checks, including where third parties raise substantiated concerns (Articles 10 and 11). In the event of an infringement, they issue a notice of remedial action (Article 16(3)).

In Germany, the Mineral Raw Materials Due Diligence Act (Mineralische-Rohstoffe-Sorgfaltspflichten-Gesetz, MinRohSorgG) of 29 April 2020 governs implementation. The competent authority is the Federal Institute for Geosciences and Natural Resources (BGR) (section 2). It may request documents, demand information and enter business premises (sections 3 and 7). After a notice of remedial action, it may require an implementation plan within 30 days (section 3(3), point 4). Coercive fines may amount to up to EUR 50,000 (section 9).

What companies typically examine

1. Role: Does the company itself declare minerals or metals from Annex I for release for free circulation?
2. Volumes: Are the annual thresholds per tariff item exceeded?
3. System: Are a supply chain policy, a grievance mechanism and traceability in place under Article 4?
4. Evidence: Is there a third-party audit or evidence of listed smelters and refiners?
5. Reports: Is public reporting carried out every year?

This post provides a general overview of the legal position and does not replace legal advice on individual cases.

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