Thursday May 21, 2015, 2:25pm PDT
By Kristen Moran - Exclusive to Tungsten Investing News
The European Parliament voted to ban all products containing conflict minerals, or “blood metals,” on Wednesday in what is being considered a surprise vote.
The decision is aimed at completely eliminating materials from war-stricken countries in Africa from the European supply chain. In turn, that will keep corrupt leaders in the Democratic Republic of the Congo and other war zones from profiting from the sale of tungsten, tin, tantalum and gold.
The vote will make it mandatory for companies importing those metals for use in manufacturing consumer goods to certify their origin. The decision is being called a surprise largely because parliament was expected to put less harsh measures in place in a scenario similar to the US Dodd-Frank Wall Street Reform and Consumer Protection Act.
As it is, it looks like the decision will affect many companies. According to the press release from the European Parliament, ”downstream companies, that is, the 880 000 potentially affected EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products, will be obliged to provide information on the steps they take to identify and address risks in their supply chains for the minerals and metals concerned.”
That said, the new regulations aren’t quite ready to be put in place. Now that parliament has voted, the decision will be discussed with EU member states and the European Commission, and experts fear that EU governments will decide to block the tougher legislation on the basis that it could be considered an unrealistic burden for businesses. Interestingly, however, it seems that parliament has already taken such backlash into consideration — its press release “asks the Commission to grant financial support to micro-businesses and small and medium-sized firms wishing to obtain certification through the EU’s COSME program.”
US volunteer-style conflict mineral law has done little
The US Securities and Exchange Commission (SEC) began work on its conflict minerals rule, which can be found in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, in 2010. But while years have passed since then, the voluntary nature of the rule has done little to change the way manufacturers handle their imports. Furthermore, it’s even come under fire, with numerous companies taking the SEC to court over the rule.
To see what impact the rule has had, a group called Amnesty International and Global Witness put out a recent study called Digging for Transparency. It examines 2014 conflict minerals reports from 100 companies to see how many complied with the rule. It states that “79 of the 100 companies analyzed failed to meet the minimum requirements of the US conflict minerals law,” and more than half of the companies sampled decided not to report to senior management when they identified a risk in their supply chain.
Unfortunately, that’s not the only reason the rule has been deemed unsuccessful. Following the European Parliament’s decision, EU lawmaker Iuliu Winkler said that the US law is a failure because US companies now try to avoid doing business with sub-Saharan Africa. ”In the Democratic Republic of Congo, this has meant even fewer legal jobs, a surge in smuggling, no taxes paid, thousands of people deprived of their livelihood,” said Winkler, who wants only smelters and refiners to be required to certify their imports.
While it remains to be seen whether or not the European Parliament’s vote will hold, it at the very least shows that steps are being taken to regulate imports of blood metals to the EU. Investors will no doubt be watching the space for further developments.