REGULATORY: Natural Resources: European Commission Issues Consultation for Views on Potential EU Conflict Minerals Initiative; Canada floats “Conflict Minerals Act”

by King & Spalding

The European Commission (EC) Directorate-General for Trade has issued a consultation [1] to solicit interested parties’ views on a potential EU initiative for responsible sourcing of minerals coming from conflict-affected and high-risk areas. This “conflict minerals” consultation seeks information from EU zone companies that would help the EC decide whether to “complement” the U.S. conflict minerals due diligence regime passed as part of the Dodd-Frank Act and recently instituted by the Securities and Exchange Commission (SEC).

SEC rules require U.S. companies to make specialized disclosures of their use of “conflict minerals” that originated in the Democratic Republic of the Congo or an adjoining country. Specifically, affected issuers must disclose their use of tantalum, tin, gold, or tungsten (the “conflict minerals”) if those minerals are “necessary to the functionality or production of a product” manufactured or contracted to be manufactured by an issuer. There is no exception to the disclosure requirements for the de minimis use of conflict minerals in a product. [2]

As part of a quest to craft similar disclosure requirements, the EC consultation requests comment on specific areas, including:

  • The minerals that should be covered (including tantalum, tin, tungsten, and gold) and whether other minerals should be covered;
  • Whether the geographical scope of any action should be global, region-specific, or country-specific;
  • Whether specific segments in the minerals’ supply chain should be targeted;
  • Whether some companies should be exempted due to size;
  • Whether an EU initiative would reach the critical mass to motivate other major economies (e.g., China, Brazil, Indonesia, and Malaysia) to engage in similar initiatives; and
  • Whether the 2010 EU Timber Regulation can serve as an effective model for conflict minerals due diligence.

Comments on the potential EU initiative are to be accepted until June 26, 2013.

Similarly, a proposed Canadian “Conflict Minerals Act” would impose due diligence and disclosure requirements similar to those in the U.S. on Canadian companies that use “designated minerals” (including tantalum, tin, tungsten, or gold) originating in the Great Lakes Region of Africa. It is noteworthy that the Canadian proposal would extend disclosure obligations to cover the extraction, processing, purchasing, or trading of conflict minerals, roles that are exempted in some cases from the SEC’s rules. The inclusion of these activities could significantly affect Canadian stock exchange-listed mining and extractive industry companies whose operations include these minerals or their ores.

The U.S. rules have presented a compliance headache for affected companies and their suppliers and may now be spreading to European and Canadian companies that previously found themselves outside the scope of the SEC’s rules. Given these developments, it might be advisable for all companies actively engaged in manufacturing of products containing tin, tantalum, tungsten, or gold, regardless of where they are currently operating, to factor conflict minerals disclosure obligations into their future business plans.

[1] “Public consultation on a possible EU initiative on responsible sourcing of minerals originating from conflict-affected and high-risk areas,” available at

[2] See “SEC Adopts Final Rules Affecting Energy Companies; Adds Private Right of Action,” available at

[3]Conflict Minerals Act, Bill C-486, available at

Jeffrey Perry
+1 202 626 5521
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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