It's not often that applause echoes around the European Parliament. Ask any politician to make a brave and difficult decision, or a weak one that maintains the status quo, and we all know the likeliest outcome.
So, lobbyists, analysts and media alike were surprised to hear applause during a vote in April. MEP's had unexpectedly voted in favour of a mandatory monitoring system for minerals that originate from conflict zones.
The draft law requires all EU importers of tin, tungsten, tantalum and gold, the “3TG” metals, to prove that they are responsibly sourced.
Most had expected the new system to be voluntary. But the draft law goes further than that, and also covers “downstream” companies. This means around 880,000 European manufacturers that use 3TG may soon find the onus on them to prove the minerals are responsibly sourced.
The hardest hit will be the electronics sector, 3TGs are used extensively in tablets, mobile phones and laptops. But they are also used as high performance alloys in sectors such as automotive and aerospace, industrial machinery and tooling, and in construction, lighting, and jewellery.
3TGs are used in a myriad of products, devices and equipment, however, because there is little monitoring of where they come from, they can originate from illegitimate mines with terrible working conditions. The proceeds from their sale are frequently used to fund militias and conflict.
Children at work in a gold mine in the Democratic Republic of Congo
The EU law is the result of many years of campaigning by pressure groups and charities such as Global Witness. In May, the NGO was behind a letter, co-signed by 150 organisations, urging MEPs to make the new scheme compulsory.
Global Witness is working to ensure that the European Parliament's proposal is understood fully, and that other tools to stop conflict minerals are also employed. These include development policies and foreign affairs tools, as well as working closely with industry.
Michael Gibb, team leader for Global Witness' conflict mineral campaign, says: “The legislation will result in much more responsible and transparent supply chains. We will have a due diligence framework, harmonised internationally.
“The better management of supply chains and risk as a good thing for business. It must be better for companies to deal with any issues before problems surface in public.”
The US introduced conflict minerals regulation in 2011. Some companies will have already taken action to met the requirements of Dodds-Frank and meeting the new EU regulation will not be tough, says Gibb.
Dr Yolande Kyngdon-McKay is an associate at Estelle Levin, a consultancy that specialises in responsible mining and sourcing of minerals. The company works with both the mining supply chain, including local communities, and downstream users such as manufacturers.
She says it is incorrect to assume that European firms will find it easy to satisfy the EU regulations. The EU law is broader in scope and could affect many more companies, particularly SMEs. “EU companies will only be meeting US regulations only if they have been asked to do so by American clients. And we're talking about the entire supply chain meeting the new obligations, not just tier one companies. There can be 15 or 16 tiers in the supply chain in relation to tin.
“Some EU companies, especially smaller ones, won't have the capacity to manage this. If you have a supplier who is uncooperative, it throws a massive spanner in the works. Smaller companies will need financial support, incentives and training to manage these obligations.”
More research is required to assess the full impact on industry. Even the European Parliament is yet to fully understand the implications. She says: “EU Parliamentarians themselves don't know who is going to be affected yet. A lot depends on how the law is implemented, what limitations and definitions are made. Definitively working out who it affects will be a tough job.”
The EU's conflict minerals' law will be implemented within the next 18 months. During that time the EU Parliament will negotiate with the European Council, the member state's representative body, about how exactly it will be implemented in each country. If that results in the applause fading away to the complaints of governments and lobbyists, few will be surprised, but many disappointed.
“There's still a lot debating to do,” says Kyngdon-McKay.
China step change
China, widely seen as the largest producer and user of 3TG metals is also beginning to change its policies. In November last year, the Chinese government launched a set of guidelines for Chinese mining and minerals trading companies.
The move is a first step for China, which is widely seen internationally as having the largest presence in conflict minerals-affected regions and produces a large proportion of the world's electronics goods.
Micheal Gibb from NGO Global Witness sees the Chinese guidelines as evidence that momentum is building globally to produce meaningful change. He says: “The whole supply chain engaging allows us to create a critical mass of companies that want products and materials to a similar standard. Collective commercial leverage that forces change.”