Regulation Update

Conflict Minerals Regulation

The Conflict Minerals Regulation (CMR) was passed by the EU in 2017 and is intended to: (a) prevent conflict minerals and metals from being exported to the EU; (b) stop global and EU smelters and refiners from using conflict minerals; and (c) protect mine workers from abuse. The CMR will come into force on 1 January 2021, applying to all entities importing tin, tantalum, tungsten and gold into the EU from conflict-affected and high-risk (CAHR) areas. During 2019, the European Commission (EC) will release a nonexhaustive list of countries which ought to be identified as CAHR. Under the CMR, as drafted, all entities sourcing an annual import volume of 100kg or more of gold (refiners, mints, banks, traders, retailers, etc.) must identify and address actual and potential risks linked to CAHR areas when they carry out due diligence of their supply chain. CMR does not apply to recycled metals or stocks created before 1 February 2013.

The obligations under the CMR implement the five-step framework provided by the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas (the OECD Guidance). Importers adhering to the recommendations of the OECD Guidance will thus be able to demonstrate compliance with the CMR. LBMA is already applying for its Responsible Sourcing

Programme (RSP), which is based on the OECD Guidance, to be formally recognised as an industry scheme equivalent to the five-step requirements set out in the CMR. If successful, compliance with LBMA’s RSP will demonstrate compliance with CMR. In advance of 1 January 2021, importers should therefore prepare to formalise their management systems in line with LBMA’s RSP and the OECD Guidance. Non-EU suppliers will also be affected as they will need to prove to EU importers that they source responsibly.

Reporting Obligation

Step 5 of the OECD Guidance and article 7 of the CMR focus on reporting, with the following objective: “To publicly report on due diligence for responsible supply chains of gold from conflict-affected and high-risk areas in order to generate public confidence in the measures companies are taking.” LBMA has set up a Working Group, that will address Bullion Bank Reporting in order to prepare a declaration which will help banks to comply with this public reporting requirement.

An online transparency platform where downstream companies can voluntarily share information on their due diligence for metals and minerals will soon be released by the EC.