UPDATE 1-EU proposes scheme to certify mineral imports blood-free

Wed Mar 5, 2014 9:21am EST

* EU seeks to compliment U.S. law, target importers

* Voluntary scheme could be extended to more minerals

* EU is a big market for gold, tin, tantalum, tungsten

By Robin Emmott

BRUSSELS, March 5 (Reuters) - Importers of minerals from conflict zones will be able to certify their goods have not financed warlords under a European scheme proposed on Wednesday, but rights groups said it was too timid to stop the trade in 'blood metals'.

Much of the gold, tantalum, tin and tungsten used in electronics and lighting is mined in areas of civil conflict in Africa.

The European Union, which increasingly requires trading partners to adopt political and human rights reforms, wants to pressure importers to boycott the violent militias that control the raw materials.

"We are committed to preventing international trade in minerals from intensifying or perpetuating conflict," EU Trade Commissioner Karel De Gucht and foreign policy chief Catherine Ashton said in a joint statement.

Under the EU's voluntary scheme, which could come into force by the end of next year, the approximately 420 companies that import all minerals for the 28-nation bloc could seek EU certification that their goods are conflict-free.

What's more, companies such as Apple or Siemens that source metals from certified importers would be eligible to bid for lucrative contracts across the EU's many governments and institutions.

In the United States, the Dodd-Frank Act already obliges U.S stock exchange-listed companies to disclose the use of minerals from an African conflict zone in their supply chains.

Rights group Amnesty International said the EU proposal fell short of expectations and that only binding legislation requiring a wide range of EU-based companies to do checks on their supply chains would work.

"Without a clear EU law that requires companies to do due diligence and report publicly on it, the European Commission will fail to bring EU companies up to the same responsible sourcing standards as their American competitors," Amnesty said.

EurAc, a campaign group working in central Africa, said the EU proposal was simply "not a sufficient response" to stop the commercialisation of conflict minerals.

European officials say that creating an EU version of U.S. law could lead importers to abandon Africa altogether and plunge honest mining communities in those areas deeper into poverty.

AVOIDING AN AFRICAN BOYCOTT

The European Commission, the EU executive, says the U.S. law already pressures companies to avoid buying conflict minerals.

Some listed companies have switched their suppliers to Australia, depressing the price of minerals such as tin by half in the Democratic Republic of Congo and Rwanda, according to one EU official who has travelled to the region.

The Commission says its proposal, which must be approved by EU governments and the European Parliament, compliments the Dodd-Frank Act by targeting importers into the European Union, one of the world's biggest markets for tin, tantalum, tungsten and gold.

"Before the minerals get spread across Europe to hundreds and thousands of factories to be used in millions of products, we focus on a critical point in the EU supply chain, the importers of these minerals," De Gucht told a news conference. "That is realistic to control."

The United States defines the conflict mineral zone as the Democratic Republic of Congo and neighbouring countries including Angola and South Sudan. They make up 17 percent of the global production of tantalum, 4 percent of the global production of tin, 3 percent of tungsten and 2 percent of gold.

The European Union says its proposal is not limited to sub-Saharan Africa and could be applied across the world to places such as Colombia, where militias control some remote gold regions.

The scheme does not cover diamonds because the European Union is already part of the 50-member Kimberley Process, a government, industry and civil society initiative set up in 2002 to control the use of rough diamonds that fund rebel movements and human rights abuses.

But the EU proposal could be extended to other minerals and also could become mandatory after three years if there is enough support within the bloc.

Officials in Brussels estimate that implementing the certification scheme will cost each importer about 13,500 euros ($18,600), or less than 1 percent of annual turnover.