EU agrees law to curb flow of conflict minerals

STRASBOURG (Reuters) - The European Union agreed a deal on Tuesday to stem the flow of gold and other metals used to fund armed conflicts or produced in conditions that breach human rights.

EU importers of tin, tungsten, tantalum, gold and their ores will from 2021 have to carry out checks on their suppliers in legislation that will also apply to smelters and refiners.

Human rights campaigners said the agreement was a half-hearted first step, with imports of finished products that may contain the minerals not included and an end result that exempted a large number of companies.

Industrial users of the commodities said the deal reached in outline in June strikes the right balance.

Members of the European Parliament and European Commission officials who brokered the deal said it would improve the lives of those living in conflict zones and break a vicious cycle between the trade in minerals and the financing of conflicts.

"This is a very strong regulation. It's ground breaking," EU Trade Commissioner Cecilia Malmstrom told a news conference, adding she hoped other countries would follow the EU example.

The EU rules will cover the minerals anywhere in the world, meaning they go further in scope than U.S. Dodd-Frank legislation that is limited to the Democratic Republic of Congo and nine neighbouring countries.

However, the EU would only scrutinise imports of the raw materials, while the U.S. law extends that to their use in products such as mobile phones, electrical goods and cars.

All but the smallest EU firms will have to carry out due diligence checks on their suppliers. Dentists have been cited as one group that would not have to do checks.

Michael Gibb, conflict resource team leader at campaign group Global Witness, welcomed the fact that checks would be mandatory, but said the EU had appeared to allow sizeable trading exempt from checks - such as up to 100 kg of gold (220 pounds) per year.

"This will include serious minerals traders. It's not just dentists," he said, adding a four-year phase-in was also too long.

Global Witness believes it would also have made sense to have a longer list of materials, including for example cobalt, widely used in batteries and in aircraft engines, and diamonds and other gems.

Tin, tantalum, tungsten and gold are used in the production of many high-tech devices, in the automotive, electronics, aerospace, packaging, construction, lighting, industrial machinery and tooling industries, as well as in jewellery.

(Reporting By Philip Blenkinsop, editing by David Evans)