LkSG · Supply chain due diligence
Avoid LkSG fines: document due diligence for critical minerals
Germany's Supply Chain Due Diligence Act requires large companies to conduct risk analysis, preventive measures and reporting — including critical raw materials such as rare earths, graphite and gallium in procurement.
Reporting duty
Annual · ongoing
Report on risk analysis and measures — deadline after fiscal year. New contracts without due diligence proof are an audit risk.
Fine
up to 2% turnover
For companies with >€400M turnover: up to 2% of global group turnover; otherwise up to €8M. Personal liability for management.
Supply failure risk
Weeks downtime
Typical scenario: audit finds LkSG gap → supplier blocked → production line without NdFeB magnets or graphite anode.
Concrete procurement risk scenario
How it plays out in practice — operational damage, not theory:
Step 1
Audit request from corporate procurement
Your tier-1 supplier demands LkSG proof for cobalt and rare earths by quarter-end. Your documents: incomplete COA, no origin proof, no risk analysis.
Step 2
Authority fine proceedings
BAFA investigates supply chain complaints. Missing documented measures → fine notice. Parallel: media coverage, reputational damage.
Step 3
Supply stop & emergency sourcing
Blocked supplier, empty spot market, price +40%. Production stops 3 weeks. Replacement supplier unvalidated — next audit risk.
What to check now
- Supplier risk analysis documented for all critical minerals?
- COA, ESG reports and origin certificates archived audit-ready?
- Grievance mechanism and preventive measures demonstrable?
- Annual LkSG report with concrete supplier examples prepared?
How ZRG Mineral supports your LkSG due diligence
ZRG is not legal advice — but delivers the documented data base auditors and corporate procurement expect:
- · Audit trail & PDF certificate per validation
- · ZRG score for document completeness + risk terminal score
- · Coverage map: make missing suppliers visible
- · Early warnings for geopolitical risk 6–8 weeks ahead
Not legal advice. Fine figures based on LkSG — obligations depend on company size and supply chain.