Reports by the United Nations group of experts and several national and international NGOs have shown that natural resources were, and still are, fuelling conflict in Eastern DRC. The United Nations has been reporting on the issue of the illegal exploitation of natural resources since 2002 and has created a specific group of experts on this issue. Their last report was released on 2 December 2011. You can also take a look at a Global Witness’ report on the question, from 18 May 2011: Congo's mineral trade in the balance: opportunities and obstacles to demilitarization. Rebel groups and members of the Congolese national army control the exploitation of gold, cassiterite, coltan, wolfram, timber and diamonds, in a number of areas in North and South Kivus. They have become “informal owners” of pits, and they are levying taxes on minerals trade. In some territories in Eastern Congo, the informal artisanal mining sector generates hundreds of thousands of informal jobs and tens of millions of dollars per year.
- The Current Situation
In July 2010, the American government passed financial reform legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1502 of this Act calls on the American Securities and Exchange Commission (SEC) to make the sector more transparent by formulating rules that require companies to disclose the origin of their minerals through due diligence over the supply chain.
This legislation is the first to specifically target the issue of conflict minerals since the conflict in DRC began. Architects of the Dodd Frank Act hope that it will help sever the link between mineral trade and armed groups. But it has also generated a controversial debate in NGO circles and a degree of uncertainty in this sector. For instance, critics argue that, whatever the law’s intention, section 1502 will essentially end the trade in minerals mined in Eastern Congo. It is true that mineral exports from the region dropped significantly in 2011. The downturn stems from a six-month suspension of mining and trading activities imposed by the Congolese government (the Congolese government has put a ban on exploitation and exportation of Minerals in DRC for a duration of 6 months, see Ministry of Mines), which prompted leading foreign companies to suspend importation while waiting for the development of the SEC’s regulation to be settled. This has forced many artisanal miners to move to mining sites in North Katanga or to seek alternative livelihoods.
The Dodd-Frank Act disclosure also does not ban or penalise the use of conflict minerals. According to the section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, “the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual- and gender-based violence, and contributing to an emergency humanitarian situation therein […]” pp 838. If companies discover they have been sourcing conflict minerals from DRC or adjoining countries, they can continue to do so; however, they must submit a “conflict minerals report” to the SEC and thus make public their imports. According to the SEC, “The Conflict Minerals Report would include a description of the measures the issuer had taken to exercise due diligence on the source and chain of custody of its conflict minerals, including a certified independent private sector audit of the Conflict Minerals Report that identifies the auditor and is furnished as part of the Conflict Minerals Report.” For more information please click here. In addition, the Act only applies to major companies listed on the New York Stock Exchange, leaving behind many smaller companies involved in the trade.
Many other initiatives focused on methodology for due diligence have arisen since the Dodd Frank Act was passed. For example, the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (December 2010), provides management recommendations for responsible global supply chains of minerals to help companies respect human rights and avoid contributing to conflict through their mineral or metal purchasing decisions and practices.
International Conference of the Great Lakes Region (ICGLR) introduced another initiative during the Lusaka summit in December 2010. It launched a Regional Initiative on Natural Resources (RINR) that promotes dialogue between ICGLR Member States on issues related to the illegal exploitation of natural resources and provides them with “six specific tools” aimed at breaking the link between armed conflict and revenues from natural resources:
- Regional Certification Mechanism
- Harmonisation of National Legislations
- Regional Database on Mineral Flows
- EITI Peer Learning Mechanism
- Whistle-blowing Mechanism
Germany is playing an important role in supporting both the ICGLR projects and the Rwandan and Congolese mining authorities. The German Federal Institute for Geosciences and Natural Resources (BGR) is leading a certification initiative in both countries called certified trading chains (CTC). This effort aims to implement ethical standards and transparency in mineral production, thereby increasing responsibility in the minerals sector through voluntary self-commitment among the partners. The approach focuses explicitly on artisanal mining organisations and small-scale companies that use artisanal labour in developing countries. While the scheme has progressed considerably in Rwanda, the DRC’s pilot program in South Kivu is still in its early days.
The most important components of the CTC scheme are origin verification and trade volume analysis of cassiterite, coltan, wolframite and gold. CTC companies must comply with a newly established set of standards to assess this (read the full report here):
Origin and volumes of produced and traded goods as well as company payments to host government must be transparent.
The company must not use child labour and must ensure fair remuneration and work conditions as well as continual improvement of health and safety measures for all employees.
The company must ensure security on company sites whilst respecting human rights.
The company must consult communities where it operates and must contribute to their social, economic and institutional development taking into account gender sensitive aspects.
The company must seek continual improvement of its environmental performance.
As with the other certification schemes, CTC implementation would require several measures for upstream companies mining cassiterite, coltan and wolframite in the upstream section of the DRC supply chain (these requirements are based on the CTC project in Rwanda):
· Development of a record-keeping system that allows the efficient and systematic control of the creation, receipt, maintenance, use and disposition of records, which have to be kept to prove compliance with the CTC Standards.
· Regular and uniform submission of records to a regulatory body.
· Being subject to certification audits and corporate social responsibility performance reviews.
The Industrial Technology and Research Institute (ITRI), an organisation based in the United Kingdom and representing major tin producers, has launched the Tin Supply Chain Initiative (iTSCi) which aims at improving due diligence and traceability in the tin supply chain in Rwanda and the DRC. The iTSCi traceability scheme indicates to international purchasers whether the minerals in question derive from certified mining and trading activities. Together, the ICGLR and ITRI signed a partnership agreement to cooperate in a tracking system to certify conflict-free casserite from the Great Lakes Region.
- Further Analysis
The adoption of the Dodd-Frank legislation in 2010 prompted a flurry of international initiatives designed to bring transparency to the minerals trade in the Great Lake Region and prevent it from fuelling conflict. The increased attention on this issue is a welcome development; however these efforts raise questions as well as answers. For instance, the initiatives taken by the United Nations (since the beginning of the 2000s, the UN Security Council has passed a series of resolutions about the illegal exploitation of natural resources in the DRC: Resolution 1493 (2003), Resolution 1596 (2005), Resolution 1533 (2004), Resolution 1856 (2008), Resolution 1906 (2009).) and by the Congolese Government (On September 10, 2010, Joseph Kabila banned the production and trade of minerals in the Kivus and Maniema.) intending to end the illegal trade of minerals in the DRC through sanctions and policing operations did not stop or reduce illicit ties between armed groups and minerals traders. As the last report from the UN highlights, “On 10 March 2011, the Government of the Democratic Republic of the Congo lifted its suspension of all artisanal mining activity in the provinces of North Kivu, South Kivu and Maniema, which had been in place since 11 September 2010. The Group determined that during the ban, the mining of tin, coltan and wolframite had continued in several areas, often under the control of FARDC or armed groups. The involvement of FARDC units in mining activities sometimes leads to violent conflicts of interest between army units, revealing the persistence of parallel chains of command.”
In order for these initiatives to have a real impact in the Eastern Congo, the governance issues must be addressed, particularly feasibility, reliability and security problems. The lack of administrative capacity in the country, the integrity of the administration and the militarisation of production sites should take priority. From an industry perspective, international coherence is required to avoid distortion of competition. European and Asian companies should be subject to the same regulations as U.S. companies.
In the framework of the Raw Material Initiative, the European Union did not expressany intention to introduce due diligence requirements similar to those in section 1502 of the Dodd-Frank Act, despite the fact that the European market is one of the main consumers of these minerals. However, there is a strong need for the EU to not only pass similar legislation, but to go further than the American act by complementing market regulation with a political and developmental approach that is currently lacking. Europe must not only demand transparency for companies that operate in conflict areas, but it must also work towards the socio-economic well-being of the mining communities and support current regulation efforts by the producing countries in the Great Lakes Region.