Conflict Minerals

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For decades, the trade in tin, tantalum, tungsten and gold (also known as 3TG), along with various other minerals and resources, has played a central role in funding and fuelling some of the world’s most brutal conflicts.

According to international nongovern- mental organisation Global Witness, revenues from the extraction and sale of these natural resources, also known as ‘conflict minerals’, not only provide armed groups with the means to operate but also provide State security forces and corrupt officials with off-budget funding.

Section 1502 of the Dodd Frank Act – the US’s conflict minerals law – is the first piece of legislation that aims to break the links between the lucrative minerals trade in certain African regions and the abusive armed groups that prey on and profit from these regions’ minerals trade.

The Dodd Frank legislation was passed in July 2010 and the final rules for Section 1502 were released in 2012.

“The Dodd Frank Wall Street Reform and Consumer Protection Act came into effect in January last year, and Section 1502 on conflict minerals requires compliance from all public companies that are listed with the US Securities and Exchange Commission (SEC),” ENSAfrica mining and environmental law director Lloyd Christie tells Mining Weekly.

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http://www.washingtonpost.com/

The following is a guest post by Christoph Vogel and Ben Radley. Vogel is an Independent Analyst and a PhD candidate at the University of Zurich. Radley is a Director for Heartland Alliance and a PhD student at the International Institute of Social Studies.

When we think of the Congo today, we may think of bloody resource wars where women are being raped by armed groups to gain access to and control of the country’s minerals. If we do so, it’s because of the work of numerous NGOs, advocacy organizations, and activists such as the Enough Project or the “no blood in my mobile” campaign, who have been campaigning for several years to reduce conflict in the eastern Congo by “cleaning up” the region’s mineral trade. The struggle against so-called “conflict minerals” has literally become, borrowing Autesserre’s words, a lopsided “dominant narrative” spanning policy discourses and practical engagement in the sector.

The most significant policy result of this work to date, Section 1502 of the Dodd-Frank Act, was passed by the Congress and signed into law in July 2010. It requires companies registered on the U.S. stock market to report on an annual basis whether their minerals have been sourced from the eastern DRC or neighboring countries, and thus, potentially financing conflict. This has in turn led to recent announcements by electronics giants including Apple and Intel that more of their products will be “conflict-free” in the future.

In the meantime, a coalition of around 70 Congolese leaders and international experts argue that, in the Congo itself, the movement risks contributing to, rather than alleviating, the very conflicts it sets out to address. While not calling to keep transparency and regulation at the lowest level, their open letter urges governments, companies, and other stakeholders to carefully rethink and increase their engagement on the issue.

More than four years after the signing of the Dodd-Frank Act, only a small fraction of the hundreds of mining sites in the eastern DRC have been reached by practical measures emanating from Dodd-Frank legislation, such as supply chain traceability or mineral export certification.

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http://www.bloombergview.com/

The world’s insatiable demand for everything from smartphones to jewelry to cars is feeding the bloody war in eastern Congo, where tin, tantalum, tungsten and gold are mined for use in manufacturing. Last year, exports of these minerals from central Africa generated at least $2.1 billion — much of which went to rebels and government soldiers.

Four years ago, Congress responded with a sensible provision of the Dodd-Frank Act that requires U.S.-regulated manufacturers whose products may contain conflict minerals to investigate the matter and report, publicly, to the Securities and Exchange Commission. This transparency is meant to motivate the companies to get conflict minerals out of their supply chains and avoid the wrath of socially conscious consumers and shareholders.

So far, though, companies are widely flouting the law. The first conflict-mineral reports were due June 2, and only 6 percent met an acceptable standard for compliance, according to a review by Claigan, an environmental compliance consultancy.

Now, this is only the first year, and some companies may have been confused by an eleventh-hour Court of Appeals ruling that modified the law’s reporting requirements. Some noncompliance would have been understandable. But not this much. Manufacturers apparently need to be nudged awake to the harm their reliance on conflict minerals causes. The SEC will have to make an example of the worst offenders.

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http://www.washingtonpost.com/

On June 10, the Enough Project published a report claiming that 67 percent of tin, tantalum, and tungsten (3T) mines in eastern Congo are now free of armed actors and declaring the minerals mined there ‘conflict-free’ (compared with a 2010 U.N. Group of Experts report asserting that ‘almost every mineral deposit’ in the area was controlled by military groups).

The document came close on the heels of a June 2 deadline for U.S. firms to report to the Securities and Exchange Commission (SEC) the provenance of minerals used in their products and to certify that they do not contain ‘conflict minerals’ from the Democratic Republic of Congo or its neighbors. The BBC responded to the Enough Project’s report, calling it ‘rare good news’ from the DRC and lauding it as proof that consumer-led lobbying efforts in wealthy countries can have real effects on under-developed countries.

However, the situation is not as rosy as such reactions may suggest. First, describing the mines as ‘conflict-free’ suggests that the absence of armed groups and Congolese military from mines means that miners no longer work under duress and are not forced to pay illegal ‘taxes’ at the mine site that can in turn fuel militia activity. Yet the absence of armed individuals does not mean that miners are not working under forced or inhumane conditions, that they are not being extorted, or that non-state actors and individuals holding political office are not benefiting illegally from mining in the region.

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http://www.mineweb.com/

Urgent reforms are needed for conflict gold, says a new study by a Washington D.C.-based human rights group.

RENO (MINEWEB) – A new report by the Enough Project, a Washington D.C.-based human rights group, says the Dodd-Frank conflict minerals legislation is partly responsible for forcing armed groups to cede control of two-thirds of tantalum, tin and tungsten mines surveyed by the Enough Project in the eastern Congo.

“However, artisanally mined gold continues to fund armed commanders,” said the report, The Impact of Dodd-Frank and Conflict Minerals Reforms on Eastern Congo’s Conflict. Gold mining “is still financing armed actors and business and political elites”.

“The U.N. Group of Experts estimated that 98% of artisanal gold (roughly 10-12 tonnes, worth between $380 and 500 million) was smuggled out of Congo in 2013,” said the report. “The army continues to be involved in illicit gold exploitation, with senior officers reaping the majority of profits.”

“The smuggling of gold is also fueled by the sector’s mismanagement and poor enforcement of the Congolese mining legislation. The gold trade must be thoroughly reformed, both through expanded, responsible development and formalization of the artisanal sector,” said Enough Project.

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http://www.businessweek.com/

Like most advanced chips these days, Intel’s (INTC) contain tantalum, gold, tin, and tungsten—elements that can be mined on the cheap in war-torn parts of the Democratic Republic of Congo. Carolyn Duran’s job is to make sure the company doesn’t use so-called conflict minerals.

For the past five years, Duran, Intel’s supply-chain director, has paid for independent audits and led the company’s own audits of metal producers to determine if their ore comes from mines controlled by militias in the DRC, where a decades-long civil war has claimed millions of lives. It’s as tough as it sounds, she says: “Every single member of Intel’s conflict team has felt, at some point, that we’ve hit an insurmountable task.”

By June 2, U.S. companies with products that may contain conflict minerals were supposed to send reports to the Securities and Exchange Commission detailing their efforts to discover whether their metals originated in the DRC. The rule, designed to starve militias in the central African country of revenue by discouraging companies from dealing with them, dates to 2010’s Dodd-Frank Act.

In April a federal appellate court struck down the part of the rule that would have compelled companies to disclose the possible use of DRC-sourced conflict minerals on their websites. But businesses must still prove to the SEC that they’ve performed their due diligence, either by auditing their suppliers or hiring an accredited third party to do so. Besides Intel, Apple (AAPL) and Hewlett-Packard (HPQ), few companies put in the work before the deadline to trace their components from mine to factory.

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http://www.bizjournals.com/sanjose/

Blood diamonds. Blood chocolate. Blood smartphones.

Silicon Valley technology companies are racing to comply with new federal rules that require them to disclose efforts to determine if their products contain materials that fund armed groups in the Democratic Republic of Congo.

By June 2, companies whose products use tantalum, tin, tungsten or gold — widely used in semiconductors, mobile phones and other electronics — are required by the Securities Exchange Commission to disclose steps taken to trace the origin of those minerals.

Companies must describe their efforts to determine the country of origin of these minerals, collectively known as “3TG.” If they have a reason to believe their minerals come from Congo or bordering countries, they must try to determine the minerals’ complete chain of custody, including the source mine if possible.

The rule is a result of years of pressure from human rights organizations such as the Enough Project, Amnesty International and Global Witness. They hope that increased transparency will pressure companies to make sure their minerals are not funding violence in Congo, where 5.4 million people have died since 1998 due to conflict-related causes according to an International Rescue Committee report.

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http://www.businessweek.com/

As his chartered Cessna flies above the Democratic Republic of Congo’s Katanga province, Mussadiq Hamid Merican flips through the pages of his Malaysian passport, counting Congolese visas.

“Nine, 10, 11,” he laughs, while the plane passes over villages of thatched-roof huts scattered across sparsely forested savannah. “And these are multiple entry visas so it’s actually more than that.”

The pilot banks and approaches a dirt landing strip rolled in the 1980s by a now-defunct tin company. For the past four years, Merican, 34, has been flying in and out of mines like this in Congo for Malaysia Smelting Corp. (SMELT), the world’s second-largest tin producer. Merican’s company is among those trying to determine if it’s possible to mine in the country profitably — without enriching warlords.

Since the mid-1990s, when war broke out in eastern Congo in the aftermath of the genocide in neighboring Rwanda, Congolese minerals have been linked with corruption, killing and sexual violence. Rebels, unscrupulous traders and members of the army helped themselves to tin ore, of which Congo is Africa’s biggest producer, gold and columbite-tantalite, or coltan, an ore used in smartphones and laptops.

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