Conflict Minerals

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.theguardian.com/uk

How can manufacturers – and consumers – fight the conflict minerals that are destabilising central Africa?

The illegal trade of tantalum, tungsten, tin and gold from the Democratic Republic of Congo (DRC) and surrounding countries is fueling conflict in central Africa. Sales of these conflict minerals help fund arms for militias, ultimately leading to human rights abuses. Meanwhile, US companies that use these metals are facing growing pressure to find sources that are conflict-free. An Securities and Exchange Commission rule, which had been scheduled to take effect next month, would require the vast majority of US companies to disclose whether they use conflict minerals from the region.

Now the SEC rule has come under fire: A US appeals court last week ruled that part of the regulation – a provision requiring companies to state whether their products use conflict minerals – is unconstitutional. That, and other ongoing litigation, has raised uncertainty about exactly how the conflict minerals rule will take effect.

The good news for companies is that compliance with these new regulations just got easier. In January, the Conflict Free Sourcing Initiative (CFSI) announced the existence of certified conflict-free smelters for all four of the conflict minerals. A key step in the supply chain, smelters turn rocks into purified metals for use in electronics.

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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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http://www.theguardian.com/uk

Tackling conflict minerals, and the human rights abuses that often accompanies them, requires an industry-wide approach

Connecting purchasing decisions in developed countries to human rights abuses on the other side of the world is a difficult feat, regardless of whether you are an activist or businessperson. At a recent United Nations event, a panel of experts debated how consumer electronics companies, including some of the most prominent brand names in the industry, are working to ameliorate a brutal, systematic and ongoing human rights abuse.

The event, held on International Women’s Day by non-profit the Enough Project, brought together a a panel including activist John Prendergast, UN special representative on sexual violence in conflict Zainab Bangura, Congolese activist Sylvie Maunga Mbanga, actor and activist Robin Wright, and Tim Mohin, chair of the Electronic Industry Citizenship Coalition.

Enough project policy associate, Holly Dranginis, opened the panel with examples of how sexual violence is used as a deliberate, systematic tool of war, drawing from situations in Rwanda and the Balkans.

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