A US law on conflict minerals is curbing African warlords’ presence around mines in the Democratic Republic of the Congo (DR Congo), campaigners say, but its full impact remains unclear, with most firms failing to pinpoint the origin of their metals by a deadline that passed last month.
Millions are estimated to have died over nearly 20 years of bloodshed in eastern DR Congo fueled by the minerals smuggled through Rwanda, Uganda and Burundi.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, US companies must try to establish the origin of four metals often used by Congolese rebels to finance their activities.
Photo: Reuters
Yet only 5 percent of firms making filings by the June 2 deadline traced the conflict status of the minerals used in their products, US risk management firm Source Intelligence said.
A grace period means big firms can say they were unable to get data for two years, but campaigners urged them try harder, saying the law had helped, but could do more to track the minerals, many of which are used in smartphones and other electronics goods.
“Overall, we’ve been disappointed with the response of companies, and the lack of meaningful information on the supply chain checks and risk assessments they are doing, although a few of the reports have been strong,” said Emily Norton, an assistant campaigner with non-governmental organization Global Witness.
Photo: Reuters
The electronics sector has been the most robust at tracing the source of its minerals, Norton said, holding up chip giant Intel Corp as a rare example of a company that had conducted an audit.
Campaigners say the law has had a positive impact in three of the four metals it covers — tin, tantalum and tungsten — but that gold remains a problem.
A new certification scheme organized by non-profit industry group the International Tin Research Institute is being rolled out in North Kivu Province, after earlier projects in the DR Congo’s copper-rich southeastern provinces of Katanga and South Kivu.
Sasha Lezhev, a senior policy analyst with the Enough Project based in Washington, said about two-thirds of tin, tantalum and tungsten mines in the eastern DR Congo have been demilitarized.
In a report based on five months of field research, the organization said minerals not certified as “conflict-free” sold for 30 to 60 percent less, cutting profits for armed groups, but some analysts say the law’s impact has been overstated.
A Congolese government adviser cautioned that rebel involvement was hard to track in remote areas, while an academic specializing in the region said profits were still going astray.
“Dodd-Frank and the ensuing initiatives, including traceability and certification, have removed armed actors from the mines, but now we hear that army commanders are sending intermediaries to organize taxation on the site,” said Christoph Vogel, a researcher at the University of Zurich.
Global Witness said that last year, there was still high-level military involvement in the gold trade in the country’s east, and Lezhev has called on jewelers and the US government to counter this.
Campaigners are also urging the EU to strengthen a conflict minerals proposal released in March, making it mandatory instead of voluntary. Some of the legal experts advising the companies about the minerals law say the firms find it hard to discover the origin of their supplies.
“We have clients that have literally tens of thousands of suppliers,” said Michael Littenberg, a partner at New York law firm Schulte Roth & Zabel.
However, another consultancy said that information was available and companies needed to be more rigorous.
Of the 1,306 companies that filed reports, only 14 of them contacted Indonesia’s CV United Smelting Corp, one of the most widely used tin smelters in the world, said Canadian environmental consultancy Claigan, which specializes in conflict minerals.
“Very few companies showed any due diligence,” Bruce Calder, vice president of consulting services at Claigan, said in a presentation.
When the conflict minerals law was first passed, there were fears that it would lead to companies boycotting the region’s minerals and some firms initially moved in that direction, but that is less of a problem now, Littenberg said.
“Most companies have figured out that isn’t the right approach and the NGOs [non-governmental organizations] have also been pretty vocal that they don’t want to see companies boycotting the region,” he said.
The law was watered down by a court ruling after industry groups challenged it, but an appeal has been launched by the US Securities and Exchange Commission in charge of enforcing it.
Analysts say it has had little impact in some neighboring areas, such as the Central African Republic, where the short-lived rule of Seleka rebels last year triggered a conflict that prompted the intervention of French and African peacekeepers.
“Once in power the movement asserted control of lucrative trafficking networks [gold, diamond and ivory]. Their systematic looting destroyed what was already a phantom state,” the Brussels-based International Crisis Group said a report last month.
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