PoliticsNews & AnalysisTaking the conflict out of Congo's 'conflict minerals'

Fri,24Nov2017

Posted on Tuesday, 04 September 2012 09:33

Taking the conflict out of Congo's 'conflict minerals'

By Gregory Mthembu-Salter in Kinshasa

Illegal gold trading continues in areas controlled by militia despite the government’s ban on conflict minerals/Photo©ReaActors across the board in the mining sector are making moves to bring more accountability to mining operations in conflict zones.

 

Claims and counter-claims about the illegal exploitation of the Democratic Republic of Congo's (DRC) mineral riches are fuelling the latest political row in the region after a United Nations report in late May accused Rwanda of covertly backing local militias in the DRC. After renewed fighting in the Kivu provinces, the UN report pointed to links between Kigali and the Congrès National pour la Défense du Peuple, which is accused of serial brutality and stealing local minerals.

Adding to diplomatic pressure on militias running illegal mining operations – and the foreign mining companies to which they sell – is the international campaign to promote accountability and traceability. The United States' Dodd-Frank financial reforms of 2010 included provisions barring US-listed companies from buying minerals from suppliers that may be linked to armed groups. Now the European Union is introducing its own accountability laws.

Also under pressure are Chinese companies, who are now ready to discuss compliance with the new rules. Some companies claim that Chinese traders and mineral smelters take advantage of the US's new ban by buying suspected 'conflict minerals' at highly discounted rates.

Suspensions

The international mining lobby is fighting back. The US Chamber of Commerce is planning legal action against New York's Securities and Exchange Commission (SEC), which has still not published all the rules it will put in place to implement the Dodd-Frank reforms. The chamber argues that the Dodd-Frank Act disadvantages US businesses. The pro-business Republican Party could make it a big issue ahead of the US presidential election in November.

Last September, the DRC government introduced laws obliging companies and traders to conduct due diligence on their suppliers. On 15 May, Kinshasa's mines minister Martin Kabwelulu suspended Chinese-owned TTT and Huaying trading companies from working in eastern Congo while Congolese officials investigate whether they have been dealing with companies linked to armed groups.

In April, local officials in the Ituri region of Orientale province shut down the illegal mining operations of Fametal, a Chinese company that had received an explor- ation licence but not government approval to mine.

1,502 company executives testified at US House of Represen- tatives hearings in May to ask for changes to SEC reporting rules on conflict minerals

The international campaign for more accountability is winning supporters. In early May, the Paris-based Organisation for Economic Cooperation and Development's (OECD) conference on gold, tin, tantalum and tungsten mining in war zones attracted record attendance. At the OECD conference, a state-owned Chinese company offered to host a meeting in China to discuss due diligence requirements and standards for companies when buying from areas such as eastern DRC.

Alongside government officials and anti-corruption lobbyists such as Global Witness at the conference, big US companies such as Boeing and Motorola want to influence the debate over accountability in supply chains. Their target is Section 1502 of the Dodd-Frank Act of 2010 that will require US-listed companies to report to the SEC if they are using 'conflict minerals' and report on the due diligence that they are conducting.

Major users of tin, tantalum, tungsten and gold – including the bullion dealers, jewellers, and the electronics and aerospace industries – try to avoid filing these reports. For now, they are under no clear legal requirement to make the reports as the SEC is yet to issue the rules based on Section 1502. Given the heated arguments, it seems unlikely that the SEC will issue its new rules before the US presidential elections.

Tagging scheme

British-based ITRI, a tin trade association, has introduced a traceability and due diligence scheme that involves issuing tags to mining output at sites identified as 'conflict free.' This scheme is in operation in the DRC's Katanga province and in Rwanda.

ITRI has not issued tags in the DRC's war-torn Kivu provinces, leaving tin and tantalum either to be sold at a discount to Chinese buyers or to be smuggled out to Rwanda. Earlier this year, ITRI stopped issuing tags to one prominent mining company in Rwanda because of suspicions that it was laundering 'conflict tin' from the Kivus. The Rwandan government has said it is investigating the matter.

Renewed conflict flared in the Kivus as the OECD conference proceeded in Paris, underlining how challenging it will be to establish Kivu-based conflict-free mineral supply chains from which increasingly nervous international buyers will have sufficient confidence to buy●



Last Updated on Tuesday, 04 September 2012 10:43

Subscriptions Digital EditionSubscriptions PrintEdition

FRONTLINE

NEWS

POLITICS

HEALTH

SPORTS

BUSINESS

SOCIETY

TECHNOLOGY

COLUMNISTS

Music & Film

SOAPBOX

Newsletters

Keep up to date with the latest from our network :

subscribe2

Connect with us