Saturday, December 5, 2009

Opinion: Consumers Can Influence Trade in Conflict Minerals

By John Prendergast — Special to GlobalPost
Published: December 3, 2009 08:31 ET

From mine to cell phone — illuminating Congo's conflict mineral supply chain.


By Joe Lauria — Special to GlobalPost
Published: December 3, 2009 06:34 ET
Updated: December 3, 2009 10:18 ET

Both sides of Congo war get funds from sale of minerals used in mobile phones.

ENOUGH's Response

ENOUGH's Response About US Legislation

Enough sent me their response about my blog posting on US legislation on conflict minerals. I apologize for the delay in posting it and I stand corrected on the auditing mechanism the House bill proposes. Nonetheless, I think my comment that the bill relies on being able to distinguish conflict from non-conflict minerals at a local level in the DRC, which we are not yet able to do...

Toutefois, merci a ENOUGH pour la reponse:

At Congo Siasa, Jason Stearns highlights the push for U.S. legislation to tackle the problem of conflict minerals in eastern Congo. Jason rightly notes that this level of congressional enthusiasm for the Congo is unprecedented, and is already beginning to influence thinking elsewhere around the world, particularly in European capitals. He also questions the efficacy of legislation that seeks to impose accountability on the supply chain for Congolese minerals starting at the international level and working backwards to the mines themselves.

There are a couple of specific provisions within the Conflict Minerals Trade Act (H.R. 4128) worth clarifying in response to Jason’s concerns. At the core of this bill is a set of audit and import declaration requirements that have been carefully calibrated to function as part of a wider policy push to cut off the flow of financing from the minerals trade to armed groups and military units in eastern Congo. These requirements are targeted, with the audits specifically aimed at the smelting and refining facilities where mineral ores are transformed into metals. Thanks to the investigations conducted by Jason and the rest of the experts tasked by the UN to look at this issue, we know that even refining facilities based in East Asia have much more knowledge and control over the mineral supply chain than previously understood. The audit and import declaration mechanism is also sequenced: the bill would prohibit the import of goods containing minerals that come from non-audited facilities, but this only kicks in two years after the bill is enacted.

These nuances are in the bill are intended to provide practical means to incentivize minerals traders in Congo and around the world to become more accountable so as to maintain their access to international markets, recognizing that this will not happen overnight. The audit system in this bill would crucially depend upon a strong, independent monitoring body based in Congo with the authority and capability to crack down on the illicit trade, just as Jason recommends.

In response to increasing pressure, industry insiders from Congolese comptoirs all the way to Asian smelters and U.S. electronics companies have committed themselves to a more transparent and traceable way of doing business. The possibility of U.S. legislation has already invigorated those efforts and the probability that this bill might actually pass should keep that momentum going. Passing a conflict minerals law in the United States won’t solve the problem on its own, but it has a chance to catalyze wider reform efforts that would allow Congolese civilians to meaningfully benefit from these resources.

Jason Stearns on Conflict Minerals

US Congress Tackles Conflict Minerals

Yesterday, the US congressman Jim McDermott (D-WA) unveiled legislation he will introduce in the U.S. House of Representatives today to help stop trade in conflict minerals in the Congo. His initiative was applauded by many advocacy groups, including the Enough Campaign, Human Rights' Watch and Global Witness.

This is good news indeed. Now we have three initiatives in the US government aimed at quelling the trade in conflict minerals in the Congo. In addition to this initiative, there is the Congo Minerals Act that Senators Brownback (R-KS), Duck Durbin (D-IL) and Russ Feingold (D-WI) introduced to the upper house in April 2009, as well as an amendment to the National Defense Authorization Act signed into law in October 2009 requiring the State and Defense Departments to work together to create a map of mining areas and zones occupied by armed groups in the eastern Congo.

This is unprecedented. Previously, the furthest the US Congress has gone is to issue resolutions condemning violence, supporting peace processes and holding hearings. The European Union is watching closely, and advocates in France are considering following suit with pressure on the French parliament. It's nice to see the US taking the lead on this.

But what do these acts actually call for? Here are the most important items in the House bill:

* definition by commerce secretary of what constitutes a conflict mineral good, the tasking of regular audits of mineral processing facilities in the US
* create a conflict minerals map
* support for further investigations by the UN Group of Experts;
* mapping of which armed groups control key mines in eastern Congo;
* inclusion of information on the negative impact of mineral exploitation and trade on human rights in Congo in the annual human rights reports;
* GAO review to evaluate adherence and effectiveness of policies

The Senate bill is similar, requiring amongst other things that "companies that are involved in commercial activities involving three minerals (coltan, cassiterite, and wolframite) to disclose the country of origin of the minerals to the Securities and Exchange Commission. If the minerals are from DRC or neighboring countries, companies would have to also disclose the mine of origin."

The main flaw in this legislation, as I have argued before, (I tend to be repetitious) is that it relies on being able to discern what a conflict mineral is. Otherwise the mining companies in the US will just throw their hands up and claim not to know where the minerals are from. This is currently what mining traders in Goma and Bukavu do - they just say: "All we know is that it comes from the interior, we have no idea where it is from." They are often lying, but it is sometimes difficult to prove them wrong - with the UN Group of Experts, we had to retrace the supply chain, sifting through stacks of Congolese documents (which are sometimes unreliable) and get testimony from mining industry insiders.

One idea is to start this kind of certification in several pilot projects and then trying to spread out from there. There is currently an effort being launched by MONUC, the International Organization for Migration (IOM) and the Canadian government to establish "centres de negoce" (trading centers) in five places in North and South Kivu (Mubi, Rubaya, Hombo, Baraka and Kamituga) where international officials would support the Congolese government and police to begin inspecting shipments and certifying their origin. Congolese revenue agents would also be present to levy taxes.

Even here, though, none of the centers would be established at the mines themselves. In the case of Mubi, potentially the biggest center, miners would have to shlep minerals 50 kilometers from the Bisie mine, the biggest tin mine in North Kivu. On the way, minerals from areas controlled by armed groups could be infiltrated into the supply chain; by the time the certifying agents in Mubi look at the bags full of tin, they will have a hard time knowing if it is conflict minerals or not.

We could try certifying at the mines themselves, starting with a dozen or so of the biggest mines. This would require sending reliable agents and people to protect them to these sites, not an easy task as some of the biggest mines are over a day walk from the closest road or airstrip (like Bisie, a 16 hour slog through the jungle from mine to airstrip). This would also face stiff opposition from traders, as it would reduce tin exports by significant amounts, as even "legitimate" mining sites (i.e. those occupied by the Congolese army) would be barred. But this could be a start and something for donors to commission studies to see which sites would be most appropriate.

In the meantime, a quick way of of imposing some accountability in the sector is to take the approach that Global Witness and the UN Group of Experts already have: by investigating the traders and finding out who is knowingly dealing in minerals from rebel-controlled areas. I call this the policing option and recommend setting it up as an official third-party monitor, recognized by the Congolese government with a clear agreement on what illegal activity means, what prerogatives they have under Congolese law and what the sanctions would be violations.

Hence, I think the US legislators' initiatives are laudable, but have a somewhat backwards approach - we should first try to institute mechanisms of accountability at the local level, then at the international level. Of course, the two approaches reinforce each other, and I understand some US-based electronics companies may even be willing to fund such local institutions in the Congo.