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Conflict mineral rules at risk

Conflict mineral rules at risk

The United States federal government is planning to lift its regulations on the import of ‘conflict minerals’, threatening the progress already made on the issue.

Part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires importers to carry out due diligence on minerals imported from Democratic Republic of Congo (DRC), to prevent illicit deals with local warlords. However, some US business groups have complained that the regulation is complex and expensive to implement, with the US-trade body the National Association of Manufacturers estimating that enacting the law costs US businesses between $9bn and $16bn.

US president Donald Trump is mulling over signing an executive order that will suspend the regulations for two years. Efforts by various armed groups to gain control of DRC’s mineral assets, including the coltan used in mobile phones and computers, were probably the biggest factor in prolonging the long civil wars that officially ran from 1998 until 2003, but some of which continued to wreck bloody havoc for longer.

US companies, including the biggest technology firms, are required to produce annual reports on their supply chains to demonstrate that they know where they supplies come from. Human rights groups generally believe that the restrictions have at least helped to stem trade in illegally mined coltan, diamonds, gold and tungsten.

An NGO that campaigns on the issue, the Enough Project, estimates that in 2014 local Congolese armed groups earned just a third of the $185m a year that it calculates they earned at the height of the civil wars. However, illicit mining of various minerals continues in some parts of the country. The Enough Project believes that illicit gold mining and smuggling remains a big problem. Some coltan is still mined in small-scale mines beyond the reach of government and any regulation.

US restrictions

According to a draft of the executive order, the US Securities and Exchange Commission (SEC) restrictions have “caused harm to some parties in the Democratic Republic of the Congo and have thereby contributed to instability in the region and threatened the national security interest of the United States”. The order also requires the government to devise a new method of tackling illicit mineral flows from DRC within the next six months.

The acting SEC chairman, Michael Piwowar, commented: “Legitimate mining operators are facing such onerous costs to comply with the rule that they are being put out of business. It is also unclear that the rule has in fact resulted in any reduction in the power and control of armed gangs or eased the human suffering of many innocent men, women, and children in the Congo and surrounding areas.” However, a spokesperson for NGO Global Witness, which has long campaigned on the issue of conflict minerals, said: “Suspending it will benefit secretive and corrupt business practices.”

State intervention

Conversely, tougher restrictions are being introduced by US state governments. California, Maryland and, most recently Massachusetts, have all sought to tackle the problem. On 2 February, Massachusetts governor Charlie Baker signed a resolution “directing his administration to review procurement policies regarding products that may contain extracted minerals from the Democratic Republic of Congo.”

The state government will now be required to produce a report on how to ensure that products containing minerals from Central Africa come from identifiable sources and have had the required taxes and duties paid on them at every stage of the process. In the case of all three states, and others that are considering introducing their own measures, governments are seeking to avoid directly financing armed conflict and human rights violations.

The Enough Project welcomed Massachusetts’ decision. Sasha Lezhnev, the associate director of policy at the campaign group, said: “Taxpayer money should not be used to subsidise companies that are unable to weed conflict minerals out of their supply chains. This resolution is timely and will help drive further industry reform.”

Such initiatives may have a limited effect in themselves. They do, however, help to keep conflict minerals a live subject and encourage a culture of traceability in supply chains. They will also help to maintain the Kimberley Process, which aims to prevent trade in African blood diamonds. The Trump administration has yet to clarify its position on the trade in diamonds from African conflict zones.

Neil Ford

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