Wednesday, 15 February 2017

U.S-D.R.C.: Trump & Blood Minerals

US President Donald Trump is expected to sign an executive order suspending Section 1502 of the Dodd-Franck financial reforms. The rule requires companies to disclose whether their products contain the so called 3TG conflict minerals: gold, tungsten, tantalum and tin, as seen critical drivers in the ongoing conflict in the Democratic Republic of Congo.

In 2010, the U.S. Congress passed a landmark legislation: '' The Dodd-Frank Wall Street Reform and Consumer Protection Act''. Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies using cassiterite, coltan, wolframite and gold to find out whether the metals originated in the DRC or neighbouring countries.

Firms are required to carry out checks on their supply chain – known as due diligence – to determine whether their minerals purchases have benefited abusive armed groups in eastern Democratic Republic of Congo. Companies must report publicly to the SEC on the measures they've taken, and commission an independent third party audit of their report. Some companies claim that it is too complicated or too difficult for them to do.

Advocates of the rule, which went into effect in 2014, contend that conflict minerals, which the UN has called the ''engine of the conflict'' in DRC, provide hundreds of millions of dollars to armed groups, which continue to wreak havoc in the east of the country. When it was introduced in 2010, business and corporate lobbyists decried the measure, arguing that it would require companies to implement costly monitoring tools that were difficult to enforce. Major companies from Intel to Tiffany's have undertaken efforts to comply.

Investigations carried out by International Community reveal that armed groups, in particular former rebels now integrated into the national army, have made tens of millions of dollars per year by illegally taxing the trade in cassiterite (tin ore), coltan, wolframite and gold in eastern Democratic Republic of Congo. According to recent reports from NGOs and journalists in DRC, illegal taxation by armed groups may have increased as elements within the military tightened their grip on the minerals trade and smuggling intensified.

Since the Act was passed, SEC failed to ensure that the final rules include a clear due diligence standard based on the five-step supply chain due diligence framework developed by the Organisation for Economic Cooperation and Development (OECD).

The Democratic Republic of Congo ‘conflict minerals’ are laundered into the global supply chain by exporters in the east of the country before being transformed into refined metals by large international smelting firms.

The minerals involved in this trade – cassiterite (tin ore), coltan (tantalum ore), wolframite (tungsten ore) and gold – are traded into international supply chains and used in the production of consumer goods such as laptops, cell phones and jewellery. Requiring companies to find out where the metals they use come from and whether their purchases are fuelling human rights violations can help to reduce financing to warring parties in eastern DRC.

The electronics industry is one of the main destinations for these metals, which end up in mobile phones, laptops, and other consumer products. Tin is used as a solder in circuit boards; tantalum goes into capacitors, small components used to store electricity; tungsten is used in the vibrating function of mobile phones; gold is also used by the electronics industry – as a coating for wires. World prices for each of these metals have been rising over the past years, giving armed groups in the eastern Congo all the more incentive to target or keep hold of the mines.

If companies buying these minerals don’t put in place credible measures to find out who is benefiting from the trade, minerals bagged and tagged in compliance with industry schemes will continue to fund armed groups, with harmful consequences, and will not meet international standards.

Rigorous due diligence on minerals from DRC would help stop the conflict minerals trade in its tracks. Trump's upcoming executive order suspending Section 1502 of the Dodd-Franck financial reforms is an open invitation to more severe armed conflict to come in Democratic Republic of Congo. Trump's shady conflict minerals policy would create a mining sector in eastern DRC that will benefit multinationals.

Democratic Republic of Congo is rich in oil, gas and other minerals, but is nonetheless mired in poverty and beset by poor government because the public revenues earned from selling these resources have been squandered through corruption, lack of government accountability and foreign hands.

By Guylain Gustave Moke
International Affairs Expert
Political Analyst/Author

Photo Credit: AFP-photo