Conflict minerals

 
It’s a small world, thanks to electronics and air travel. The more contacts people have with one another, the more complex things get.

Few issues are more complicated than the controversy over four conflict minerals – gold and the “3 T’s” of cassiterite, coltan (columbite-tantalite) and wolframite – that are used in electronics, communications, aerospace, cars and jewelry.
 

morguefile/muyral

morguefile/muyral


These minerals come from parts of Africa where some five million people have died in the Congo war during the last 20 years.

This is horrible, and so the United States passed legislation in 2010 – Title XV, Section 1502 of the Dodd-Frank Act – to discourage companies from engaging in trade that supports those regional conflicts.

Compliance with the law, says the Securities and Exchange Commission, will cost companies $3 to $4 billion the first year and then range from $200 to $600 million per year. That’s a price tag that you and I will eventually pay, of course.

In addition, parts of the law are tied up in court over First Amendment concerns (PDF).

Can the US government regulate how companies advertise their products when it doesn’t involve deceiving consumers? This is the first time it’s ever been tried.

Yeah, it’s a mess.

USAID via Wikipedia

Refugees lined up at the Rwanda-DRC border. Image: USAID via Wikipedia

Congo war

The Hutu-Tutsi tribal conflict that caused genocide in Rwanda in 1994 moved into the neighboring Zaire (now the Democratic Republic of the Congo) along with millions of Rwandan refugees.

The huge Congolese region is rich in minerals, and gems. Eventually Rwanda, DR Congo, Uganda, Zimbabwe, Namibia and Angola were all fighting (and allegedly looting) there.

All countries but Rwanda and DR Congo stopped fighting in 2003. Those two countries kept at it until the end of 2008, when they joined forces to fight Hutu rebels calling themselves the Democratic Forces for the Liberation of Rwanda (FDLR).

Some five million people have died, mostly from starvation and disease, during all this.

Today, DRC troops and about 17,000 UN peacekeepers are fighting the FDLR and other groups in the eastern part of the region, which is also where the gold, cassiterite, coltan (columbite-tantalite) and wolframite mines are. Those mines have ended up controlled by various armed thugs. The mines still operate, and as the National Geographic puts it:

Turns out your laptop—or camera or gaming system or gold necklace—may have a smidgen of Congo’s pain somewhere in it.

Columbite-tantalite (coltan)  Wikipedia

Columbite-tantalite (Coltan) (Wikipedia)

Dodd-Frank summary

The US responded to this dilemma with the Dodd-Frank Wall Street Reform and Consumer Protection Act (oh, you thought that was just about the 1%?).

The law requires the SEC is to make rules about conflict minerals and to determine whether purchases of minerals or their derivatives bought by US companies are supporting armed groups in the area.

In addition, the US Secretary of State and the administrator of the US Agency for International Development are ordered to address links between human rights abuses, armed groups and mining of conflict minerals in the DRC.

SEC filings

In August 2012, the SEC issued a final rule that sets up (PDF) a three-step disclosure process:

  1. The company has to document if its product contains conflict minerals
  2. It then has to decide if the material came from countries covered by Dodd-Frank
  3. If the materials are there are aren’t recycled or from scrap, the company has to conduct due diligence and possibly file a Conflict Minerals Report.

The US Court of Appeals for the DC Circuit issued a stay on the part of the law that forces companies to report whether their materials are “conflict-free.” However, companies still had to prove they had investigated their supply lines by filing reports by June 2, 2014.

While some 6,000 companies were expected to file their SEC disclosures, as of June 18th, only around 1,300 companies reportedly had done so.

Many companies said they were unable to determine the origin of the conflict minerals in their products.
 

Cassiterite (Wikipedia)

Cassiterite (Wikipedia)

Does it work?

The Enough Project issued a report (PDF) on June 10, 2014, stating that market changes brought about by Dodd-Frank:

…have helped significantly reduce the involvement of armed groups in Eastern Democratic Republic of Congo…in the mines of three out of the four conflict minerals…However, artisanally mined gold continues to fund armed commanders. Further reforms are needed to address conflict gold and close loopholes on the other minerals.

An expert noted some problems with the report, though, stating:

…minerals alone have never been the main source of conflict in the DRC; instead, conflict is at its root linked to poor or absent governance both nationally and regionally. This relatively narrow conception of conflict is likely more of a problem with the Dodd-Frank legislation that generated the SEC reporting requirement than with the Enough Project’s findings. Still, while it is surely good that a significant number of 3T mines in eastern Congo are no longer directly controlled by armed actors and that corporate responsibility about mineral sourcing is on the rise, overall levels of violence in Eastern Congo have not diminished significantly since the passage of Dodd-Frank. Removing armed actors from mines is important, but doing so will not solve problems that are, at their base, political.

So, should we all throw away our remotes, smartphones, etc?

No, that would be a terrible blow to the miners.

As mentioned, it’s a real mess, but it is encouraging that the Congolese thugs are trying to present at least the appearance of compliance. That’s a step forward.

I suppose it will ultimately come down to us. It’s our decision on how much we’re willing to pay in order to bring about financial transparency that will bankrupt the Congo’s cycle of murder and hate once and for all.
 

morguefile/Alvimann

morguefile/Alvimann


 


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