Conflict Minerals

Dodd-Frank 1502 Law: Impact on Conflict Minerals Trade in Congo

Date: 
Sep 22, 2015

 

“Progress and Challenges” web-page briefing features quotes from Congolese experts, reports, analysis, topical backgrounders, as European Union meets on new draft law

September 22, 2015 – The Enough Project has published a media briefing, “Progress and Challenges on Conflict Minerals: Facts on Dodd-Frank 1502,” as a resource for journalists covering issues related to conflict minerals. Enough experts based in the United States and in Central Africa are also available for backgrounders, commentary, and on-air interviews.

The briefing features quotes from Congolese experts, reports, analysis, and topical backgrounders for reportage on section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The briefing offers resources for journalists covering parallel legislation underway in the European Union, a recent Court of Appeals ruling on the Securities and Exchange Commission’s (SEC's) requirements for U.S. companies, the status of corporate compliance on supply chain reporting rules, and the impacts of the law in affected areas and mining communities in the Democratic Republic of the Congo (Congo) and the Great Lakes region of Africa.

Along with the publication of the media briefing, Enough Project experts commented today on the court case, and spoke about initial findings from recent research in mining areas of eastern Congo.

EUROPEAN UNION REGULATION:

Sasha Lezhnev, Associate Director of Policy at the Enough Project, said: "As European Union states meet about conflict minerals legislation this week in Brussels, they should make sure that the E.U. adopts a law that is mandatory for end-user companies, not just a handful of traders. The only way to keep the momentum for change going in Congo's mines is to hold the companies that make electronics and other products accountable for what's in their supply chains. We also strongly urge the E.U. to support livelihood programs for miners in Congo and assessment missions to identify whether rebels or the army are present at mines." 

COURT CASE: 
Holly Dranginis, Policy Analyst at the Enough Project, said, "The latest decision from the DC District Court of Appeals fundamentally misinterprets the Conflict Minerals Rule, and encourages companies to remain blind to their own supply chains and potential support they're giving to armed groups in Congo. Requiring public reporting is a tool for investors and consumers who believe that transparency can and should help break the link between business and human rights violations."

COMPANIES' COMPLIANCE WITH DODD-FRANK 1502 AND THE IMPACT IN CONGO:
Lezhnev noted: “Intel's, Apple's, and other electronics companies' tracing and auditing of their supply chains to adhere to Dodd-Frank 1502 law has already led to critical progress in Congo – 70% of tin, tantalum, and tungsten mines surveyed are now conflict-free. However, some companies are finding ways to do virtually nothing and skirt the law. That will come back to bite them, as campus activists and consumers are increasingly demanding that companies take real steps to make conflict-free electronics and other products.”

LOCAL VOICES SUPPORTING REFORMS: 
Fidel Bafilemba, Central Africa-based field researcher at the Enough Project, said: "Even in the face of violent threats, people in Congo are demanding a safer, more transparent mining industry. Many have been subjected to the worst forms of violence, abuses that were enabled by a lawless minerals sector. People we spoke to in mining areas and affected areas view Dodd Frank as one important catalyst for getting armed groups out of their communities and giving peace-abiding citizens access to the benefits of a formal mining economy."

Along with research-based overviews, topical analyses, further resources, and a downloadable text version, the web-based media briefing offers quotes and commentary from noted Congolese leaders and human rights activists, including Nobel Peace Prize nominee Dr. Denis Mukwege of Panzi Hospital in Bukavi, DRC.

Overview of facts and expert analysis included in the media briefing: 
(Factual citations and source links are available in the online version)

  • MINERALS AND CONFLICT: Conflict minerals have fueled and continue to help sustain armed violence in eastern Democratic Republic of Congo (Congo), linking them to the deadliest conflict globally since World War II. The four conflict minerals (gold, along with tin, tantalum, and tungsten, the “3Ts”) are not the only source of income to armed groups, but they are some of the most lucrative. The illegal exploitation of natural resources today is a manifestation of the grand corruption linked to violence that has marked successive governments in Kinshasa and the broader region since colonial times.

o     The U.N. Group of Experts on Congo found in 2015 that gold continued to be a source of funding for armed groups and Congo’s army. A study from the Enough Project found that armed groups made an estimated $185 million from conflict minerals in 2008. In 2007 the Pole Institute noted “minerals are a major source of income and of conflict in North Kivu as in the whole of the DRC,” and in 2001 the UN experts found that “minerals [were] the engine of the conflict.”

o     A mortality study by the International Rescue Committee looking at conflict-related deaths between August 1998 and April 2007 estimated that more than 5.4 million people died as a result of armed conflict in Congo. There has been continuing violence since that study, but no definitive follow up has been conducted on the mortality toll.

  • THE LAW: Section 1502 on conflict minerals of the Dodd-Frank Wall Street Reform and Consumer Protection Act is a transparency measure, one part of a comprehensive approach to Congo’s challenges. Passed in 2010 and implemented by the U.S. Securities and Exchange Commission in 2012, it creates a reporting requirement for all companies publicly traded in the United States with products containing any of the four conflict minerals. This creates a lever to support transparency, security, and the rule of law in the mining sector. Companies must now publicly disclose annually whether any of the gold or 3Ts in their supply chains originated in Congo or a neighboring country and, if so, describe the due diligence measures taken to determine the source of the minerals. Dodd-Frank 1502 does not require companies to divest from Congo or source from conflict-free mines. The law only requires companies to report on their mineral sourcing and due diligence practices.

o     The cost of compliance has been significantly overestimated by industry lobbyists. Claigan, an independent environmental consulting firm with expertise in supply chain management, estimates the total cost of Dodd-Frank 1502 compliance was approximately $140 million for 2014. This is a fraction of the U.S. Securities and Exchange Commission’s estimate of $3-4 billion for the first year.

  • IMPACT: Consistent with its objective, Dodd-Frank 1502 along with related reforms has led to significant improvements in the transparency of corporate supply chains and to a major reduction in the number of 3T conflict mines in eastern Congo. More than 60 percent of the world’s smelters for the four minerals have now passed conflict-free audits. Before Dodd-Frank1502, there was no certification mechanism for distinguishing conflict mines (i.e. mines controlled by armed groups or the Congolese army) from conflict-free mines, and there were no federal transparency requirements for companies on conflict minerals. The law and related reforms have changed these circumstances and created a two-tier market whereby the price for untraceable 3T conflict minerals is significantly lower than the price for verified conflict-free minerals. This price difference has made the trade in 3T minerals significantly less lucrative for armed groups.

o     By 2014, the International Peace Information Service found that 70 percent of 3T mines it surveyed across several provinces in eastern Congo were not controlled by armed actors. This is a significant change given that the U.N. Group of Experts stated as recently as 2010 that “in the Kivu provinces, almost every mining deposit [was] controlled by a military group.” As of May 2014, nearly three-quarters (74 percent) of 3T miners were working in mines where no armed group involvement has been reported.

o     Today, 192 out of approximately 300 smelters/refiners worldwide (over 60 percent) for the four conflict minerals have passed audits by the Conflict-Free Sourcing Initiative or associated programs, and an additional 41 smelters/refiners are participating in the program (i.e. are in the process of being audited) for a total of 233 participants (over 75 percent).

o     There is now an emerging certification mechanism run by the International Conference on the Great Lakes Region (ICGLR), and mines have begun to be validated as conflict-free. As of June 25, 2015, 141 mines in eastern Congo had been validated as conflict-free by multi-stakeholder teams made up of U.N. officials and Congolese civil society, business, and government representatives.

o     In surveyed locations, “minerals that do not go through conflict-free programs sell for 30 to 60 percent less” than minerals verified as conflict-free, thus reducing profits for armed groups trying to sell conflict minerals.

  • MINING COMMUNITIES: Dodd-Frank 1502 must be fully implemented, not abandoned, and strengthened with livelihood projects and other support to mining communities. Similar to other places where black markets are being disrupted, many Congolese miners who have relied on 3T mining have been affected by the transition to a conflict-free economy and are experiencing livelihood challenges. The original conflict minerals draft legislation included resources for livelihood programs for mining communities, but unfortunately those provisions were omitted from the final law and thus resources were not forthcoming in a timely way, causing hardship for some communities. Some aid has been disbursed to support conflict-free mining, but more support for livelihoods projects is needed. The solution to uncovering and eliminating these harmful illicit markets is not to reduce transparency measures but rather to strengthen and expand them.

o     Livelihood projects should include alternative livelihoods programs and artisanal mining support. Project planning should involve concerted community consultations and decision-making, and projects should encompass microfinance programs, programs to increase women’s accessibility to mining and other livelihoods, and transition programs for child miners. Projects should also include aid for the formalization of artisanal mining—including the demarcation of artisanal mining zones, validation of more conflict-free mines, capacity building for mining cooperatives, provision of equipment, and development of safety standards for miners.   

o     Section 5 of the original “Conflict Minerals Trade Act” (introduced on Nov. 11, 2009) included provisions for livelihood support. Since that time, the Enough Project has repeatedly called on the United Nations, the United States, and other governments to engage in a process of dialogue and reform in Congo that is broadly inclusive of Congolese civil society, business, and government representatives.

  • CONGOLESE SUPPORT: Many Congolese communities and leaders—including Nobel Peace Prize nominee and Sakharov Prize winner Dr. Denis Mukwege, community activist Justine Masika Bihamba, and Archbishop François-Xavier Maroy Rusengo of Bukavu, South Kivu—support Dodd-Frank 1502. Leaders and activists support the law because they have seen direct positive impacts, because they believe in transparency and the rule of law, or both.

o     Dr. Denis Mukwege: "A conflict-free minerals industry would contribute to ending the unspeakable violence the people of Congo have endured for years. Government must not only enact strong legislation, they must be willing to enforce the law. Companies bear the responsibility of compliance and public disclosure, and acting transparently as consumers are increasingly aware of conflict-free components on the market. Tens of thousands of legitimate miners would benefit from a clean, transparent minerals industry…The mineral trade is one of the components that drive suffering in Congo.”

o     Open letter signed by 31 Congolese civil society leaders, experts, and former ambassadors: “It is time for another broader push for reform on conflict minerals and natural resource governance in order to complement the Dodd-Frank legislation and deepen related minerals reforms. Dodd-Frank has been the primary driver of corporate and regional policy change on conflict minerals.”

Link to the full media briefing resource: http://eno.ug/1iCJiVj
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For media inquiries or interview requests, please contact:
Greg Hittelman, Director of Communications, +1 310 717 0606gh@enoughproject.org 

About THE ENOUGH PROJECT

The Enough Project seeks to build leverage for peace and justice in Africa by helping to create real consequences for the perpetrators and facilitators of genocide and other mass atrocities. Enough aims to counter rights-abusing armed groups and violent kleptocratic regimes that are fueled by grand corruption, transnational crime and terror, and the pillaging and trafficking of minerals, ivory, diamonds, and other natural resources. Enough conducts field research in conflict zones, develops and advocates for policy recommendations, supports social movements in affected countries, and mobilizes public campaigns. Learn more – and join us – at www.EnoughProject.org

Resource Page - Progress and Challenges on Conflict Minerals: Facts on Dodd-Frank 1502

Photo credit: Sasha Lezhnev

The Enough Project recently released a resource page that provides a background and updates on Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to conflict minerals. It includes information on the law, progress in Congo, and views from Congolese civil society members.  Read More »

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Brandeis University Goes Conflict-Free

Date: 
May 21, 2015

 

$4 Million Annual Electronics Purchase Policy to Support Peace in Congo

May 21, 2015 - Student activists are celebrating the announcement from Brandeis University of a new policy to ensure computers and other electronic equipment they purchase are not connected to killing, child abductions, and sexual violence in the mining sector of the Democratic Republic of the Congo.

Spurred by an international student movement called the Conflict-Free Campus Initiative, the procurement policy requires that the makers of all of the university's most commonly purchased electronic equipment be surveyed to determine possible connections to illegal mining and smuggling in eastern Congo by violent armed groups.

Annie CallawaySenior Advocacy Associate at the Enough Project, said: "The Brandeis resolution shows how far the conflict-free movement has come. Brandeis is the 19th school worldwide to change its procurement policy to favor companies working to make their products conflict-free and support the livelihoods of Congolese miners and their communities. Thanks to the hard work of students leading the Conflict-Free Campus Initiative at Brandeis, the university has taken an important extra step by committing to survey companies on their conflict mineral policies. This proactive industry engagement by Brandeis will further amplify the call for products made with conflict-free minerals sourced from eastern Congo.”

Gina GkoulgkountinaConflict-Free Campus Initiative (CFCI) student leader at Brandeis, said: "After 3 years working to pass a conflict-free procurement resolution, I am proud to see Brandeis joining the growing community of schools actively supporting peace in Congo. Working with the Library and Technology Services, procurement and administration staff to achieve this has been an incredibly rewarding experience. I am confident Brandeis will implement this critical policy in a thorough, responsible manner."

Lisa M. Lynch, Ph.D., Provost and Senior Vice President for Academic Affairs and Hexter Professor of Social and Economic Policy at Brandeis University, said: "From the founding of the university, a special characteristic of Brandeis students has been how profoundly they care about people around the world and take action to address problems faced by the most vulnerable. Today, I am extremely proud of our students and their initiative to address the human tragedies caused by conflict minerals. After advocacy by our students who are involved with the Enough Project, our policy committee voted unanimously to ask the suppliers of our most commonly purchased and leased electronic items (desktop and laptop computers, printers, scanners, and copiers) to show due diligence in auditing the sources and provenance of potential conflict minerals in their supply chain."

Brandeis spends an estimated $4 million annually on computers and other products that are potentially affected by the new “conflict-free” policy. The resolution builds momentum for statewide conflict minerals legislation in Massachusetts.

For media inquiries or interview requests, please contact: Greg Hittelman, +1 310-717-0606gh@enoughproject.org 

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ABOUT THE ENOUGH PROJECT

For media use, short version: "The Enough Project, an atrocity prevention research and policy group."

The Enough Project is a project of the Center for American Progress aiming to end genocide and crimes against humanity. Founded in 2007, Enough focuses on the crises in Sudan, South Sudan, eastern Congo, Central African Republic, Somalia, and areas affected by the Lord’s Resistance Army. Enough conducts intensive field research in conflict zones, develops practical policies to address these crises, and shares sensible tools to empower citizens and groups working for change. For more information, visit www.EnoughProject.org

ABOUT THE CONFLICT-FREE CAMPUS INITIATIVE

An initiative of the Enough Project’s “Raise Hope for Congo” campaign, the Conflict-Free Campus Initiative (CFCI) draws on the power of student leadership and activism to help support peace in the Democratic Republic of the Congo. By encouraging university officials and stakeholders - both of whom are large purchasers of electronics and powerful spokespersons - to commit to measures that pressure electronics companies to responsibly invest in the minerals sector, students are voicing the demand for conflict-free products from Congo. Comprehensive reform is needed in Congo to bring about sustainable peace - now is the time is for students to lead the conflict-free movement. Join us: www.raisehopeforcongo.org/campus

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