Point of Origin - Status Report on the Impact of Dodd-Frank 1502 in Congo


Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 1502) and the U.S. Securities and Exchange Commission’s (SEC) Conflict Minerals Rule have improved global minerals supply chain transparency and begun to help break links between the minerals trade and violent conflict in the eastern Democratic Republic of Congo. For nearly two decades, illicit mining and minerals trafficking – primarily in tin, tantalum, tungsten, and gold (“3TG”) – have provided significant financing to a range of armed groups as well as corrupt and abusive elements of the Congolese army.

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 1502) and the U.S. Securities and Exchange Commission’s (SEC) Conflict Minerals Rule have improved global minerals supply chain transparency and begun to help break links between the minerals trade and violent conflict in the eastern Democratic Republic of Congo. For nearly two decades, illicit mining and minerals trafficking – primarily in tin, tantalum, tungsten, and gold (“3TG”) – have provided significant financing to a range of armed groups as well as corrupt and abusive elements of the Congolese army. 

Minerals were not among the initial causes of Congo’s armed conflict, but they have fueled many of the groups that have perpetrated serious crimes there. The ties between illicit mining and violence are also distinctly regional in nature. Smuggling, trafficking, and illegal minerals taxation in Congo and the region implicate authorities and criminal networks in neighboring countries including Rwanda, Uganda, and Burundi. 

Based on 2015 and 2016 field research in eastern Congo with miners, traders, human rights activists, civil society leaders, foreign industry experts, and others, the Enough Project found a number of key developments pertaining to Dodd-Frank 1502 and mining reforms in eastern Congo. They include positive advances corresponding to the stated purpose of Section 1502 such as increased security for civilians in some mining areas, a significant reduction in armed group control in 3T mining areas, improved safety and health standards for miners in some mining areas, organized local advocacy in support of reforms, in-region development initiatives, and the initial implementation of the region’s first system to assess mines and certify minerals as conflict-free.

According to current Congolese mining ministry records, multi-stakeholder teams have now assessed 193 mines in eastern Congo on conflict and child labor issues, and 166 of the mines have passed the assessments. Moreover, a record amount of certified conflict-free tantalum was exported from eastern Congo in 2015 – 948 tons, a 19 percent increase over the 2014 record, and a 387 percent increase over 2013 – and 70 percent of tin, tantalum, and tungsten mines assessed by IPIS in 2014 were conflict-free. In addition, the International Conference on the Great Lakes Region (ICGLR) is conducting audits of six minerals exporters and hired its inspector general for minerals, the Independent Mineral Chain Auditor (IMCA), in January 2016.

Enough also found that a number of problems remain. Those include ongoing security threats in communities near mines, especially gold mines. Elsewhere in eastern Congo, research found corruption in the traceability system, limited access to formal markets or alternative livelihoods by artisanal miners, an insufficient number of legal artisanal mining zones, and continued minerals smuggling, especially from eastern Congo into Rwanda. To address these problems, reforms and new initiatives are needed, including more alternative livelihood programs for artisanal miners, additional and more transparent programs to trace and verify the conflict status and origin of minerals, the designation of more artisanal mining zones, more efficient and regular mine validations, security monitoring along trading routes in addition to mine sites, and accountability for minerals smuggling and corruption crimes that undermine current traceability mechanisms. 

Dodd-Frank 1502 and related reforms are an important part of a much broader peacebuilding and good governance effort in Congo that must be further expanded. Reforms in support of better governance and security, justice for atrocity crimes, and free and fair elections in 2016 are also critical for the achievement of goals like local economic growth and security. The impact of mining reforms and conflict minerals disclosure reports cannot be accurately measured without those other factors in mind.

One of the core objectives of Section 1502 is to “address the linkages between human rights abuses, armed groups, mining of conflict minerals, and commercial products.” The law was never intended as a panacea for the causes of the war, but instead as one way to help reduce the resources available to armed groups in Congo and improve supply chain transparency. The law requires public U.S. companies with products containing tin, tantalum, tungsten, or gold that might originate from the DRC or surrounding countries to report on their supply chain due diligence measures. It also mandates the U.S. Department of State, in consultation with the U.S. Agency for International Development (USAID), to develop a strategy to “promote peace and security in the Democratic Republic of the Congo.” The original House of Representatives bill called for $20 million to implement the law, including funding for improving the lives of artisanal miners. Despite the best efforts of some of the bill’s advocates, that allocation was not included in the final version.

Several efforts have attempted to address remaining needs, including by the following agencies: USAID through two wide-ranging responsible minerals trade projects, the Public-Private Alliance for Responsible Minerals Trade, Partnership Africa Canada, and Germany’s Federal Institute for Geosciences and Natural Resources (BGR). In addition, U.S. Special Envoy to the Great Lakes Region Tom Perriello has begun to focus more on conflict minerals and economics following a January 2016 mine visit to eastern Congo, and the U.S. State Department is in the process of helping establish a new initiative to support the prosecution of economic crimes in Congo’s military justice system. However, significant gaps remain related to livelihoods and the prosecution of high-level perpetrators of pillage, human rights, and corruption crimes.

In order to preserve positive momentum and address problems, policymakers, companies, civil society, and justice officials should take specific actions outlined below. A conflict-free minerals trade that benefits the population is possible for the Great Lakes region, and more must be done to build on initial successes and meet urgent needs. 

The Enough Project recommends the following to ensure that Dodd-Frank 1502 and related reforms are fully implemented to the benefit of Congolese citizens and the region’s formal mining sector:

  1. Combating smuggling: USAID, the European Union, the Netherlands, and Germany should provide significant additional support to the International Conference on the Great Lakes Region (ICGLR) Independent Mineral Chain Auditor (IMCA) for hiring inspectors to investigate minerals smuggling in the Great Lakes region. U.S. and U.N. Special Envoys Tom Perriello and Said Djinnit, and the E.U. Senior Coordinator for the Great Lakes Region Koen Vervaeke should follow up with the mining ministries of the region to ensure the IMCA is doing its job effectively. The envoys should also press the governments of Rwanda and Congo to make the minerals tag distribution process more transparent and to improve law enforcement related to smuggling.
  2. Improving Security: The Congolese government should increase the number of mining police forces in mining areas and trade routes and carry out its commitment to demilitarize the 3TG mining sector in the Kivus, especially in gold mining areas. In doing so, they should comply with the Voluntary Principles on Security and Human Rights, and insist on compliance by mining companies operating in Congo. Along with local authorities, the U.S. Department of State and International Organization on Migration (IOM) should introduce anti-corruption measures into training initiatives with mining police, integrating the Voluntary Principles guidance on interactions with public security and Principle 10 of the Global Compact. 
  3. Enforcing Sanctions and Prosecuting Serious Crimes: Congolese military courts and the International Criminal Court (ICC) should incorporate financial investigations into cases concerning war crimes and crimes against humanity in the DRC. The U.S. State Department’s new initiative with U.S. Institute of Peace (USIP) to train justice officials in economic crimes should include training on international crimes and asset tracing. U.S. Special Envoy Tom Perriello and U.N. Special Envoy Said Djinnit have lent strong support to in-region reforms, prioritized accountability in high-level meetings, and visited mining communities to understand local needs. They should build on this by supporting and encouraging targeted sanctions and prosecutions for minerals pillage and high-level corruption crimes.
  4. Holding Regional Actors Accountable: Congress and the U.S. Securities and Exchange Commission should strengthen — not diminish — the focus on regional enforcement of Dodd-Frank Section 1502. Smuggling continues particularly into Rwanda, which threatens the viability of the entire regional system, security in Congo, and traceability further down the global supply chain.
  5. Improving Artisanal Mining: The United States, European Union, The Netherlands, and Germany should urge the Congolese government to significantly increase the number of artisanal mining zones, known as ZEAs in Congo. The Congolese government is in the process of canceling dormant mining titles, having canceled half of Congo’s concessions over the past three years (from 4,000 to 2,000, according to a local official). But it should convert many such titles to ZEAs so that artisanal miners can legally mine. Donor governments should also provide additional funding to mine inspection missions currently led by the IOM to improve and increase the assessment and validation statuses. Mine assessments should be made public by Congo’s Ministry of Mines, and assessment teams should comply with mandates to re-validate mines every six months.
  6. Requiring Quality Due Diligence: The E.U. should pass mandatory reporting requirements for all companies bringing 3TG minerals into the E.U., including importers of raw materials or minerals included in finished products. The E.U. legislation should also include provisions for development and investment in conflict-affected, minerals-rich areas. The U.S. Securities and Exchange Commission should issue clarifying guidance on both the status of the Conflict Minerals Rule’s (CMR) audit requirement and its enforcement strategy for CMR reporting compliance.
  7. Increasing In-Region Sourcing: End-user companies of tin, tantalum, tungsten, and gold should inform their suppliers they do not want them to avoid sourcing from Congo or the Great Lakes region. They should also urge the main current traceability and due diligence program, iTSCi, to publish incident reports, become more financially transparent, and lower costs. End-users should invest in in-region reforms, including conflict-free sourcing initiatives. Mining companies operating in Congo should strictly comply with the DRC mining code, the U.N. Guiding Principles on Business and Human Rights, and the Voluntary Principles on Security and Human Rights, especially provisions related to consultations and agreements with local communities.
  8. Improving Livelihoods: End-user companies should also invest in artisanal mining formalization programs and alternative livelihoods through multi-stakeholder groups or other vetted channels with collaboration from local implementing organizations. The U.S. State Department should revisit its strategy associated with Dodd-Frank 1502 to assess where improvements can be made to comprehensively support alternative livelihoods. USAID Development Credit Authority (DCA) together with the United Kingdom’s Department of International Development (DFID) and the Dutch Foreign Ministry should conduct assessments in eastern Congo to determine the viability of implementing village savings and loans and microcredit initiatives in mining communities. 
  9. Increasing Protection for Activists: Special Envoys Tom Perriello and Said Djinnit should increase pressure on the Congolese government to end the ongoing crackdown on civil society in Congo. MONUSCO’s UN Joint Human Rights Office (UNJHRO), the International Union for Conservation of Nature (IUCN), Amnesty International, Protection Internationale, and Human Rights Watch have done critical work monitoring and reporting on recent abuses targeting defenders of democracy and human rights. Given their ongoing and valuable efforts, they should coordinate to improve direct protection programs for corruption whistleblowers, transparency activists, and conservationists to address escalating threats ahead of the 2016 elections. 


Photo credit: Erberto Zani / www.erbertozani.com