The Conflict Over Conflict Minerals

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A 12-year-old Congolese girl, uprooted by war, holds her little brother. / REUTERS

Fifteen months after President Barack Obama hailed the Dodd-Frank Act as a mighty weapon against reckless excesses on Wall Street, the measure is sparking fierce debate for a far different reason: Its effort to clamp down on “conflict minerals” which are found in everyday objects, but which are often linked to brutal African conflicts and dictators.

It may seem a far stretch for a law aimed at cleaning up Wall Street to also take on the trade in minerals from the war-torn Democratic Republic of Congo. That it does is setting off fierce debate that pits human rights activists against some of the most powerful business interests in Washington.

In addition to its myriad regulations covering the banking and financial industries, the Dodd-Frank law also intensifies government oversight of the multibillion-dollar-a-year trade in oil, gas and minerals. It requires American oil and gas companies to publicly disclose payments to foreign governments. And it obliges companies in the extractive industries to demonstrate “due diligence” in determining whether or not the minerals they buy are linked to brutal conflicts in Congo and its neighbors in Central Africa.

The notion, say backers of this increased oversight, is for international businesses to help cut off the supply of money that often fuels these deadly conflicts. In some ways, it is not unlike the efforts to halt the trade in “blood diamonds,” in which global attention reduced the sales of diamonds that helped pay for corrupt regimes.  As happened with blood diamonds, supporters contend, forcing companies to disclose whether they use conflict minerals could subject them to public shaming, hurting their bottom lines as well as their reputations.

“Conflict minerals” are the ores that produce tin, tantalum, tungsten and gold. They appear in a variety of products, from huge jet engines to tiny electronic devices. Life as we know it would be inconceivable without them.

Not surprisingly, mining the ores in Congo and other countries has become a brutal, sometimes deadly labor, with miners often working in virtual slavery. Perhaps even worse, money for the ores has been used by the rival factions to finance the endless wars they wage upon one another – wars in which unspeakable cruelties, including the slaughter of civilians and mass rape, have become commonplace.

There are also new rules on oil and gas as well that are intended to cut down on bribes to corrupt local officials in energy-rich countries.

Together, the proposed rules on conflict minerals and oil and gas have drawn stiff opposition from people in some of the affected industries, who argue that they are ill-conceived, impractical and will have the unintended effect of hurting the people they are meant to help.

Among the heavy hitters that have lined up against the proposed rules are the United States Chamber of Commerce, which wants them shelved altogether. The National Association of Manufacturers, and the Information Technology Industry Council, whose members include such giants as Microsoft, Google, IBM, Apple, Dell, Intel, Sony, Hewlett-Packard and Texas Instruments have also signaled their opposition.

As a sign of this intense pressure, the Securities and Exchange Commission is already six months late in issuing final regulations under the Dodd-Frank Act, which was passed by Congress and signed into law by President Obama in July 2010. The regulations to carry out the conflict minerals provisions had been promised for the following April. At this stage, even more delays seem likely.

The debate has flared into the open in recent weeks. On Oct. 18, the SEC held an unusual meeting of business representatives and human rights advocates, where heated words were exchanged on both sides. .

Global Witness, one of several human rights organizations attending the October meeting, urged the SEC “not to cave in to industry pressure” and said that some suffering had already been alleviated by measures taken in anticipation of the new regulations. The government of the Democratic Republic of Congo has been spurred  to undertake reforms in the country’s mining industry, helping to loosen the army’s illegal control of the biggest tin mine in the region.

“This law is already catalyzing some positive changes on the ground, including demilitarization of some mining areas in eastern Congo and laudable efforts by certain companies to clean up supply chains,” said Mike Davis of Global Witness. “Despite these efforts, the U.S. Chamber of Commerce is working at all levels to derail the regulations and continue business as usual.”

Davis added that for all the remaining challenges in carrying out the law, it presents “the best chance in over a decade to establish a clean minerals trade that contributes to development, rather than fueling instability.”

But Benedict S. Cohen, an attorney for Boeing who also attended the meeting, said unreasonable requirements on conflict materials could cost the aerospace industry hundreds of millions of dollars, a cost that would be passed on to customers like the Department of Defense – and, of course, to the taxpayers.

The SEC has estimated that concluded that the cost of putting the conflict minerals rules into effect would be $71.2 million. But a Tulane University study that put the total cost at $7.93 billion. For its part, the National Association of Manufacturers estimates the cost to American companies  would top $32 billion for initial compliance and $3 billion a year thereafter. (The association said its estimate was based on what it cost the European electronics industry to comply with safety standards imposed by the European Union in 2006 on the use of lead, cadmium, mercury and other hazardous materials.)

Business opponents say it is difficult, if not, impossible to trace all the minerals back through the supply chain to be sure that they are not mined in inhumane ways or used to finance corrupt regimes and wars. Even more, in this era when so many metal supplies are recycled, it is doubly-difficult to determine where metal supplies originate.

For this reason, the Chamber of Commerce has asked that the regulations be scrapped altogether. Some have suggested that the SEC is ill-equipped to enforce issues relating to metals and mining. Still other business representatives say that the SEC should take more time to write regulations that are clearer and more workable, which would make them ultimately more enforceable.

Global Witness disputed claims by the United States Chamber of Commerce and other business groups that tracing the provenance of the minerals backward from metal to smelter to mine is impractical. The organization also said that some leading electronics companies have already begun to follow the Dodd-Frank requirements — and to good effect.

“The announcement of new rules was always likely to cause some short-term uncertainty and disruption,” the organization wrote in a statement. But it said the “paralysis” in Washington has “prolonged and deepened these impacts and caused unnecessary suffering for those Congolese who rely on mining for a ruling.”

On Oct. 25, the European Commission proposed legislation requiring mining, oil, gas, and timber companies based in the European Union to disclose their payments to governments around the world.

Conflict minerals have served as currency for warring factions in the Democratic
Republic of the Congo, often called DRC, as well as in the adjoining countries of Angola, Burundi, the Central African Republic, the Congo Republic, Rwanda, Sudan, Tanzania, Uganda and Zambia.

Tantalum from African mines is used in jet engine components, carbide tools and a myriad of computer and electronic devices. Tin is used for food cans, alloys and steel-plating; tungsten for electrical wiring. Gold is needed for electric plating as well as jewelry. And those are only some of the uses of the minerals covered by Dodd-Frank.

The DRC produces only a portion of the world’s supply of those substances, but its contribution is significant, especially in the ores that are mined and then turned into tantalum and tin.

Human rights groups want companies to specify, on a regular basis and in writing, what they are doing to avoid buying minerals from sources that perpetuate the suffering in Congo, especially in the remote eastern region.

The minerals section of the Dodd-Frank law is nothing if not ambitious. It calls for the State Department to work with other agencies to develop a strategy to address the links between the warfare in Congo, the mining of conflict minerals and the commercial products made from them as part of an effort “to promote peace and security” in a region which has known little.

The agencies are also told to suggest possible punishment for people or companies whose businesses are shown to support armed groups and foment human rights violations in the DRC.

Left unsaid by the legislation, say its backers, is that if companies fail to comply with these new rules, not only would they face the SEC but would also have to worry about bad publicity, shareholders’ scrutiny and consumer-activist boycotts – worries that have intensified in the era of instant, worldwide communications across the Internet.

Diana Jean Schemo

Diana Jean Schemo

Diana Jean Schemo is co-founding executive editor of 100Reporters and an award-winning former foreign, national and cultural correspondent for The New York Times and the Baltimore Sun.

1 COMMENT

  1. I’m disappointed in the way this article frames the discussion about conflict minerals. As I wrote in the NYT back in August, framing this story as a contest between brave human rights activists and greedy corporations marginalizes what ought to be the most important voice of them all: the people of eastern Congo. Informed civil society organizations from the region are virtually unanimous in their opposition to the way the advocates want the law implemented–and warned repeatedly of the dangers it would pose to their communities. They know the wars that have harrowed the region are only secondarily concerned with minerals, and that a focus on them will do little to help resolve the conflicts; that the effect of the law will be to push the trade underground, harming legitimate business but providing windfall profits to the rogue militia; and that the embargo in place since April against these minerals has devastated the two million or so people in eastern Congo who depended for their livelihood on artisanal mining. 
    The “conflict minerals” story offers an appealing narrative of corporate indifference to a humanitarian tragedy. The story of what is happening in eastern Congo is a little more complicated.

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