One of the leading advocacy groups for the conflict minerals campaign Global Witness, a British NGO, published a report last week detailing the massive failure of the Dodd-Frank 1502 Act to achieve any of its intended goals.
The report documents how the conflicts have worsened since passage of the law and the SEC’s promulgation of the implementing regulations. And it reveals how, by driving the trade underground, the law has benefited the very worst elements in the Kivus: rogue military groups and armed militia.
Other NGOs had already revealed their fealty to the US Chamber of Commerce by publishing reports highly critical of Dodd Frank 1502, but none had previously positioned itself as a leader in the campaign.
Here are some of the report’s highlights:
Up to 10 tonnes of gold from South Kivu is being laundered each year through Burundi and exported to Dubai–with an “almost complete absence of checks” on the trade;
FARDC forces redeployed to fight M23 rebels left a security void filled by armed groups moving in on the mineral trade;
General Gabriel Amisi, who was fired last year as the army chief of staff for selling arms to the M23 rebels, controls one of the richest gold mines in South North Kivu;
Changes in security dynamics in the past year have provided rebels and FARDC with opportunities to take control of mining sites previously considered candidates for conflict-free sourcing;
Formal exports of the three Ts–tin, tantalum, and tungsten–are low in South Kivu and virtually non-existent in North Kivu. The majority of these minerals are smuggled out of eastern Congo, laundered through Rwandan tagging system, and exported as domestic Rwandan product.
The financial incentives to smuggle Congolese tin ore across the border outweigh the risks of getting caught, since “tagged” tin sells for $9/kilo, compared to a mere $3 or $4/kilo for untagged ore.
The government-led initiative to certify mining sites initiated in 2011 is already out of date and defunct;
The conflict-free tin initiative at Kalimbi in Nyabibwe, widely viewed as a test case for responsible sourcing, is being exploited by a military-led smuggling racket.
To be sure, the report concludes with the standard advocacy-based recommendations, to wit: that companies implement OECD due diligence procedures in full; that the Congolese government enforce domestic due diligence law, remove and prosecute army officers involved in the mineral trade, and formalize the gold trade; and that the donor governments support capacity building for mining authorities.
But the report convincingly demonstrates that the government has neither the will nor the capacity to bring the illicit trade to heel, and provides overwhelming evidence that Dodd-Frank has exacerbated the very problems it was meant to resolve. The sparse recommendations tacked on to the conclusion of the report tacitly acknowledge the nature of the problem: A government capable of making the recommended reforms would not need to be told to undertake them in the first place. To put it another way: A government that is unable and unwilling to govern its territory or protect its people is not a likely candidate to administer a complex and dynamic mineral trade regime.
With the publication last month of the Pole Institute’s highly critical No Kivu, No Conflict report, which concluded that the Kivus are “being asphyxiated” economically by Dodd-Frank 1502, this leaves The Enough Project as the law’s sole remaining cheerleader. In late February, Enough’s co-founder and public face, John Prendergast, wrote this about the mineral campaign:
“For decades all of the benefits of eastern Congo’s vast mineral resource wealth have gone to those with the biggest guns — the Congolese army, local militias or neighboring countries. These minerals include, among others, gold, cobalt, copper, tin, industrial diamonds and coltan, used in cell phones, laptops and other electronic devices.
But U.S. and European consumer demands for a conflict-free minerals trade, congressional legislation, International Monetary Fund aid suspensions, U.N. experts’ reports, responsible investors and other influential voices are making it harder to profit violently and illegally from mineral smuggling.”
Further analysis from the Pole Institute:
“Thus, a pattern is emerging in which Kivu’s mining sector is being asphyxiated in the name of reform. Before 2010, Kivu’s mineral traders had willingly participated in moves to strengthen formal and legal channels and to safeguard Kivu livelihoods by creating “conflict-free” production and trading chains within Eastern Congo. The mining ban killed this off, and today the focus has moved to Katanga and Maniema, increasingly apparently favouring a nexus of mining firms closely linked to the power-holders in Kinshasa. Because they do not finance armed groups, these firms are seen as “conflict‐free,” but no criteria exists to judge the wider political ramifications of their activities, their benefits for local development and the possible exacerbation of local conflict caused by favouring certain firms in collusion with international partners to the detriment of others.”
– David Aronson