Congo-Kinshasa: Dodd-Frank 1502 Law – Impact On Conflict Minerals Trade in Congo

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

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.

– 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.”

– 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.

– 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.

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.

– 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.”

– 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.

– 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.

– 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.

– 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 Neema Namadamu, 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.

– 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.”

– 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.”

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