By Joe Lauria
Thursday, September 9, 2010
The recent mass rapes in a mineral-rich area of eastern Democratic Republic of Congo underscore the urgency of a new U.S. law to certify consumer goods free of "conflict minerals" tied to the violence. The law may be hard to enforce but supporters have high hopes.
Congolese rebels, who've made rape a preferred strategy of intimidating nearby villages in mining regions, buy weapons with proceeds from mines they run illegally, often with forced labor.
The rebels have found a ready market for their loot with legitimate companies mostly in the West and China, as documented by years of U.N. investigations. The proceeds from these sales are fueling the deadliest conflict since World War II, with as many as 5 million people killed over the past decade and more than 200,000 women violated.
The law calls on U.S. firms, including brand name consumer electronics makers, mineral processors, jewelers and automobile manufacturers, to report annually to the Securities and Exchange Commission if their products use any gold, tungsten, tantalum or cassiterite (tin ore) that was either directly imported from the Democratic Republic of Congo or smuggled through nine neighboring countries.
Tantalum is perhaps the most ubiquitous of these metals since it is found in electrolytic capacitors, which are inside nearly all cell phones and personal computers. Companies using such minerals must demonstrate how they are tracing the supply chain beginning with the original mine.
The law gives the Securities and Exchange Commission until April 17, 2011, to enact rules and regulations to implement it. It also calls on Secretary of State Hillary Clinton and the U.S. Agency for International Development to provide guidance to U.S. companies to keep them from helping to finance the decade-old armed conflict in eastern Democratic Republic of Congo. The State Department must keep up-to-date a detailed map of the region and neighboring nations, showing which mines are rebel-controlled and the trade routes they use.
Jewelers of America lobbied strenuously against inclusion of Section 1502 in the financial reform bill, arguing that it would be too difficult to implement. The New York-based industry group said it will also be expensive as the law requires companies to hire outside auditors to prepare their reports to the Securities and Exchange Commission.
But firms that can prove their products do not contain illicit minerals from the Democratic Republic of Congo could gain a competitive advantage with consumers. Seeing the new law coming, Intel and Motorola--two electronics giants--in June began developing a process to audit their tantalum purchases.
John Crawley, an executive committee member of the Tantalum-Niobium International Study Center, based in Lasne, Belgium--the Democratic Republic of Congo's former colonial ruler--also hailed the law.
"I think companies do have a responsibility to trace and audit their supply chains," Crawley said, adding that while gold may be difficult to trace, tantalum was not. "I believe that we can easily certify the supply chain and we in the tantalum industry have been further along in this process."
Crawley--whose family has commercial ties to mining in the Democratic Republic of Congo--was himself embroiled in a dispute with U.N. investigators that demonstrates the complexity of knowing where minerals come from.
The U.N. reported late last year that a mineral company begun by Crawley's father in Hong Kong, and on which Crawley is a board member, used a "front company" and a suspected smuggler to hide purchases of rebel-controlled minerals. The U.N. backed up its case with numerous documents.
The Washington-based Enough Project also produced shipping records that suggested that Crawley's own company in Nevada was importing conflict minerals.
But Crawley produced documents and statements that contest the U.N.'s and Enough's conclusion, pointing to the need for a more formal process.
Sasha Lezhnev, a consultant to the Enough Project, the law's chief lobbying group, noted that the law had seized the attention of CEOs and corporate legal departments and expressed confidence it would be enforced. He said nongovernmental organizations like Enough would help companies set up a certification regime.
In the meantime, he said, tin companies were still trying to source cassiterite from the very area of North Kivu that was the scene of 242 of the recent rapes.
"[Certification] will not be an extremely simple overnight process, but I think it is definitely doable," Lezhnev said.
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Joe Lauria has been a correspondent at U.N. headquarters in New York for the past 20 years.
The Enough Project:
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