U.S. Legislation Targets Minerals in Congo Crisis

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GOMA, Democratic Republic of Congo — Like many in this freewheeling lakeside town, Faustin Ntawangundi owes his life to mining.

For more than a decade, the former gas station attendant has worked for a Goma-based comptoir, or minerals trading house, inspecting locally mined cassiterite — the ore that produces the metal tin when smelted. It's a decent, honest living, in a region where 15 years of conflict has destroyed most other livelihoods, including agriculture, the would-be leading industry in Goma's North Kivu Province, one of the continent's most fertile areas.

Yet on the day he met with The Washington Diplomat, Ntawangundi's work had been temporarily halted. After a visit to North Kivu's Walikale territory — home to the region's largest cassiterite mine as well as a grisly summer rampage in which rebels raped more than 300 civilians, mostly women — Congolese President Joseph Kabila enacted a ban on mining in three eastern provinces, cutting off the flow of tin. The country's rampant sexual violence tends to go hand in hand with its lucrative but often-illicit minerals industry, which various groups scramble to control, in part by terrorizing the local populations along valuable trade routes (also see "Rape in War: Congo's Weapon Of Choice Gets Renewed Scrutiny" in the October 2010 issue of The Washington Diplomat).

Ntawangundi was visibly on edge.

"It's like someone came and cut our necks," he said of the ban. "The entire economy here revolves around mining. We know nothing else. If mining were stopped for good, we'd have a huge crisis."

As expected, the Congolese government has since announced the mining ban will be lifted. Yet Ntawangundi, and the millions of Congolese that depend directly or indirectly on the minerals sector, may still have reason for concern — in part due to a well-intentioned law crafted thousands of miles away in Washington.

Buried deep inside the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act, signed by President Obama in July, is a "Miscellaneous Provision" requiring U.S. companies that use tin, tantalum, tungsten (the so-called "3T's") and gold to disclose whether minerals used in their products originated in the Congo or any adjoining country. Once the law takes effect, companies sourcing minerals from Congo or any of its nine neighbors must submit an annual report to the Securities and Exchange Commission (SEC) detailing measures taken to exercise due diligence in their supply chain. They must also declare whether or not their products are "DRC Conflict Free" — that is, whether their mobile phones, MP3 players, laptops or other devices contain materials that have directly or indirectly benefited armed groups in the region. While there are no penalties for noncompliance, the disclosures must be made public on companies' websites, and firms continuing to source in "conflict minerals" face significant reputation damage.

The legislation has been praised by advocacy groups as a first step in reforming an industry that is intractably linked to armed groups responsible for one of the world's worst ongoing humanitarian crises.

By targeting the end-users of Congo's minerals, proponents of the bill believe it will force a degree of transparency on a shadowy, extortion-laden supply chain — similar to the crackdown on so-called blood diamonds — and eventually cut a vital stream of revenue to the region's many bad actors. Critics, however, charge it's a hastily constructed measure that could create a de facto embargo on minerals from the region, putting tens of thousands of people — some of the very ones the legislation is intended to protect — out of work and potentially exacerbating the crisis.

"This legislation will have unforeseen consequences," said Harrison Mitchell, a director at Resource Consulting Services, a London-based consultancy specializing in extractive and agricultural sectors. "Right now, it's impossible for companies sourcing from the region to prove their minerals are 'conflict free.' Companies must now decide whether they can put a due-diligence program in place or whether they will source their minerals from elsewhere. No one wants a de facto ban, but if it happens it will have serious implications."

A Driver of Conflict

Though critical to the region's economy, North Kivu's minerals have an ugly past, and like all of Congo's natural riches, have long contributed to the country's misery. Since the late 19th century, when Belgium's King Leopold II used a brutal campaign of forced labor and terror to extract a personal fortune from Congo's rubber and ivory, this nation has been the world's most lasting example of the so-called "resource curse." The size of the eastern United States, Congo has been perpetually looted of its vast wealth by actors from inside and out, with devastating consequences for its people.

The last 15 years have been particularly brutal. Since 1994, when the remnants of deadly Rwandan Hutu militias fled across the Congolese border in the wake of the Rwandan genocide, Congo's east has served as a staging ground for conflicts involving eight African nations and dozens of rebel armies — many known for plundering villages, terrorizing civilians and employing mass rape as a strategy to drive populations from mineral-rich areas they seek to dominate. Though statistics on total deaths vary widely, some groups estimate that more than 5 million people have died as a result of the Congo crisis — the majority victims of disease and lack of food and medicine in what is widely considered to be the deadliest conflict since World War II.

Yet "Africa's World War" did not begin because of mining — and it remains a complex crisis, fueled by tensions over land rights, regional and ethnic power struggles, and a vacuum of governance created by years of state decay under the notoriously corrupt dictator Mobutu Sese Seko. Still, most analysts contend that the minerals trade, a key source of financing for armed groups, has long been a driver of the conflict.

According to the Enough Project — a Washington-based advocacy campaign to end genocide and crimes against humanity, and a prominent voice on the Congo crisis — armed groups generate an estimated $180 million per year from stakes in the four minerals targeted by the U.S. legislation. Gold, by far the most valuable, is potentially the greatest racket, though the ease with which it is smuggled (a 2009 U.N. report estimates that up to 95 percent of Congo's gold is exported "informally") means its trade will likely see little impact from the legislation. Cassiterite, Congo's largest mineral export by volume — an estimated two-thirds of which is traded through legal channels — has thus emerged as the pivotal ore in the efforts to reform the country's mining sector.

Thought to contain up to a third of the world's reserves of cassiterite, Congo produced the ore on an industrial scale while still a Belgian colony, and was the world's second-largest tin exporter as early as the 1940s. Yet infrastructure, including state-owned mining entities, decayed during the Mobutu era and Congo's production declined steadily until 2004, when new environmental laws in Europe and Japan forced electronics manufacturers to move away from lead-based solders (fusible metal alloys) in favor of tin.

Today, the global solder market consumes more than half of the world's tin, 70 percent of which is sold for use in the electronics industry. It's estimated that Congo accounts for 6 percent to 8 percent of global tin production, which is all mined artisanally — which means it's dug from open pits by individual men, and sometimes boys, laboring with pick axes and shovels for between $1 and $5 per day.

Bisie mine in Walikale, the source of roughly 70 percent of North Kivu's production, is home to more than 2,000 artisanal miners, who sell their daily wares to representatives of comptoirs like the one employing Ntawangundi. After it's mined, the raw cassiterite is flown 100 miles to Goma (the roads are so bad that ground transport would take more than a week), where it is inspected for quality, ground into powder, and either sold to middlemen or exported directly — often via neighboring countries like Rwanda — to smelters in Malaysia and China.

The hold of armed groups on the mines is a constantly shifting maze of extortion, involving scores of militias and individual actors, including units of the weak, chronically underpaid, and often renegade Congolese army. Until 2009, many of the mines were controlled by the FDLR, the notorious Hutu militia formed by perpetrators of the Rwandan genocide. Since last year's anti-FDLR offensive by the Congolese army with support of MONUC, Congo's United Nations peacekeeping mission, most mines are now occupied by the Congolese army or another former rebel group once headed by the notorious warlord Laurent Nkunda, which was supposed to have integrated into the Congolese army after Nkunda's arrest by Rwanda last year.

Today, the Bisie mine is occupied by government soldiers and controlled by Nkunda's former commanders, who collectively extract an estimated $120,000 per month by levying a tax on cassiterite and other minerals as they pass hands from miners to comptoirs. Yet the mine, and others in the area, remains a source of contention within the army, and among various militias that operate in mineral-rich Walikale — some with links to renegade officers in the Congolese army, known as FARDC.

According to Jason Stearns, a doctoral student at Yale University and former coordinator of the U.N. Group of Experts on the Congo, this summer's mass rape in Walikale was organized by an alliance of three militia leaders who'd been colluding with the commander of the FARDC's 212th brigade. The attack reportedly occurred when the 211th brigade replaced the 212th in the area, a move that jeopardized the militia leaders' rackets.

Although the exact motive of the rapes remains unclear, the incident helps to illustrate the seemingly intractable links between the militarization of mining and systemic civilian violence.

Overdue Due Diligence?

While the U.S. legislation has forced buyers of Congolese minerals to address this problem with new urgency, pressure on "conflict mineral" users has been building for quite some time. Last year, two leading minerals players, the Belgian exporter Traxys and Thaisarco, a Thai-based smelting and refining company, suspended operations in the Congo, citing pressure from advocacy groups in the wake of a 2008 U.N. Security Council resolution that called on countries to "ensure that importers, processing industries and consumers of Congolese mineral products" exercise due diligence on the minerals they purchase.

Companies that continue to source from the region — including traders, smelters and end-users of the "3T" minerals — have been engaged in various transparency efforts that pre-date the U.S. legislation. Most prominent is a supply chain initiative launched last year by the International Tin Research Institute (ITRI), a membership-based organization representing major tin producers and smelters. After an initial phase that worked to standardize mineral export documentation, ITRI has begun tagging minerals at a pilot site in South Kivu Province and plans to commence in North Kivu shortly. The aim is to develop a system of traceability from mine to exporter that will ensure metals are not being sourced from mines controlled by militias — essentially what the U.S. Congress is now demanding.

"What the law is asking for is what we are putting in place," Kay Nimmo, manager for sustainability at ITRI, told The Diplomat.

Though they admit the legislation is no silver bullet, supporters of the Dodd-Frank bill say that forcing transparency in the supply chain is the best way to disrupt the lucrative conflict economy that fuels the armed groups' culture of violence and impunity.

"I would never say that instilling good governance in the minerals supply chain will bring an end to the conflict," said Stearns of Yale University. "But it will diminish the stakes over which the various parties are fighting, and it may make demobilization more attractive for some combatants when they can no longer occupy lucrative mines."

Though most armed groups have stakes in other rackets, including charcoal, timber and fuel, even those inside the mining business admit their trade is a key lifeline for the region's connoisseurs of plunder. Most, including ITRI's Nimmo and David Bensusan, head of the Rwanda-based trading house Minerals Supply Africa, accept the need for reform and say they support the basic principle of the U.S. legislation. The big problem, they say, is the timing. By April 2011, nine months after the bill's signing, the SEC must promulgate specific regulations, and firms will be asked to declare whether they are "conflict free" during the first full fiscal year thereafter — giving them until July to fully sort out their supply chains. Despite the progress of ITRI's traceability scheme and other due-diligence efforts, most see this target as impossible, particularly given the constantly shifting dynamics of the armed groups' extortion rackets.

"The initiative we are developing won't be put in place before the law comes into effect," confirmed Nimmo. "The end-users of tin are really concerned. They are not sure what they can buy, what is 'conflict,' what is not, and many are saying they will prefer not to buy from Congo at all."

If a critical mass of firms decides to source from elsewhere, insiders worry the trade could be driven underground, evading due-diligence schemes like ITRI's and shifting toward markets in India and China, where companies are less concerned with negative publicity. Bensusan, who purchases his ores from comptoirs in Goma and is the largest exporter of tin originating in Congo, charges that the legislation has interfered with a due-diligence process already under way and will lead to an increase in smuggling, potentially worsening the conflict.

"This legislation is forcing an embargo," he told The Washington Diplomat. "The trade will just go underground. Congo's borders are porous. And if China doesn't want to stop buying Congolese tin, it won't. The Chinese will walk in when America walks out. An underground trade will be even more militarized, and the war will intensify."

Despite such alarm bells, the law's proponents say the fears of unintended consequences are overblown. Darren Fenwick, senior manager of government affairs at the Enough Project, admits that the legislation may compel some firms to stop sourcing from the region, but maintains that the benefits of transparency will outweigh the bill's potential costs. Likewise, Yale's Stearns notes that end-users targeted by the law have already been in the spotlight for a long time and that fears of reputation damage for firms unable to declare they are "conflict free" are overstated.

Intel spokesman Chuck Mulloy, whose firm is engaged in multiple transparency efforts, admits the micro-processing giant is currently unable to declare its supply chain "conflict free." Intel, he says, is confident in its public image as long as it makes an honest effort to address the problem, though he refuses to pledge with 100 percent certainty that it will continue sourcing from the region.

"We believe we can find a way to verify our supply chain," Mulloy said. "But I don't want to forecast what will happen if we cannot."

Challenge of Good Governance

Whatever the consequences of the legislation — intended, unintended or otherwise — all sides agree that the key impediment to Congolese peace is not to be found in rocks beneath its surface but within the failed institutions spawned by decades of ineffective and even predatory governance. Even if the law leads to a more transparent minerals sector, massive governance and security challenges will remain, particularly in the Kivu provinces, which sit on 1,000 miles of rugged, lawless terrain far from the distant Congolese capital, Kinshasa. Critics of the legislation, such as Mitchell of Resource Consulting Services, say that the use of an economic tool to solve a problem of governance is misdirected, and although the law might starve armed groups of revenue, it will not change the fundamental circumstances that enable such groups to exist.

Others, including Stearns, argue that the legislation presents an opportunity to promote accountability within the Congolese public sector and create incentives for structural reform. Even if the law leads to a decline in formal exports, as its critics contend, the government's loss of corresponding tax revenue might serve as an incentive to get its act together.

"This may be the best foot in the door for the reform of the Congolese administrative and security apparatus," he said.

In a country where government employees — including soldiers — frequently go unpaid, those on the ground say a better-functioning state apparatus is the only medicine with a chance to mitigate the crisis. Yet this will not go down easily.

"People are creating rebellions here because life is very hard," said Emmanuel Munganga, a Goma resident and local tour guide. "If the government would pay workers living wages, this would stop. Tourists come and pay $400 to see mountain gorillas, but rangers make $30 per month. Sometimes they're not paid at all. Normally, people would farm, but since there is no security, rebels can come at any time, steal your land, and ruin your investment. People who are jobless, they ask, 'What am I to do in this world?' The easiest answer is to form a rebellion. They rape women. They find a man, kill him, and steal his cow. They find a businessman, kill him, and take his money."

When asked about the role of minerals in all of this, Munganga exposes a Catch-22 that will continue to make the crisis intractable, even if the pros of the new legislation succeed in outweighing the cons.

"Rebels, they are here because of our minerals, because of our richness," he said. "This is why we have no peace."

"Some people say we should stop the mining," he adds. "They think this will finish the war. No, no, no, it will not."


About the Author

Jon Rosen is a freelance journalist based in Kigali, Rwanda.

Last Edited on June 24, 2014