US firms fail in re­port­ing ‘con­flict min­er­als’: study

The China Post - - BUSINESS - BY MARC JOUR­DIER

Many U.S. com­pa­nies drag on com­ply­ing with a law against fi­nanc­ing armed move­ments ac­tive in eastern Demo­cratic Repub­lic of Congo ( DRC) through the pur­chase of “con­flict min­er­als,” ac­cord­ing to a new study.

“Our anal­y­sis shows that most com­pa­nies seem to pre­fer busi­ness-as-usual to gen­uinely ad­dress­ing the risk that their min­eral pur­chases bankroll armed groups over­seas,” Amnesty In­ter­na­tional said in a study re­leased this week jointly with Global Wit­ness, which com­bats the loot­ing of nat­u­ral re­sources from poor na­tions.

The two groups mon­i­tored ap­pli­ca­tion of one part of the Dod­dFrank Act, a U.S. fi­nan­cial re­form law passed in 2010. The sec­tion, re­gard­ing min­er­als such as gold, tin, coltan and tung­sten po­ten­tially com­ing from con­flict zones, took ef­fect in 2014.

U.S. com­pa­nies listed on the stock ex­change must now in­form reg­u­la­tors if they pro­cure such raw ma­te­ri­als, and whether those come from the DRC or any one of nine coun­tries on its bor­ders.

The firms are re­quired to de­scribe the steps they have taken to en­sure that the min­er­als they use have no con­nec­tion with the strife in the DRC. The law gives com­pa­nies be­tween two and four years to com­ply, depend­ing on their size.

Amnesty and Global Wit­ness stated that more than 1,000 U.S. com­pa­nies are af­fected by the new reg­u­la­tions. The two rights groups fo­cused on 100 of th­ese firms, care­fully study­ing the state­ments they had made to the Se­cu­ri­ties and Ex­change Com­mis­sion.

‘Min­i­mum re­quire­ments’

The joint re­port con­cluded that “79 per­cent of the 100 com­pa­nies an­a­lysed failed to meet the min­i­mum re­quire­ments of the U.S. con­flict min­er­als law.”

More­over, only 16 per­cent had in­ves­ti­gated “be­yond their di­rect sup­pli­ers to con­tact, or at­tempt to con­tact, the smelters or re­fin­ers that process the min­er­als,” it said.

The eastern prov­inces of the vast DRC are rich in min­er­als but have been wracked for more than 20 years by vi­o­lent eth­nic and ter­ri­to­rial con­flicts, and even strife over na­tion­al­ity. Na­tional and re­gional po­lit­i­cal in­ter­ests fur­ther com­pli­cate the sit­u­a­tion.

Most of the bel­liger­ents il­le­gally profit from min­ing or traf­fick­ing in the abun­dant nat­u­ral re­sources — some of which end up be­ing used as vi­tal com­po­nents of elec­tronic prod­ucts such as cell­phones.

The coun­try’s highly-ac­claimed doc­tor, De­nis Muk­wege — who has treated thou­sands of vic­tims of mass rape by DRC com­bat­ants — says no­table progress has been made to keep money in­vested in min­er­als from go­ing to armed groups.

In an opin­ion ar­ti­cle in Thurs­day’s edi­tion of the In­ter­na­tional New York Times, Muk­wege wrote about ef­forts since 2010 by tech gi­ants like Ap­ple and Hewlett Packard to en­sure trace­abil­ity of their sup­plies.

Muk­wege also hailed moves in Oc­to­ber by a gov­ern­ment-af­fil­i­ated min­ing in­dus­try group in main­land China to en­force scru­tiny across its for­eign sup­ply chain.

He also noted loom­ing Euro­pean Union reg­u­la­tions that would en­cour­age — though not re­quire — EU smelters and re­fin­ers to fully vet the prove­nance of sup­plies to avoid con­flict min­er­als.

But as the his­tory of Dodd-Frank demon­strates, get­ting com­pa­nies im­pli­cated to join the ef­fort to de­prive armed groups busi­ness in the min­eral trade will not be easy.

Pro­vi­sions of the law on “con­flict min­er­als” were bit­terly op­posed by busi­ness in­ter­ests in the United States, which fought against mea­sures they con­sid­ered too costly or cum­ber­some to en­force. In the DRC, the leg­is­la­tion also sparked de­bate.

In an open let­ter pub­lished last Septem­ber, 70 sci­en­tists, politi­cians and NGO of­fi­cials ar­gued that the Dodd-Frank Act has a num­ber of un­in­tended and dam­ag­ing side-ef­fects.

For ex­am­ple, they wrote that the leg­is­la­tion had led a num­ber of in­ter­na­tional buy­ers to con­form by sim­ply with­draw­ing from the DRC, where no re­li­able means of cer­ti­fy­ing ori­gin ex­ists.

Thou­sands of ar­ti­sanal min­ers who lost their jobs as a re­sult be­came choice re­cruits for armed move­ments.

Sup­port­ers of the leg­is­la­tion con­tend that its benefits are al­ready be­ing seen, while foes claim that although min­er­als can pro­long con­flicts, they do not cause them.

In his op-ed piece, how­ever, Muk­wege ar­gues that laws like Dodd-Frank are in­evitable and ur­gent un­less vol­un­tary ef­forts are un­der­taken to stop the ul­ti­mately deadly trade.

“Com­pa­nies must con­duct hon­est, rig­or­ous in­ves­ti­ga­tions of their sup­ply chains, pub­licly re­port their find­ings, and act on the re­sults to en­sure that their money — and ours — no longer ends up in the hands of vi­o­lent rebels,” he wrote.

“If they are un­will­ing to do so, gov­ern­ments must com­pel them to ac­tion.”

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