21st September 2011

The US Congress passed a landmark law in July 2010. Section 1502 of the Dodd Frank Wall Street Reform Act is designed to prevent armed groups in the Democratic Republic of Congo from profiting from the trade in cassiterite, coltan, wolframite and gold, by requiring companies using these minerals to do checks on their supply chains – these checks are known as due diligence. Congo NOW! member organisations are calling on the European Union to follow suit with similar legislation.

Carrying out supply chain due diligence on minerals sourced from conflict-affected areas such as eastern Congo allows companies to make sure they are not causing harm through their purchases. Establishing conflict free supply chains from eastern Congo could cut off a major source of revenue for abusive armed groups operating in the region, and so help to end a conflict that has led to over 5 million deaths over the past 15 years.

EU legislation requiring companies that use minerals sourced from Congo to undertake supply chain due diligence would be an important next step in tackling the conflict-resource trade and would encourage greater transparency in the country’s mining sector. European companies should be working towards a better understanding of their supply chains and their sourcing practices should be in line with the due diligence guidance that has recently been endorsed by the Organisation for Economic Co-operation and Development (OECD) and the United Nations Security Council.

As the implementation date of Dodd Frank’s Section 1502 draws nearer, a fierce debate has begun about whether the measures contained in the Act will actually prove counter-productive. Critics fear that they risk creating a de facto embargo on minerals being exported from eastern Congo which would in turn damage livelihoods, or increase contraband trade in the minerals mined in eastern DRC.

As companies wait for the US Securities and Exchange Commission to issue the final instructions for the law’s implementation, the international demand for Congolese minerals has been low, which has had serious implications for miners and their families.

However, the idea that the Dodd Frank Act amounts to a long-term embargo has been contradicted in the past few weeks by the unveiling of plans by international companies to invest in and source from mines in areas of Congo covered by the American law. The Congolese government has voiced its support for the law, and local NGOs working in mining areas have criticised the industry lobby that is trying to delay its implementation.

European governments should enact similar legislation to Section 1502 without delay.

But laws requiring companies to behave responsibly are only a first step in working towards a solution to eastern Congo’s instability. These measures should form the basis for a mineral trade that truly benefits mining communities in Congo. Legislation should also be accompanied by measures to formalise the Congolese mining sector, including support for certification and traceability initiatives in the DRC and across the whole Great Lakes region, capacity building support to the Congolese Ministry of Mines and other important institutions, and pressure on Congolese power holders to demilitarise key mines.

Increased engagement on the issue of conflict minerals should not reduce the focus on other root causes of the conflict, including the need for more democratic accountability in DRC and neighbouring countries, the demobilisation of combatants, dealing with refugee and land issues, reforming the security sector and addressing impunity.

Importantly, the Dodd Frank Act, in a different Section (1504) also contains measures obliging multinational mining companies to publish the payments they make to governments in countries where they are operating. This could represent a huge step forward in promoting transparent management of natural resources not just in eastern DRC but across the country. We urge the EU to take similar action, but to go one better than the US, by obliging companies to publish full details of their operations – including sales and profits, as well as tax payments – on a project-by-project basis. This would make a huge difference in terms of fighting corruption and tax avoidance in resource rich countries like DRC.