Congo mining reform is making progress, but oversight is still lacking(Read article summary)
Guest blogger Jason Stearns explains further his assertion last week that Congo mining industry reform deserves 'cautious optimism.'
Last week, I expressed some cautious optimism here about reforms in the mining sector in the eastern Congo. I received quite a bit of feedback on various issues, which merit another posting to clarify some issues. (See original post here.)
First, "cautious" is the operative word. The Congolese export ban (September 2010- March 2011) and the US electronic industry's embargo of untraced minerals (April 2011- present) have caused major job losses in the Kivus, as well as played into the hands of a select elite of military commanders, including ICC-indictee Bosco Ntaganda. It is, however, important to point out that neither initiative was caused directly by the Dodd-Frank legislation in the US. Rather, the export ban was decreed by the Congolese presidency, while the industry embargo was an aggressive interpretation of the US legislation. Dodd-Frank call for companies to carry out due diligence and to report their findings; the OECD guidelines call on companies to minimize the risk of financing armed groups.
Secondly, the Malaysia Smelting Corporation (MSC), which I had reported as having signed a deal for the largest tin mines in the Kivus, has not yet officially concluded a deal. A large Congolese delegation visited Malaysia earlier this year, and MSC and their Belgian partners Traxys then came to meet with President Kabila. A "confidentiality agreement" was signed with MSC regarding the Sakima concessions in Maniema, a good place to start as most of the mines there are removed from the main areas of conflict. In addition, MSC has not yet given $10 million for certification an tracing schemes, although the mining minister says they have agreed to fund these initiatives.
Furthermore, I gave the wrong impression with regards to the ITRI-led tracing schemes in the Kivus. These schemes, which the government intends to use as part of an official certification plan, do entail provisions for detecting armed group involvement in mining. Several local stakeholder committees have been set up in North Kivu, South Kivu, and Katanga composed of relevant local actors. They compile information regarding mining supply chains and send them to a risk assessor – a kind of auditor – based in Brussels, Channel Research. This assessor conducts field visits, as well, and makes their information public (aside from confidential commercial information).
Critics have pointed out that, while these ITRI provisions are good first steps, they are still an industry initiative – while technically Channel Research can make whatever recommendations it likes, it is still being paid by its business partners. (For the deficiencies of these kinds of schemes, see this Washington Post article about in-house audits). In addition, uncovering collusion with armed groups requires in-depth investigation, which local shareholder groups may not be able to carry out.
Where do we go from here? There will be a meeting of the Electronic Industry Citizenship Coalition in late June to discuss how to deal with trade from the region. Also, the latest group of experts' report (more on that later) has an update on the centres de négoce set up by the UN and Congolese government to monitor the mineral trade, with three of the five proposed centers set up (Isanga, Rubaya and Mugogo). These centers are also supposed to carry out investigations about the militarization of the supply chains they deal with, and we should soon be seeing the first fruits of their work.
These initiatives are still, however, lacking. For all their talk, neither the US State Department nor the industry have put real money into either certification or oversight schemes in the Kivus. While military units are slowly pulling out of some areas – including perhaps the vital Bisie mine – they still retain their control over most other areas.