Illicit trade with Coltan and Implications for Certification

Abstract

Coltan mining in Central Africa and especially in the Eastern Kivu region of the Democratic Republic of Congo (DRC) has often been viewed as a case for a conflict over the control of raw materials in a failing state (contribution of Müller, Croll in Part I). Rebel groups and others are fighting over access to minerals and profit from illicit trade, and the state fails to provide social order resulting in unchecked criminal activities. The easy access to coltan and other minerals, combined with weak property rights in a country with weak basic institutions and a long history of civil war, and a high demand on world markets can be assumed as main determinants of insecurity and conflicts.

A revised version of this paper has been published in the journal Resource Policy 37 (2012) 19–29.

Annex: International Initiatives and Coverage of the Value Chain of Coltan

Initiative	Action description	Actors responsible	Part of supply chain	Synergies with other actions	Risks
UN-EU partnership on extractive industries and conflict	Aims at ensuring inclusion of conflict prevention and sensitivity in NRM programs. It provides a framework and technical assistance useful to EU and UN agencies to plan and design intervention strategies where extractive industries are driving factors of the conflict	EU and UN	UN and the EU, extractive industries, governments	EITI, capacity building/technical assistance	contribution of other key parties is needed in order to achieve a peaceful outcome in a coordinated and constructive manner
EITI, EITI++	disclosure of public revenues/expenses	Governments and companies	Local companies (comptoires/mining companies)	Capacity building programmes, initiatives supporting transparency in the value chain(certification/chain of custody assurance)	It covers only one part of a broader resource management process. Problems in implementation due to the fragmentation of state organizations
OECD/UN due diligence	Due diligence framework and practical guidance on how to manage risks	Up/down-stream operators	Up/down-stream operators	Promotes the use of schemes for traceability (iTSCi), EITI	Too burdensome requirements, might push companies from OECD countries out of the sector
Capacity building of governments (e.g. Promines DRC)	Strengthening capacity of key institutions to manage mineral sector, improving condition for investment and socio-economic benefits	Local institutions, international donors	Local institutions, business environment	Attends to gaps in EITI, supports the creation of traceability systems	Difficult implementation environment in the region (e.g. situation in DRC), limited resources for too wide scope
Certified Trading Chains (CTC)	Ensure chain of custody for producers and buyers (verification of origin and trade volume analysis, independent audits); on-the-ground assessment of mining conditions	BRG and the local ministry of mines (DRC, Rwanda)	Mining production and trade (focus on companies’ concessions—LSM)	Capacity building programmes, fingerprinting process	Capacity building needed, multiple stakeholders involved can hamper the process
iTSCi	Ensure traceability of minerals (phase I-introduction of due diligence procedures, written documentation, independent audits; phase II- “bag and tag system” of traceability)	Initiative of the tin smelting industry	Suppliers and exporters of minerals (in particular ASM)	Possible interaction with Capacity building programmes, EICC/GeSi, OECD/UN due diligence guidelines. Could be integrated in CTC as traceability scheme.	Security of mining sites, commercial visibility, need to publish data for awareness raising
Analytical Fingerprint (AFP)	Independent mineral traceability tool	Up to now: BRG	Mining and trade	Forms part of CTC certification scheme; can be linked to iTCSi	Complex and costly implementation, stakeholders facilitation and institutional support needed
GeSI/EICC	Global e-Sustainability Initiative and Electronic Industry Citizenship Coalition offer a tool and support for certification of smelters	Initiative of electronics industry	Smelters	Link with mineral certification schemes (iTSCi and CTC)	Complexity of ITC supply chain
ICGLR certification scheme	International Conference of the Great Lakes Region, Regional certificate of origin scheme, harmonization, promotion of dialogue	ICGLR	Local producers/traders	Complementarity with other point of origin certification schemes (CTC, iTSCi)	Ownership issues
Bans	mining/export of the mineral is prevented	Governments/international community	Extraction phase or exports from the producing country	May be symbolic part of broader action	Bringing further economic hardship for people, costly and difficult to enforce
Dodd Frank act	Legal obligation on US companies reporting to SEC to declare use of “conflict minerals”	SEC, SEC reporting companies	SEC reporting companies	Due diligence guidelines and iTSCi	Compliance issues, questionable impact on Congolese people.
Starec plan	Rehabilitation and regulation of mining. Establishments of marketplaces (centres de negoce) in key mining areas	Government of DRC, artisanal miners and their associations	Traders, merchants, diggers, mineral and state authorities		Challenge on how to manage security

1. Source: Authors’elaboration of different sources