Conflict Minerals Regulation: Disconnecting the “Minerals” from “ Conflict”

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11 December 2017

by Dr. Adriana Jalba, Director Chemical practice at Cambre Associates

The adoption of the European Conflict Minerals Regulation in May this year was followed by a wave of contradicting media articles, opinions and policy analyses. Only going through the headlines felt like a journey from agony to ecstasy and back: fingers rushed on computers’ and smartphone’s keyboards to pinpoint the use of these minerals in manufacturing computers and smartphones; media outlets were either praising the new EU regulation (especially since in USA a proposal to repeal the Section 1502 of Dodd-Frank Act was making its way through the decision process) or were raising concerns about the weaknesses of this new piece of legislation, whereas policy analysts were predicting catastrophic consequences for the minerals supply chains. In all this pointless agitation, the reality didn’t seem interesting enough to make it to the front page: the OECD Due Diligence Guidance was already at the 3rd Edition, multi-stakeholder initiatives and platforms and well-established processes were already functional at global scale, business models were adjusted and the EU Commission had already in place some financing instruments for the SMEs to benefit from access to technical assistance.

So how does the reality look today? It is truly that ... unattractive? Let us consider all the facts.

Artisanal, small-scale mining is not a new thing, it has been a traditional occupation for centuries and in the same time an important source of income for rural populations in developing countries. Lack of opportunities or livelihood alternatives push people into mining, but also the hope for better incomes than from agriculture (especially in gold mining). In many of the countries rich in mineral resources, the mining is a major contributor to the economy but the lack of statistics makes it difficult to account how many people depend on this source of income. According to the World Bank, about 100 million people worldwide depend on artisanal mining, compared to about 7 million people in industrial mining. The small-scale mining is often regulated, but the law enforcement is low or inexistent, therefore permits and licensing, health and safety measures or environmental management are seen as burdensome and costly by the miners (when they have knowledge about these). Moreover, the lack of control can favour the human rights abuses such as forced labour or child labour, or even the financing of armed conflicts.

However, putting the artisanal and small-scale mining out of the supply chain is not the solution. This will only increase poverty, thus creating the conditions for conflict situations and leading to human rights abuses and population displacement.

In this context, the OECD due diligence guidance was elaborated after three rounds of multi-stakeholder consultations, involving the governments of the African countries, industry, civil society and UN and touching upon the cross-cutting issues in the minerals supply chain. The guidance puts emphasis on collaborative approach as a solution to this complex situation, including the human rights dimension, and has become de facto an international standard since its adoption in 2011. In practice, the guidance is a 5-steps framework: 1. Establish company management systems; 2. Identify the risks in the supply chain; 3. Design & implement strategies to manage risks; 4. Carry out independent audits; 5. Annual reporting on supply chain due diligence.

Industry voluntary initiatives to address the conflict minerals sourcing were set-up well before the date of OECD guidelines adoption. Thus, the Responsible Minerals Initiative (RMI, formerly the Conflict-Free Source Initiative) was established in 2008 by members of the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI) and developed programs, standards and resources aiming to help businesses in their efforts to implement the OECD recommendations. The RMI also established the Initial Audit Fund, a financial instrument that incentivize the smelters to enter the program by paying for their first audit.

The European Partnership for Responsible Minerals (EPRM) is another example of voluntary initiative. EPRM is a multi-stakeholder platform, involving industry, civil society and governments and focusing on building capacity in the local mining communities. EPRM runs various programs aiming at providing technical and financial support in order to create the critical mass that can drive to changing in better the social and economic conditions in the mining areas.

All this time the EU didn’t just stood aside. In 2008, within the framework of the Raw Materials Initiative, the EU Commission acknowledged that access to reliable raw materials is key for the EU businesses competitiveness. With a focus on compliance and not sanctioning, the EU Conflict Minerals Regulation clearly aims to level the playing field by building on existing voluntary schemes of responsible sourcing of minerals, and in the same time providing financial instruments and technical assistance to SMEs (COSME 2014 – 2020 program).

After all, there is more to responsible minerals sourcing than meets the eye. There is a great deal of work and goodwill, which will progressively disconnect the mining activities from human rights abuses, environmental issues and conflicts.

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