Extractive companies working in mineral-rich conflict areas in Africa have made little progress in documenting and reporting their compliance to resolving mineral conflicts, a report has revealed.
According to the 2014 Conflict Minerals Survey Report by PricewaterhouseCoopers that studied the operations of nearly 700 companies in the Democratic Republic of Congo (DRC), only 4 percent of them have made a step towards becoming compliant with a rule in Section 1502 of the Dodd-Frank Act that is aimed at stopping rebel groups in the DRC and surrounding areas from illegally using profits from minerals to fund violence.
The Conflict Minerals rule requires companies registered with the Securities and Exchange Commission (SEC) to disclose if their minerals may have originated from DRC, and if they are ‘conflict free’ or not. The minerals include tin, tantalum, tungsten and gold.
“The task of conflict minerals compliance has proven more intensive than many companies initially anticipated,” reads the report. “In our 2013 survey, the majority of respondents said they were in the early stages, and companies reported that they anticipated the process would take three to four months. This year, our results show that while the majority of respondents are making substantive progress, many aren’t as far along as they had originally intended to be.”
The survey shows that many companies have struggled to make substantial progress in becoming transparent in their mineral transactions, with only 28 percent getting complete responses from less than a quarter of their minerals’ suppliers.
Denis Kusasira, Managing Partner at ABMAK Associates, a Ugandan law firm that handles many investors in the mineral sector, says that such mineral conflicts are likely to increase in countries with weak or non-existent laws.
“For instance, Uganda’s mining laws are very old. Imagine our laws do not allow the government to take part in investing in the resource,” he observed while speaking to a group of journalists at a media training in Kampala recently.
He noted the need for laws that effectively place the management of minerals in the host-country’s hands.
39 percent of the companies interviewed said that they had not made any decision on how to deal with conflict minerals, while 4 percent revealed that it was not even important for them to steer clear of conflict minerals.
The DRC’s North Kivu region, bordering Uganda, remains one of the most insecure and volatile regions in Africa and leading source of conflict minerals in the Region.
The inability of the DRC government to manage the area, coupled with its abundance in minerals like gold, diamond and cassiterite, has transformed it into a haven for tens, possibly hundreds, of armed groups and local militias including the now weakened Allied Democratic Forces (ADF) rebel group and disbanded M 23 rebel outfit.
Report by Flavia Nalubega