In a recent report, American NGO Enough – which campaigns against genocide and crimes against humanity – mentions a 65% drop in profits from conflict minerals like tin, tungsten, and tantalum in Eastern Congo. Such decrease is partly the result of the traceability system put in place in the Great Lakes states to guarantee that minerals purchased from the region are not financing armed groups, a way to meet the transparency requirements of the American Dodd & Franck Act. However, sources at the Department of Geology of the Royal Museum of Central Africa of Tervuren (Belgium), the efficiency of the system is questionable. In their view, the idea that an embargo on these conflict minerals will dry up the resources of the local warlords is a fallacy.
In the first place, the trafficking of minerals is not the only source of funding of these groups. Some of these groups, like the M23, for instance have received support from Rwanda and Uganda, a UN report claims. In addition, according to observers in Kivu, the M23 main source of revenues is probably the customs dues cashed at the Bunagana border post with Uganda. Taxes and tolls on various products (food, coffee and cannabis) are also providing funds to the rebels. According to the Congolese Institution for National Conservation, the trafficking of charcoal and wild animals in the Virunga National Park is another lucrative business for the rebels. Furthermore, the Congolese army itself is involved in the trafficking of minerals. According to a Belgian geologist, the Congolese Minister of Mines himself, Martin Kabwelulu Labilo, said in a meeting that he found “normal” for the Congolese soldiers to exploit minerals in a mineral-rich region.
Traceability systems are also difficult to implement because of their high cost. Tagging minerals in sealed bags to guarantee their non-conflictual origin may cost up to 400 dollars a tonne. And nobody in the region is keen to pay for that additional cost, which may explain why the official exports figures have dropped. The problem is that one of the main effects of the US legislations has been that many producers have gone underground. Since the Chinese buy these minerals 30% below the world price, there will always be a market for them and a strong incentive to smuggle.
Besides, it is quite difficult to control the trade flows. There are thousands of small mining deposits in both Kivu and North Katanga, some of them in riverbeds. This creates an ideal situation for small mobile groups who migrate from a vein to another. Even if the Congolese state was organised, the challenge would be considerable. Moreover, the illegal trade is likely to continue because the world industry needs tantalum and tin. The Great Lakes region represents around 20% of the current supply of tantalum. In addition, the fact that the cost of manpower is not included in the sale of minerals makes Great Lakes minerals particularly attractive for purchasers. Some researchers are speaking about an alliance between the different actors of the supply chain in Congo, Rwanda and Burundi. Different tax and customs duties and different purchase prices within the region are powerful incentives for smuggling.
According to the UK-based NGO, International Alert, the export tax on a 25 tonnes of cassiterite (tin-bearing ore) produced in the Democratic Republic of Congo (DRC) is US $ 6,500. This represent three times the cost of the same container smuggled out via Rwanda or Uganda, including export taxes, transport costs and bribes.
Single custom rates and a sharing system between the Great Lakes tax administration could be the solutions. But those who are behind the smuggling are sometimes found in government circles, says a Belgian geologist. In addition, Enough reports, armed groups have increasingly turned to smuggling a fourth conflict mineral, gold, to generate income. In its study, Enough mentions that over $600 million of gold is illegally smuggled out of the DRC every year by rebel groups such as the Democratic Forces for the Liberation of Rwanda and more recently the Rwandan-backed M23, which is attempting to retake control of gold mines and trading routes. According to other estimates, 15 tons out of a total production of 40 tonnes are smuggled every year through Burundi, representing a value of € 660 million but these quantities are purchased at 50% of their real value, which enables traffickers to make substantial profits and bribe many people.
According to Enough, smuggled gold continues to flow from mines operated by warlords in eastern Congo, with the complicity of Congolese smugglers working with armed groups of regional smugglers in Uganda, Burundi, and Tanzania, refiners in Dubai, banks in Switzerland and Jewellers in the U.S., India and China. And at the lowest end of the chain, gold miners in eastern Congo face some of the world’s worst working conditions and include up to 40% child miners, as young as eight.
The trouble is that the Emirates do not belong to the OECD and therefore are not subject to its transparency rules. In addition, there is a lack of consensus between consumers. The European Commission and United States would like the Chinese and other to join them in certification systems. In addition, within the European Union, there are still important divergences between the member states over the need to impose a system which would be the equivalent of the Dodd & Franck Act in the US. Since neither Europe nor the US has major mining companies, they lack leverage to impose their political will to reluctant business partners worldwide. This said, nobody denies that there is a need to clamp down on armed groups but it is not sure that sanctioning the mineral trade from the region is an efficient shortcut. Nothing can replace political negotiations between the actors.