This month, the Enough Project issued a relatively favorable report on progress in the DRC and adjoining countries in curtailing the funding of armed groups through the trade in conflict minerals (tin, tantalum, tungsten and gold --3TG). Happily, according to the Enough Project -- one of the key proponents of the conflict minerals rule -- much of the progress was attributable to "market changes spurred by the 2010 Dodd-Frank law on conflict minerals." So could it be that all that time and effort by companies to comply with the Dodd-Frank conflict minerals provision actually made a difference?

In fact, even before the SEC had adopted final rules implementing the conflict minerals provision, the Enough Project reported that the prospective application of the conflict minerals legislation, along with new tech industry sourcing policies and governmental reforms, had helped lead to a substantial drop in armed groups' profits from the trade in the 3Ts over the prior two-year period. Now, two years later and following implementation of the conflict minerals rule, the Enough Project reports even stronger results:

  • Significant reduction in control of 3T mines by armed groups. The report concludes that armed groups and the Congolese army are no longer present at 67% of 3T mines in three major provinces in the eastern Congo. By contrast, in 2010, in those provinces, almost every mine was controlled by a military group. Some of the largest tin and tantalum mines that previously generated significant revenues for warlords and criminal army units are entirely or largely demilitarized and conflict-free. For example, the report indicates that 60% of the 28 tantalum mines at one location that once provided significant income to the infamous M23 rebel leader (Bosco "Terminator" Ntaganda) are currently validated as conflict-free. Three months after a Solutions for Hope project was launched in that location in March 2014, "no illegal taxation or armed groups involvement has been reported, and local media have popularized the project, calling it a ‘coltan [tantalum] boom' with many miners migrating to the area." Some of the mines are even the subject of negotiation between international investors and local community groups for large-scale development of the mine and investment in infrastructure in the environs. However, although the volume of trade in the 3Ts is significantly below pre-Dodd-Frank levels, some army and rebel commanders continue to tax smugglers of 3Ts along supply routes, and some army commanders use intermediaries such as friends and relatives in the mines.
  • Two-tiered pricing structure for conflict and conflict-free minerals. Untraceable conflict minerals sell at a 30% to 60% discount from conflict-free 3Ts, with the result that profits to armed groups from untraceable conflict minerals are greatly reduced, and many armed groups are now largely shut out of the 3Ts trade that supplies western electronics companies, according to the report.. 
  • Only marginal improvement in gold trade. Efforts to ensure that is gold is conflict free have been less successful, and the gold trade has seen only marginal improvement. The U.N. Group of Experts estimates that almost all artisanal gold is smuggled. In addition, the "army continues to be involved in the illicit gold exploitation, with senior officers reaping the majority of profits." According to the Enough Project, working conditions at gold mines remain poor, with "up to 40 percent child miners in some mines…. Overall, the pervasive involvement of armed actors in gold mines, including forced labor, forced purchase, mining, and taxation, greatly affects gold miners' living and working conditions. Though conditions might vary slightly from one area to another,… many miners still mine at gunpoint, and extortion and intimidation at checkpoints are common. In addition to poor working and living conditions, miners are subject to targeted killings in [some areas]."
  • Expanded sourcing in DRC. Through organizations such as Solutions for Hope, some companies have actually expanded sourcing from the DRC, where there are now 16 conflict-free mines in contrast to only one in 2011. According to the report, "Communities near conflict-free mining projects experience a greatly reduced presence of armed groups; hospitals and schools are starting to be built in those areas. As an international investor who was unable to invest when armed commanders occupied most mines told Enough, ‘Dodd-Frank has made a huge impact, wildly beyond the architect's dreams. It is no longer economic[al] for armed groups to mine [3Ts]. We never would have been looking at investing in mines in Congo if it weren't for this law.'" 
  • Impact on miners. The wages of miners have also increased, in some mines threefold, and an increased number of miners now receive helmets and safety equipment and experience safer working conditions. Anecdotal evidence suggests that most former 3T miners that were displaced as a result of decreased volume of trade have found work in gold mines (which may be conflict-ridden and therefore problematic), farming and small businesses such as fishing or motorcycle taxis, some of which are much more lucrative than mining.
  • Dodd-Frank helped to accelerate third-party audit programs. One of Dodd-Frank's "main effects has been to spur reforms by regional governments, international organizations, and electronics, gold, and other industries." Of the mines in the DRC, 112 out of 155 mines surveyed have been validated as conflict free, and over 40% of the world's 3T and gold smelters have passed third-party conflict-free audits through programs such as the Conflict-Free Smelter Program or Solutions for Hope. The CFSP has now validated 87 smelters as conflict-free, compared to only one in 2009. Many of these programs were prompted by or accelerated as a result of Dodd-Frank.

But, unfortunately, there's a spoiler for every piece of good news. This time, the spoiler is a lecturer in International Relations at King's College London, who penned a piece in the Washington Post skeptical of the progress reported in the Enough Project's report and the BBC's characterization of it as "'rare good news' from the DRC," and "proof that consumer-led lobbying efforts in wealthy countries can have real effects on under-developed countries."  Perhaps the disparity is less a question of fact and more a question of whether the glass is half full or half empty?

According to the author, "the situation is not as rosy as such reactions may suggest. First, describing the mines as ‘conflict-free' suggests that the absence of armed groups and Congolese military from mines means that miners no longer work under duress and are not forced to pay illegal ‘taxes' at the mine site that can in turn fuel militia activity. Yet the absence of armed individuals does not mean that miners are not working under forced or inhumane conditions, that they are not being extorted, or that non-state actors and individuals holding political office are not benefiting illegally from mining in the region. Indeed, a variety of actors are involved in Congo's mineral industry, including politicians, Congolese and foreign entrepreneurs and investors, Congolese mining companies, and multinational firms, and eliminating extortion by armed groups and the military will not necessarily affect illegal profits to others, who may subsequently fund armed activity. While the route may be more circuitous, the result is the same."

Highlighting the acknowledgement in the report that some armed groups are simply using friends and relatives as proxies to extort money from miners, the author concludes that "the absence of armed groups and Congolese military in the mines themselves thus does not mean that they have disappeared entirely from the mineral trade or that minerals are not indirectly financing armed activity. In addition, extortion does not just occur in mines, but also along roads, at checkpoints, with negotiants, and at comptoirs in nearby towns and provincial capitals where minerals are bought, sold and smuggled. Extortion may thus continue to occur at other points along the supply chain, and indeed, the report notes that armed actors are still present along many key transport routes." In addition, the fact that control of the mines (in the absence of armed groups) is being negotiated by outside investors with the politicians and community groups does not, in the author's view, "mean that equitable solutions are being found," particularly given that corruption of politicians and co-optation of community groups may prevent these participants from giving fair consideration to miners' interests.

The author's most significant objection to the report, however, is to the very use of the term "conflict-free": "It is used largely to describe the electronics and other products manufactured by Western companies and consumed by Western populations. This, however, leaves out the Congolese themselves, many of whose lives remain marked by personal and material insecurity. While the report correctly stresses that much remains to be done, that instability still plagues much of the region, and that there is an acute need for broader security sector reform, the discourse that implies that mines without military actors and minerals from those mines are ‘conflict-free' minimizes the many ways in which a variety of actors sustain conflict in Congo and suggests that what matters most in the search for peace in Congo is minerals. However, minerals alone have never been the main source of conflict in the DRC; instead, conflict is at its root linked to poor or absent governance both nationally and regionally. This relatively narrow conception of conflict is likely more of a problem with the Dodd-Frank legislation that generated the SEC reporting requirement than with the Enough Project's findings. Still, while it is surely good that a significant number of 3T mines in eastern Congo are no longer directly controlled by armed actors and that corporate responsibility about mineral sourcing is on the rise, overall levels of violence in Eastern Congo have not diminished significantly since the passage of Dodd-Frank. Removing armed actors from mines is important, but doing so will not solve problems that are, at their base, political."

One interesting aspect to consider is whether the author's final critique of the use of the term "conflict free" might have some implications for the conflict minerals case currently before the D.C. Circuit. As you may recall, in that case, the three-judge panel decided that the requirement to disclose whether companies' products were "DRC conflict free" amounted to "compelled speech" in violation of companies' First Amendment rights, but a rehearing en banc has been requested. (See my news brief of 6/24/14.) To the extent the Court holds that, to invoke the more relaxed scrutiny applicable to commercial speech under the test articulated in Zauderer v. Office of Disciplinary Counsel (1985), the speech at issue must be "factual and non-controversial," is it possible that the author's criticism may lend more credence to an argument that the required disclosure is neither non-controversial nor factual?