What price a mobile phone?
Glen Newey · Conflict Minerals
What price a mobile phone? Pursuant to the Dodd-Frank Act, passed after the 2008 crash, the US Securities and Exchange Commission set 2 June 2014 as the deadline for mining companies to report the provenance of minerals they put on commodities markets, the aim being to flag ‘conflict minerals’ as such. Minerals dug in the Democratic Republic of Congo’s North and South Kivu provinces, including coltan (columbium tantalum) cassiterite and gold, are used in capacitors and other components for tablets, phones and computers. Various armed rebel groups in and around the Kivus vie for control of the mostly hand-worked mines.
Though the M23 rebels, who’d been supported by Rwanda against Joseph Kabila’s government, surrendered last November, the Great Lakes area remains volatile. Several Mai-Mai militias remain active, as do Joseph Kony’s Lord’s Resistance Army and other groups. The UN maintains a task force, MONUSCO, in an expensive and largely vain attempt to keep the peace (UN missions have cost $8.7 billion since 1998).
Mining companies are running scared. Last month they argued in a District of Columbia circuit court that disclosure of conflict minerals’ provenance breached the First Amendment, because it made them say something – a burden that food and drugs firms have laboured under for decades. The companies would have been required to badge those minerals which had ‘not been found to be “DRC conflict-free”’ on their websites.
The DC court found meritless the SEC’s appeal to what’s called ‘rational basis review’, by which statutes like Dodd-Frank get opt-outs against constitutional rights if it can be shown that they are reasonably needed for ends pursued by the US government – which means, roughly, whatever you want. Unlike ingredients in food or liquor, telling consumers whether their phone uses minerals mined by children to fund warlords was deemed either not to be a reasonable end itself, or not reasonably to promote an end, of government. On 14 May the mining firms suffered a reverse in the courts in their efforts to get an across-the-board postponement of the 2 June deadline, but were granted a stay on reporting conflict minerals, lest their First Amendment rights be jeopardised. Only firms that actively label minerals ‘DRC conflict-free’ will be subject to a private sector audit. While the US reporting regime targets the Kivus, the effective cause of conflict lies elsewhere. Despite its potential wealth – the epitome of the ‘resource curse’ – Congo remains a failed state. While public money is blown on networks of clients, the government cannot project executive power in the vast hinterlands east and south of Kinshasa. In the mineral-rich southern Katanga province, now relatively peaceful, non-US mining concessions go on doing their stuff, operating outside the conflict zone. Recently Glencore Xtrata, based in Jersey and Switzerland, acquired equity in the Katangese Kansuki and Mutanda mines after the state-owned stock had been sold by Kabila’s government at a knock-off price to a company in which his close friend, the Israeli tycoon Dan Gertler, has an interest. In 2011 Gertler was alleged to have links with 29 of a list of 59 offshore shell companies dealing in DRC assets, many based in the British Virgin Islands. The FTSE-100 listed Eurasian Natural Resources Corporation has obtained stakes in DRC mines via Gertler. Questioned about his relationship with Gertler in 2012, the ENRC’s then chair Mehmet Dalman said: ‘Don't give me questions that I will look bad on, right? Come on. Be fair.’ Dalman resigned amid corruption allegations last year.
Meanwhile, Congo remains dirt-poor. The World Bank ranks it last but one (just above Burundi) by per capita GDP, at $262 in 2009-13. Rape of women and children by militiamen is endemic. Since 1998, armed conflicts in the DRC have claimed up to 5.4 million lives. That’s roughly a 9/11 every three days.