• 2022.02.25 ｜

  Policy Recommendation

  ｜

  No.11

  SDGs Collaborative Research Unit

Policy Recommendations Concerning Response to Conflict Minerals Regulation

The European Union (EU) Conflict Minerals Regulation came into full force on January 1, 2021. The regulations require companies that import any of four minerals cited as providing a source of funding for conflict in the eastern part of the Democratic Republic of the Congo (hereinafter, DRC)—tin, tantalum, tungsten and gold (referred to collectively as 3TG)—into the EU, or smelter/refiner these minerals, must perform due diligence. These requirements are in line with the Due Diligence Guidance published by the Organisation for Economic Co-operation and Development (OECD) in 2010. Their purpose is the same as previous regulations on the conflict minerals. Regulations on the conflict minerals were made law through Section 1502 of the US Dodd-Frank Act in 2010, and several measures have been implemented over the past decade. Even in Japan, which has not established its own regulations, companies are required to conform to the US and EU regulations when doing business with US or European companies. For this reason, Japanese companies that use 3TG also investigate supply chains for conflict minerals.

Meanwhile, over the past decade, the international community has already experienced just how difficult it is to resolve conflicts in mineral-producing areas through the establishment of closed-pipe supply chains. Moreover, conflict related violence in the DRC has not decreased; in fact, it has increased since the introduction of the regulation. The commencement of the EU regulations and the effective expansion of the scope of due diligence to include cobalt, a mineral not actually subject to regulation, have placed companies at a crossroads. This paper analyzes the current situation from the perspective of conflict research and proposes recommendations for policies to address it.

Why have regulations on the trade of conflict minerals been unable to contribute to resolving the conflict? This paper proposes the following four points as reasons why regulations cannot stop the conflict.

1. Despite bringing about a change in the behavior of companies, the DRC government, the governments of surrounding countries, European and US governments, armed groups, military forces, the DRC Army, aid organizations and other parties related to the conflict, regulations on the conflict minerals have not functioned as an effective means of resolving conflict because they have not been able to change the mechanisms linking minerals and conflict.
2. Significant problems exist in the upstream sections of the closed-pipe supply chains designed to distribute only minerals certified as not associated with conflicts (conflict-free minerals), and the construction of these supply chains has not been successfully achieved.
3. Surrounding countries continue to interfere in the conflict in eastern DRC through the recruitment and training of soldiers for armed groups and the smuggling of minerals, and the geopolitics of the African Great Lakes Region is not heading for a resolution of the conflict.
4. Pressure from companies downstream in the supply chain and aid donors has not proved strong enough to change the mechanisms whereby the actors involved profit from continuing the conflict.

Based on an analysis of these factors, four recommendations are proposed for policies to be adopted by the Japanese government, aid organizations, researchers, companies, and civil society.

Recommendation 1:Analyze the effect of regulations on the conflict minerals on the mechanisms linking minerals and conflict

Despite bringing about a change in the behavior of the governments, armed groups, military forces, and companies involved, the introduction of regulations on the trade of conflict minerals has failed to change the mechanisms linking minerals and conflict. There is no resolution to the conflict in sight because the mining and trading of minerals are used to continue the conflict, while also continuing to act as an incentive to keep the conflict raging. A deeper analysis is necessary, not only of changes in the behavior of the actors due to the regulations but also of the effect of the regulations on the mechanisms linking minerals and conflict.

Recommendation 2:Strengthen the investigation of supply chains for conflict minerals and the conflict-free minerals certification scheme

The first step in ensuring the regulations on the trade of conflict minerals function to resolve conflict is to implement them as they were designed. The relaxation of the regulations should not be considered while they are still to be implemented fully. Instead, what is needed is stronger investigation of supply chains for conflict minerals and a more robust minerals certification scheme.

Recommendation 3:Strengthen support for upstream supply chains (mineral-producing regions) to establish closed-pipe supply chains

When establishing closed-pipe supply chains for conflict-free minerals, the difficulty lies in the upstream mineral-producing regions. Even if downstream supply chain traceability is improved from the stage of smelters/refiners onward, the entire supply chain will be polluted if the profits collected through the “taxation” of minerals mining and trading in mineral-producing regions is used by conflict actors. It is recommended to strengthen support for upstream mineral certification agencies, to enable downstream companies that perform due diligence to strive not only for the traceability of the downstream supply chain but also to ensure that the mines and transportation upstream are conflict-free.

Recommendation 4:Analyze the issue based on the geopolitics of the African Great Lakes Region, including DRC, Rwanda, Uganda, and Burundi

Given the continuing involvement of surrounding countries in the conflict in the eastern DRC, it is necessary to understand the Eastern Congo conflict in the context of the geopolitics of the African Great Lakes Region, including DRC, Rwanda, Uganda, and Burundi, and for the international community to work towards resolving the conflict based on this understanding.