Photo: Nicholai Lidow/IRIN

Soldiers loyal to dissident General Laurent Nkunda rebel man a checkpoint in Kimoka

The US House of Representatives reviews the progress of landmark supply chain regulation in the Democratic Republic of Congo and Great Lakes region.

Suspecting that the minerals and metals trade was funding conflict in eastern Democratic Republic of Congo, the US Securities and Exchange Commission adopted Section 1502 of the Dodd Frank Act last August, requiring US-listed companies operating in the region to carry out checks on their supply chain for commodities including tin, tantalum, tungsten and gold.

This week, five months into the first reporting year of the law, the US House of Representatives’ Subcommittee on Monetary Policy and Trade heard ‘for and against’ testimony about the impact of Section 1502 so far.

Major companies have been playing ball, identifying the origin of the metals they use and publishing the names of smelters and refiners in their supply chains. In April 2013, Hewlett Packard published the names of the 195 tin, tantalum and tungsten smelters and gold refiners identified in its supply chain. Apple has actually been tracking its sourcing since 2010, and its 2012 report identified 211 smelters and refiners in its supply chain. The same year, Philips identified the 127 tin, tantalum, tungsten smelters and gold refiners that it uses.

Motorola Solutions and AVX have launched an innovative ‘closed-pipe’ sourcing initiative in Katanga province, in which tantalum from sites is sold to certified smelters.

Proponents of Section 1502 acknowledge there is some way to go before the legislation achieves its goals. “The number of companies carrying out due diligence and sourcing from eastern DRC is still limited, largely as a result of the uncertainty created by the SEC’s 16-month delay in publishing the final rule for Section 1502,” said Sophia Pickles of the NGO Global Witness, in one of four testimonies heard by the sub-committee.

But Ms Pickles added: “In sites where closed-pipe supply chains have been set up, there are indications that the implementation of due diligence is helping to establish and safeguard conflict-free supply chains. Moreover, local monitoring groups have begun to identify and flag risks as they arise.”

Industry bodies are more critical, citing unfortunate unintended consequences. By adding administrative cost, the legislation is said to be incentivising companies to avoid the region entirely, according to Rick Goss, senior vice president of environment and sustainability at the Information Technology Industry Council, a global trade association representing the likes of Apple, Canon, Kodak and Microsoft. “Major smelters report that a majority of their direct customers are demanding metals that are Congo-free, rather than conflict-free,” he told the subcommittee. Section 1502 “has led to a de facto embargo on minerals from the covered region, with serious consequences for local populations.” As a result, exports of tin, tantalum and tungsten from the eastern DRC have all but halted, he claimed.

Worse still, the militias and mafia-type networks that Section 1502 was meant to eliminate have reportedly adapted, and are now seizing revenues from timber, charcoal, cannabis and ivory, and even turning to human trafficking, illegal roadblocks and extortion. Corporate effort, Mr Goss argued, is no substitute for “comprehensive international engagement” to resolve the political crisis in one of the world’s most troubled regions.