July 28 (Bloomberg) -- The Democratic Republic of Congo appealed to the U.S. Securities and Exchange Commission to prevent forthcoming conflict-mineral rules from causing a “de-facto embargo” on trade from the Central African nation.
The SEC, which is writing regulations for companies dealing in minerals from war-torn eastern Congo, should follow due-diligence guidance developed by the United Nations and the Organization for Economic Cooperation and Development, Mines Minister Martin Kabwelulu wrote in a July 15 letter published on the commission’s website.
The UN and OECD recommendations “define due diligence as a continuous process, proactive and reactive, by which companies take reasonable measures in good faith to identify and respond to risks that contribute to conflict,” Kabwelulu said. The result “will allow companies to make a positive contribution to peace and sustainable development.”
Kabwelulu’s letter is the Congolese government’s first written request to the SEC about the guidelines, which the commission was asked to develop last July under the Dodd-Frank Act to help cut the link between Congo’s mineral trade and armed groups. The SEC rules, which are expected as early as next month, will apply to U.S. companies involved in the trade in tin ore, tantalum, tungsten and gold shipped from Congo and nine neighboring countries.
Conflict in eastern Congo began in the mid-1990s and continues to this day, with armed groups and some members of the national army supporting themselves through the sale of natural resources.
Increased scrutiny of companies working in the region has caused mineral buyers including Traxys SA, Malaysia Smelting Corp. and Amalgamated Metals Plc to curtail or eliminate their purchases, and most trade from eastern Congo ground to a halt April 1. That month, electronics-industry groups implemented new guidelines for mineral smelters to ensure their products were “conflict-free.”
The new rules left tens of thousands of people out of work, according Paul Yenga Mabolia, head of Promines, a World Bank program assisting Congo’s mining industry.
“Nobody was prepared and there was no program to alleviate the impact of the law,” he said by phone from Kinshasa, Congo’s capital, yesterday. “Almost everything came to a standstill.”
Congo’s Mines Ministry has dispatched teams to validate mine sites that aren’t linked to armed groups so trade can resume. Motorola Solutions Inc. announced in an e-mailed statement on July 7 it would create a pilot program to monitor tantalum purchases from Congo so the country can remain “a viable source of conflict-free minerals.”
Congo accounted for 9 percent of the world’s tantalum, a mineral used in mobile phones and video-game consoles, and 4 percent of tin ore production in 2009, according to the U.S. Geological Survey.
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