United Nations Security Council Releases Interim Report of the DRC Group of Experts, Conflict Minerals

On June 21, 2012, The UN Security Council released the interim report on DRC (document number S/2012/348).

As stated in the report, “the Group’s primary role is to investigate and document evidence regarding the procurement of military equipment, including weapons and ammunition, by armed groups active in the Democratic Republic of the Congo, as well as their related financial networks and involvement in the exploitation and trade of natural resources” [Paragraph 5].

Therefore, the majority of the report details the existence and activities of armed groups in DRC and adjoining countries, including April’s defection from FARDC lead by General Bosco Ntaganda.  But the report also “evaluat[es] the impact of its due diligence guidelines for importers, processing industries and consumers of Congolese mineral products…” [Paragraph 7].

Regarding those findings,

The Group has established that market uncertainty resulting from the lengthy delay in the publication of the [US Securities and Exchange] Commission rules, together with the fear of potential 100 per cent “conflict free” demands in [the companies’] reporting obligations, has led most industry actors to pull out of the market in the eastern Democratic Republic of Congo rather than conduct due diligence on their supply chains.  [Paragraph 151].

Last August, we noted almost identical concerns stemming from “absolute certainty”, and made similar comments at the SEC Conflict Minerals Roundtable.

The report continues:

The Group proposes therefore that the Commission incorporate into its Guidelines the concept of mitigation container in the due diligence guidelines of the group and OECD…  Mitigation allows companies that purchase from mines where FARDC criminal networks are in operation to continue purchasing provided they have put in place time-bound and publicly available strategies to progressively decrease the involvement and benefit of military actors.

We believe this is an appropriate recommendation, especially given the dynamic nature of the on-the-ground situation in the DRC that is discussed in the larger portion of the Report.  Of course, we continue to wait until the final SEC rule is issued to know if mitigation will be allowable for Dodd-Frank compliance.

The 138-page report (which includes Annexes and photographs) can be downloaded here by entering symbol S/2012/348 in the “Search by Symbol” box.

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