December 2013 UN Group of Experts report on DRC, Conflict Minerals

The most recent report of the UN Group of Experts (GoE) on the conditions in the DRC and surrounding countries has been released.  The report is wide ranging, but there is plenty of interesting information about conflict minerals – mainly gold – and the GoE’s findings concerning areas of militia control.

The report acknowledges that improvements have been made in the area’s conditions, but armed groups “continue to pose threats to security.  These groups are responsible for grave human rights abuses and massive displacement.”  In contrast to many reports from popular western media about the surrender and demise of M23, “…sanctioned M23 leaders are moving freely in Uganda, and that M23 has continued to recruit in Rwanda.”  In addition to M23, the GoE provided details on a number of other militia groups that are still active in the region.

Clearly, earlier statements by some media and other observers that the conflict ended with M23 are wrong.

With regard to conflict minerals, the GoE “estimates that 98 percent of the gold produced in DRC is smuggled out of the country, and that nearly all of the gold traded in Uganda – the main transit country for Congolese gold – is illegally exported from DRC” and tin, tantalum and tungsten continues to be smuggled out of eastern DRC.  One particularly blunt comment points to the DRC government:  “The Group notes that the lack of action of the Government of DRC against gold traders operating illegally in the aforementioned trading towns. In each location, gold traders work openly, but government authorities fail to arrest these traders, or otherwise compel them to legally trade in gold.”

The GoE found that “The main downstream destination of artisanally mined Congolese gold remains the United Arab Emirates (UAE); other destinations are Lebanon and Asian markets including India.”  According to various articles and sources, the highest uses of gold in those markets are jewelry and investments (bullion and coin) rather than industrial/commercial uses (such as gold chemicals/salts for plating of electronic components).  At least part of this finding seems to be supported by statements made by the World Gold Council.  Therefore, there may be less of a linkage between this gold smuggling and downstream manufacturers (other than jewelry) than it may appear.

Armed groups are funding themselves through several means such as poaching (ivory), looting villages, illegal transportation taxes, embezzlement of government levies at borders and revenues from various businesses (including rental fees for ore mining/processing equipment).  The report pointed out a few instances where they identified mining as a source of revenue, although “The Group found no evidence that M23 was engaged in the trade of minerals in 2013.”

Not everything was gloom and doom, however, as there were improvements noted that were attributed to gains in due diligence practices.  The report (shorter than others in the past)  is worth spending a few minutes reading.

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