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IPIS report: Culprits or Scapegoats?

May 18, 2009

Executive summary (to read the full report, click here).

Ever since the eruption of the second Congo war in August 1998, the mining sector in eastern DRC has been under the scrutiny of UN Sanctions Committees, academics, NGOs, and local and international media, who have been worried and disturbed by the links between natural resource exploitation and armed conflict in the region. Both state and non-state armed actors are deriving benefit from the local mining business by levying taxes on mineral exports, by selling minerals for their own profit, and by trading mining rights for financial and military support.

The present report aims to clarify the position and responsibility of Belgian mineral traders in the area. Our purpose is not only to shed more light on the activities of Trademet and Traxys, the two companies featuring in the latest UN report, but also to discuss the activities of two other companies that have received less attention so far, namely Services and Trading International (STI) and Société pour le Développement et l’Expansion d’Entreprises (SDE).

In the first part of our report, we offer a description of the context in which the mineral trade takes place. We discuss the current state of affairs in the global trade in tin and tantalum, present an outline of the mineral trade in the Kivu region and give a brief description of the local security situation. In the second part of our report, we concentrate on the involvement of Belgian traders in the mineral business of eastern DRC. Our main intention is to provide the reader with a profile of each of these traders. As far as possible, we also present some information on the Congolese suppliers of the Belgian traders.

This paper aims to feed the ongoing debate on the accountability of commercial stakeholders in eastern DRC and on possible solutions to break the link between the mineral trade and the financing of armed actors. IPIS agrees with most observers that a total embargo on mineral exports from eastern DRC would not only be impracticable, but also detrimental to the livelihoods of the local population and hence the security situation in the region. However, this does not imply that commercial stakeholders are not to be held accountable if their activities have, directly or indirectly, financed rebel movements. IPIS also believes that governments of countries where international mineral traders are established can play an advisory and sensitizing role vis-à-vis these companies with regard to their liabilities under international and national criminal law when they operate in a conflict zone such as eastern DRC. This would also enhance such governments’ credibility as peace-brokers in the region and adjust the persistent perception among many local stakeholders that foreign business interests are more valuable than peace.

Our research findings show that Traxys and Trademet in 2007/2008 were by far the most important foreign buyers of cassiterite and coltan in Goma and Bukavu. One would suspect that, given their economic prominence and long-standing presence in the region, they would not only have a privileged knowledge of the local commodity chain, but also considerable leverage to influence it in a positive manner. The traders concerned reacted defensively to accusations laid out in the December 2008 report of the UN Panel of Experts. The Panel asserted that, through certain suppliers (comptoirs), they knowingly purchased minerals from mines controlled by non-state armed groups such as the FDLR. During our investigation we have unfortunately not been in a position to confirm or deny such claims through documented evidence. Nevertheless, we deplore that 13 years after the start of the first Congo war, such naming and shaming exercises still seem to be necessary to prompt a more transparent and constructive engagement on behalf of commercial stakeholders in the region.

Looking forward, however, there are indications that the traders under scrutiny are willing to contribute in a more pro-active manner to a sustainable solution to the issue of conflict related minerals. This creates a window of opportunity for all stakeholders to become involved in a concerted effort to enhance transparency and accountability in the mineral sector of the eastern DRC.

In our view, a crucial first step forward is to create a transparent, publicly accessible and regularly updated database with reliable information on the local commodity chain. IPIS is currently laying the groundwork of such a database through a pilot project in the Kivus. To further protect the legitimate trade, which, we repeat, is vital for the socio-economic fabric and security of the region, a credible traceability system should be devised. While there seems to be a preparedness among certain local stakeholders to step up due diligence efforts, even if it involves a third party verification mechanism, one should realize that in the long term such efforts can only be successful if they are supported by the Congolese government, MONUC, multi- and bilateral donors, and the DRC’s neighbors. The crux of the matter is the huge challenge the Congolese authorities face as far as controlling the eastern part of the country is concerned. To achieve this, security sector reform and regional political cooperation of course are key. In the case of the mineral sector, donors should support a strong deployment of mandated state agencies such as the CEEC, SAESSCAM, OFIDA and the Mines Administration.

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