Australia needs to act on conflict minerals

Last month, the US Securities and Exchange Commission (SEC), responsible for regulating capital markets, ruled in favour of laws prohibiting the use of “conflict minerals”.

The new regulations have set an international precedent, and countries around the world are questioning whether they should be following suit. Australia, however, is not one of those countries.

Recognising the role of US companies in the illegal exploitation of workers and trade of resources from the war-torn Democratic Republic of Congo, the SEC conflict minerals ruling aims to hold US firms accountable. Manufacturers are now required to disclose whether their products contain gold, tin, tantalum or tungsten mined from the Congo or neighbouring countries.

While major US technology firms are some of the primary manufacturers of products containing conflict minerals, there are a host of international companies that are also involved in the trade of such resources at all levels; from the mine site to the final product. For Australia, the the mining stage itself proves most relevant.

Australia’s mining interests in Africa

Australian mining companies have been involved in the Congo’s fragile mining industry since before the Congolese civil war. In 2011, seven Australian based firms were active in the DRC, including BHP Billiton, Rio Tinto and Anvil Mining, which was purchased by Australian-based Chinese company Minmetals in 2011.

A recent report from the Department of Foreign Affairs and Trade noted that Australian resource companies now have more projects in Africa than in any other region of the world, and Australian investment in African resources is expected to increase dramatically. Ventures are becoming riskier as more mining companies jostle to capitalise on the vast supplies of Africa’s unexploited natural resources. Even AusAID’s development assistance strategy for Africa recognises the mutual interests of Australian mining companies and the development of mining sectors in countries like the DRC.

Given that the political infrastructure of the Congo is virtually non-existent, a great deal of obligation falls upon the mining companies to regulate their own behaviour. It is their responsibility to limit their negative impact on both the fragile political environment and on the security and livelihoods of people in the region.

More than a decade ago after recognising this responsibility, BHP Billiton and Rio Tinto were among the major international mining firms to adopt the Voluntary Principles on Security and Human Rights.

However, not all firms respect these principles or implement them to their full extent. Take Anvil Mining, for example.

Anvil Mining: a cautionary tale

Anvil Mining, a joint Canadian-Australian venture that has been mining copper in the DRC since 2002, was heavily implicated in the ongoing conflict in eastern Congo. A 2005 investigation by the UN found that Anvil was working in close cooperation with the Congolese military to quell a local uprising.

A small rebel campaign against Anvil in 2004 saw trucks looted and fuel, food and batteries stolen. In response, the Congolese military raped, murdered and terrorised the citizens of Kilwa, burying the bodies in mass graves. In all, more than 70 people were killed.

This all occurred with the help of Anvil, who provided the transportation of government soldiers to Kilwa, both by ground and by air.

In the first case of its kind, three expatriate employees of Anvil (one Canadian and two South African nationals) were charged with complicity in war crimes in connection to the Kilwa massacre in the military court of Katanga. While the case could potentially have set a precedent for the rising importance of corporate responsibility, the defendants were acquitted of the charges. A group of NGOs, under the banner of the Canadian Association Against Impunity, is now pursuing a class-action case against Anvil Mining in the civil court system of Canada.

We should consider the Anvil Mining case as a brutal demonstration of the need for greater regulation of Australian firms operating in the Congo.

The need for regulatory oversight

While companies like BHP and Rio Tinto have recognised the costs associated with socially irresponsible practises, we cannot rely on the industry to regulate itself.

Corporations are, by their nature, driven by profits, not principles. When operating in the virtually unregulated climate of eastern Congo, where corruption takes precedence over responsible business practises, companies are faced with the decision to either play the game or lose out to those with less scrupulous tactics. When it comes to protecting basic human rights, our best bet is placed on strict regulations and the forced compliance of all players.

Australia has been slow to recognise its responsibility in regulating its own companies operating in the Congo. In 2010, following increased concern over corporate involvement in the trade of conflict minerals, the Australian government released a set of due diligence guidelines. These guidelines set out a framework for responsible supply chain management of minerals, and provides steps Australian companies can take to ensure that they are not supporting the conflict in eastern Congo. One of the suggestions is implementing the principles and criteria of the Extractive Industries Transparency Initiative (EITI). However, Australia is not currently compliant with EITI criteria.

It is often put forward that the cost of implementing such regulatory systems is far too great for Australian businesses to bear. However, increased regulation would carry economic (and ethical) benefits for the Australian economy. Australia was once the leading producer of tantalum, with the world’s largest tantalum mines found in Western Australia. But after the world market was flooded with illegally sourced, cheap tantalum from eastern Congo, these mines ceased production and 200 people lost their jobs.

Before the Dodd-Frank bill containing the conflict minerals regulation was passed in the United States, many corporations were calling for government regulation to ensure all industry players were meeting the same ethical standards. It’s time for the rest of the world to follow suit, and hold their own companies responsible for the ethical sourcing of conflict-free mineral supplies.

Sara Meger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.