pactworld.org
July 2015
Unconflicted
Making conflict-free mining
a reality in the DRC, Rwanda and Burundi
About Pact
Pact is a promise of a better tomorrow for all those who are poor and marginalized. Working in
partnership to develop local solutions that enable people to own their own future, Pact helps
people and communities build their own capacity to generate income, improve access to quality health services, and gain lasting benefit from the sustainable use of the natural resources
around them. Based in Washington, D.C., and at work in nearly 30 countries in Asia, Africa,
Eastern Europe and Latin America, Pact builds local promise with an integrated, adaptive approach that is shaping the future of international development.
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Learn more about Pact’s Mines to Markets work at www.pactworld.org/mining
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Contents
Acronyms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
A Time for Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Why We — and I — Do This Work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Unconflicted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Awareness of Conflict Minerals Grows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Private Industry and Government React. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Impact of Dodd-Frank and Efforts to Respond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
iTSCi System Launches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Beginnings of Pact’s Involvement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Impact of Dodd-Frank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
How the System Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Current Implementation of iTSCi in Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Current Challenges for the iTSCi System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Next Five Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Leveraging and Expanding Security Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Strengthening Governance in the Mining Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Formalization of Artisanal Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Greater Regional Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Greater Transparency Leads to Greater Prosperity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Local Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ongoing Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conclusion and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Closing Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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Acronyms
3Ts
Tin, Tantalum and Tungsten
CEEC
Centre for Evaluation, Expertise and Certification
CFSP
Conflict Free Smelter Program
CFTI
Conflict Free Tin Initiative
DBSA
Development Bank of Southern Africa
DMFA
Dutch Ministry of Foreign Affairs
DRC Democratic Republic of Congo
EICC
Electronic Industry Citizenship Coalition
EITI
Extractive Industries Transparency Initiative
FFI
Fauna and Flora International
GeSI
Global e-Sustainability Initiative
GMD
Geology and Mines Department of Rwanda
ICGLR
International Conference on the Great Lakes Region
ITRI International Tin Industry Association
iTSCi
ITRI Tin Supply Chain Initiative
MIMIRENA Ministry of Natural Resources of Rwanda
NGO
Nongovernmental organization
OECD
Organization for Economic Cooperation and Development
OECD DDG Organization for Economic Cooperation and Development Due-Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas
OSH
Occupational Safety and Health
RNRA
Rwanda Natural Resources Authority
SAESSCAM Service for the Organization and Assistance of Artisanal and Small-Scale Miners
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SEC
The U.S. Securities and Exchange Commission
SfH
Solutions for Hope
T.I.C.
International Tantalum Association
WFCL
Worst Forms of Child Labor
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A Time for Action
Dear Reader,
Every adult deserves to earn a dignified living.
Small-scale mining may be one of the most difficult occupations — it’s back-breaking work, often with
the most rudimentary tools —but millions of men and women choose to engage in it, for a variety of
good reasons.
In Africa’s Great Lakes region, Pact and its partners are known for operating the only internationally
recognized supply chain monitoring system that ensures minerals go from miner to multinational
without interference along the way. As you’ll read, we’ve implemented this system at hundreds of
mines in the Democratic Republic of Congo, Rwanda and Burundi, affecting tens of thousands of
artisanal miners.
But our work in the artisanal mining industry isn’t just about supply chains. It’s about making sure
that a miner is safe to pursue his or her work — undeterred by armed interference and armed against
occupational hazards — and free to engage in a marketplace that rewards hard work. It’s about the
opportunity to provide for one’s family and realize hopes for a better tomorrow.
While our work providing the environment for conflict-free mining is understandably high-profile,
it’s merely one component of our Mines to Markets signature initiative. Around the world, we also
work to reduce child labor in mines, to introduce health and sanitation measures to mining camps
and villages and to improve non-mining business opportunities for women who either work in or are
connected to mining.
I hope that in reading this report, you see the difference we are helping to make, and I encourage you
to reach out to Pact and our partners to learn more about how you can join our effort.
Mark Viso
President
Pact
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Foreword
Why We — and I — Do This Work
I am often asked why Pact, a development organization, is working on an industry project for
miners, mineral traders and smelters. We are not a commercial company and we have no financial
interest in the mining business, and yet we choose to work in close partnership with industry to
implement a mineral traceability and due diligence system in Africa’s Great Lakes region.
Why do we do this work? Pact believes that well-regulated business is an effective and sustainable vehicle to deliver the development needed to lift people out of poverty. Natural resource
extraction is the economic backbone of the economy in many countries where Pact works, and an
integrated approach to development that combines responsible business with good governance
and strengthened local capacity can deliver better, safer, healthier livelihoods.
Pact started work in the minerals sector of the Democratic Republic of Congo (DRC) long before the
United States Congress enacted conflict minerals legislation in 2010 (Section 1502 of the DoddFrank Act). In fact, our work has recognized the importance of the sector to economic development since 2005, when we launched a multi-project Mines to Markets program with partners in
government, industry and civil society to maximize the benefits of mining for rural communities
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and the national economy. When Dodd-Frank came to pass, we were already working on interventions and solutions to protect men, women and children laboring in Central Africa’s artisanal
mines. Participation in efforts to make mineral supply chains “conflict free” was a natural step
for us.
In the Great Lakes region of Africa, the conflict minerals legislation was initially seen as a colonial-style imposition, as a penalty and even as a stealth mechanism to divert mineral trade to
competitor markets. Despite this resentment and the hardships that the countries have suffered,
the governments of the DRC, Rwanda and Burundi, in partnership with industry and Pact, adopted and adapted the ITRI Tin Supply Chain Initiative (iTSCi) – a comprehensive due diligence
and mineral traceability system – as a means to strengthen the governance of their minerals
sectors.
In the five years since the partnership started, iTSCi has protected and improved the lives of
tens of thousands of miners working in hundreds of mines that are free of armed groups and
human rights abuses. Hundreds of local businesses are meeting international standards of operations to become credible suppliers to international minerals markets. Actors in the region are
already focusing on other important socio-economic issues as the supply chain spotlight starts
to expand beyond conflict minerals and directs attention to broader challenges in the sector.
Pact is beginning to overlay desperately needed development programs onto these conflict-free
sites to further improve development outcomes in these underserved communities.
This is what drives Pact.
As to what drives me, I would like to share just a few personal thoughts before you read this
report.
As a Congolese citizen, I am incredibly proud of what is being achieved in my country and in
those of our neighbors to build a responsible minerals sector in the region. As a development
professional, I continue to be amazed at the rate at which we have achieved broad, impressive
results in such a short time. As a brother, I remain deeply concerned for, and committed to, the
welfare of the artisanal miners of the Great Lakes region who still need so much support to earn
a safer, more dignified living. As a father, I am working to build a better country for my children
so they never have to face such hardship. Pact’s Mines to Markets program and the iTSCi system
are part of that better future.
Sincerely,
Yves Bawa
Regional Director, DRC, Rwanda and Burundi
Pact
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Making conflict-free mining
a reality in the DRC,
Rwanda and Burundi
In 2010, when the United States adopted legislation to stop the use of conflict minerals in American products, the system known as iTSCi, that today
is in use at more than 800 mines in Africa’s Great Lakes region, was in its
infancy. The road to this point has not been easy. It involved many partners working in muddy trenches to build a local answer to an international
question demanding immediate action: How do you reliably trace hundreds of thousands of tonnes of minerals from mine to market in one of the
most challenging environments in the world?
Of course, the iTSCi system is not perfect. But by all measures, it works.
What follows is an explanation of why iTSCi exists, how it was created,
how it works and what must be done to expand the system and build on
its success — information that is especially critical as additional Western
governments consider their own conflict minerals legislation.
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Awareness of Conflict
Minerals Grows
Perhaps surprisingly, the first news articles
linking the conflict in eastern DRC to minerals
markets appeared around 2000, when illegal
bush meat hunting in protected areas – to feed
the burgeoning coltan1 mining camps in eastern DRC – came to public attention. An early
initiative to address this issue was the Durban
Process, led by wildlife conservationists who
sought to engage industry in regulating supply
chains to address illegal mining. However,
attention soon widened, with headlines about
violence and human rights abuses by armed
groups that controlled mineral flows and
preyed upon miners, using their profits to fund
corrupt administrations.
Over the following years, reports from the
United Nations Group of Experts and nongovernmental organizations (NGOs) such as Global
Witness and Fauna and Flora International
(FFI) drew attention to the complex conflict in
the region and the devastating impact of the
illegal mineral trade. The key minerals identified as being the source of the conflict were tin,
Sources of the ‘3Ts’
Cassiterite is the ore containing tin
Wolframite is the ore containing tungsten
Tantalite (also locally called coltan) is the
ore containing tantalum
1
2
tantalum and tungsten (now often referred to
as the ‘3Ts’) and gold. The terms ‘blood minerals’ and ‘conflict minerals’ became regular
features in the media, and organizations such
as The Enough Project launched a powerful lobby in the United States to push for legislation to
control mineral sourcing in the region.
Private Industry and
Government React
Consumer companies and industry associations
were highly sensitive to the negative publicity and took steps to respond. Notable among
these steps were the actions of the International Tin Industry Association (ITRI), which,
later joined by the International Tantalum
Association (T.I.C.), began developing a due
diligence and traceability mechanism to enable
their members to buy so-called clean minerals from the region. This was the start of the
ITRI Tin Supply Chain Initiative (iTSCi). At the
same time, the Electronic Industry Citizenship
Coalition (EICC) and the Global e-Sustainability
Initiative (GeSI) started to work on a mechanism to control minerals entering their supply
chains from metal smelters, called the Conflict
Free Smelter Program (CFSP).
In 2010, the powerful NGO-led lobby achieved
a significant milestone. The Dodd-Frank
Wall Street Reform and Consumer Protection
Act, passed by Congress in July of that year,
contained a specific section on conflict minerals. Dodd-Frank Section 1502 directs the U.S.
Securities and Exchange Commission (SEC) to
require companies publicly traded on U.S. stock
markets to disclose their use of the 3Ts or gold
if the mineral is “necessary to the functionality
or production of a product.” Companies must
ensure that minerals in their supply chain are
not produced under conditions of conflict,
do not fund conflict and are not connected to
human rights abuses. The regulation applies to
minerals coming from the DRC or any adjoining
Coltan is a local name for ore containing the minerals columbium (also known as niobium) and tantalum. The name comes from the abbreviation of columbo-tantalite.
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country.2 The SEC rules were aligned with the
Organization for Economic Cooperation and
Development’s (OECD) Due Diligence Guidance
for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas (also
known as OECD DDG).
The Impact of Dodd-Frank
and Efforts to Respond
In the Great Lakes region of Africa, mining of
tin, tantalum and tungsten has been carried
out for decades under various systems and at
various scales. In the colonial era, industrial
tin mines existed in many areas. However,
these fell into disrepair and decay in the latter
2
decades of the twentieth century. When DoddFrank was passed, all mining of the 3Ts in the
region was being carried out on an artisanal
basis using rudimentary tools and manual
labor, or in some cases with a degree of mechanization and investment by small-scale mining
companies, although still using manual labor.
Some mines were reportedly controlled by state
and non-state armed groups, or their minerals were assumed to be financing conflict and
human rights abuses. But many others with no
connection to conflict were merely providing a
living for miners, traders and their families.
Dodd-Frank caught the region – including the
DRC, Rwanda and eight other countries – offguard and unprepared. The law was drafted
without consultation with governments in the
region and with no mechanisms or resources
in place to help them cope with the immediate
and massive impact on their minerals indus-
http://www.auditanalytics.com/blog/an-initial-look-at-conflict-minerals-dodd-frank-section-1502/
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The immediate impact was the threat of a
de-facto embargo on the sector if mineral
buyers suspended their trading relationships in
the region. The livelihoods of tens of thousands
of tin, tantalum and tungsten miners and other
operators were at risk, with no warning or
explanation. No alternative employment was
offered.
iTSCi System Launches
tries. Economies with no connection to the
targeted conflict were among those affected.
The power of Dodd-Frank created bewilderment in central Africa, with miners asking,
How can an American law dictate how we work
in Africa? Locally, Dodd-Frank is often referred
to as “Obama’s Law.” Dodd-Frank did not have
the support of the United Nations, was not
developed as a multi-country treaty or agreement, and does not have legal jurisdiction in
the DRC or other affected countries. Despite
this lack of local legitimacy, the legislation has
had enormous influence. Dodd-Frank did not
need the cooperation of the DRC to achieve its
goal; it pulled the powerful lever of the market.
End-user industries faced negative pressure
from NGOs and lobby groups and reputation
and brand risks, as well as legal reporting requirements, costs of compliance and penalties
for failure to clean up their supply chains. The
easiest response was to cut all central African
material from their products, and this is what
many chose to do.
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It was against this background that iTSCi started operations. The system had been in development by ITRI and others before 2009 based
on United Nation Group of Experts reports and
ITRI’s desire to improve artisanal mining areas
– a large and important part of the tin business.
There was also an assumption that regulation
was coming and industry needed to get ahead
of it to maintain local markets and livelihoods.
ITRI teams visited 3T mines, studied supply
chains, identified local partners, held negotiations with governments in the region, and
developed documentation to comply with
anticipated regulations.
iTSCi was designed as an industry-led, holistic
system to deliver due diligence and mineral
traceability. It conformed to OECD DDG, DoddFrank and, critically, requirements of the CFSP
smelter audit process that had been developed
by EICC and GeSI.
Beginnings of Pact’s
Involvement
In early 2010, ITRI and Pact entered into a
partnership for the field-level implementation of iTSCi. The system was piloted in the
DRC in May of that year, just before passage of
Dodd-Frank. Ironically, the pilot was halted
immediately after the passage, as DRC Presi-
dent Joseph Kabila suspended all mining and
mineral exports from eastern DRC for a period
of several months.
Rwanda was the first country in the Great Lakes
region to commit to large-scale implementation
of iTSCi. Starting in December 2010 (before
CFSP came into force in April 2011), the country
quickly moved to have all of its 3Ts mines covered by the system. This alone was a remarkable step, as popular opinion was that Rwanda
had few, if any, mines. This myth was dispelled
when more than 500 were visited and recorded
in the course of start-up baseline studies. In
the DRC, also just before CFSP came into force,
the southern province of Katanga implemented iTSCi with funding from local businesses
and the Development Bank of Southern Africa
(DBSA). Within months, dozens of mines and
thousands of miners were working again in
Katanga. With considerable awareness already
raised in the tin industry, buyers transitioned
smoothly to the iTSCi system. Motorola Solutions set up a project to engage tantalum buyers
in a direct-purchase, “closed-pipe” supply
chain through the Solutions for Hope (SfH)
initiative at one conflict-free mine in Katanga
using the iTSCi system. Electronic components
supplier Kemet set up a similar project in Katanga using iTSCi. These efforts helped signal
to consumer-focused, end-user industries that
resumption of tantalum purchases from the
region was possible.
Mineral traceability in the eastern DRC provinces of South Kivu and Maniema followed, when
the Dutch Ministry of Foreign Affairs (DMFA)
gave funding for startup in South Kivu in 2013
through the Conflict Free Tin Initiative (CFTI).
More support came from local businesses,
especially in Maniema. The start of activities in
the volatile province of North Kivu in 2014 depended entirely on local business investment.
It was only in 2015 that the program could be
launched in the critically important Walikale
area of North Kivu, which was the subject of
much attention during the pre-Dodd-Frank
conflict minerals campaign.
Why Have We Seen Greater Progress
in 3Ts than in Gold?
Dodd-Frank was equally applied to four minerals without an
appreciation of the diversity of their supply chains and market
structures. Tin, tantalum and tungsten (the 3Ts) are all heavy
minerals that are hard to move without infrastructure. Their
local value is relatively low, given that they must be exported
to be smelted because of in-region capacity and infrastructure
issues. The smelters of these minerals are the effective choke
point in the supply chain. So long as a credible upstream mechanism feeds clean minerals into regulated smelters, minerals
flowing downstream – to retailers and ultimately consumers
– will be compliant with the standards. The U.S. market for end
products containing tin, tantalum and tungsten is extremely
important, enough so that most smelters want to be able to sell
their product into that market. In light of this, key tin and tantalum smelters took leadership roles in bringing about change.
However, Dodd-Frank also includes gold, which is an entirely
different commodity – a high-value material that in its raw form
can be used as currency. It is portable and does not require
infrastructure to move or process. It is fungible, making traceability difficult. The major international markets for gold include India, China, Russia and the United Arab Emirates, whose
buyers are less concerned about eventually reselling into U.S.
supply chains. There are no systems in place for due diligence
or mineral traceability of conflict-free gold. For these and other
reasons, despite the iTSCi system’s significant successes in regulating 3Ts supply chains, Dodd-Frank has had negligible impact
on gold mining and trade and conflict in the Great Lakes region.
Startup in Burundi took several years and was
finally achieved in 2014 with the support of
the national government, local businesses and
the World Bank. In 2015, the DMFA committed funding for three years of expansion plus
strengthening of the iTSCi system.
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Frank, coupled with the iTSCi system, has had
a remarkable impact in the region.
The Impact of Dodd-Frank
There inevitably have been negative repercussions of Dodd-Frank. These include loss
of livelihoods with resulting economic hardship, the cost and time needed for compliance
and heavy burdens of reporting and audits.
An entirely new industry has sprung up for
researchers, consultants, auditors and others who deliver a new suite of services to the
“conflict-free” mineral market. A plethora of
systems and services are offered to companies
to handle SEC reporting with initial compliance
costs estimated to reach between $8 billion and
$16 billion,3 dwarfing the sum available for upstream implementation. The annual schedule
of meetings, forums, conferences and working groups on these issues is a full one. Easily
accessible mines suffer from “conflict-mineral
tourism,” with some receiving 12 to 15 visits per
month from researchers, journalists, activists,
NGOs, government delegations, donors and
authorities.
However, despite these unresolved issues and
frustrations, it is important to note that Dodd-
3
6
Mines in remote areas where exploitation and
abuse went unrecorded are now operating under government supervision and are regularly
checked to ensure that no armed groups are
benefitting. This marks a huge achievement
and has been extremely important in delivering security to remote parts of the DRC. Local
stakeholder committees have been established
with mandates to work with communities to
resolve disputes related to the system. Accurate
data are available on miners and in production
and export levels, enabling governments to
improve their management of the sector. Hundreds of local businesses that were operating
under the radar five years ago are now reporting on their efforts to implement international
standards for responsible operations. Tens of
thousands of people are making a living and
working in safer conditions, supporting hundreds of thousands of people in the region.
This level of uptake and change would not have
happened if adoption had been discretionary.
The change came about because the market demanded it – because Dodd-Frank demanded it.
How the System Works
iTSCi is a comprehensive due diligence and
mineral traceability system that incentivizes
positive change in the Great Lakes region by
providing information on clean minerals, enabling access to international markets. Through
its various components, including stringent
membership standards, audits, baseline studies
of mines, mineral tracking, data analysis and
incident monitoring, iTSCi has created secure
mines that are free of the presence or influence
of armed groups and in which human rights
abuses are rare, recognized, reported and
resolved.
http://www.auditanalytics.com/blog/an-initial-look-at-conflict-minerals-dodd-frank-section-1502/
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Where iTSCi Operates
Rwanda
Democratic Republic of Congo
Burundi
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designed to achieve sustainable self-financing
when operating at scale.
In sum, as illustrated at left, the iTSCi program
is funded by industry and implemented by governments in the region, under the monitoring
and training of civil society. Each component is
essential to the effective implementation of the
program.
Government
iTSCi
Industry
Civil society
The field components of iTSCi include: identification of conflict-free mines and mineral
trade routes; engagement of local stakeholders
in monitoring their status; mineral tracking;
mineral production and trade data collection;
mineral sampling; and a mechanism for incident reporting and resolution. Data collected in
the field is entered into a centralized database,
which provides complete chain-of-custody information from mine to smelter. iTSCi involves
a multi-step mineral tagging and data collection
process implemented by three governments
in the Great Lakes region and designed to be
entirely absorbed into the normal management
practices of government mining services. iTSCi
provides complementary services relating to
due diligence on companies, management
of data within the supply chain and for CFS
audits, as well as independent governance
assessments, company audits (carried out by
ITRI’s partner, Synergy Global Consulting)
and a dispute resolution process through an
ombudsman, Foley Hoag LLP in Washington,
D.C. iTSCi also has an advisory board comprised
of experts in conflict minerals, including Global
Witness.
The iTSCi program is successful due to the combination of these essential components and is
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iTSCi operates under memorandums of understanding with the governments of the DRC,
Rwanda and Burundi. In all countries, iTSCi
mineral tagging and data collection is carried
out by government agents. This is essential to
local ownership and to reinforcing the authority and resources of the state, strengthening
good governance and ensuring sustainability
of the system. iTSCi is designed to build the
capacity of government agencies and workers,
strengthening good governance and enabling
mineral traceability to be absorbed into the
normal functioning of state mining services.
Pact is ITRI’s partner for field implementation
of iTSCi and supports the governments of the
DRC, Rwanda and Burundi in the daily management of mineral traceability and facilitation of
participation of local civil society in monitoring
the iTSCi process. In the field, working with
local partner NGOs, Pact provides training and
ongoing support to government agents who are
active at three major points along the domestic
supply chain: the mine and washing/processing
point, the intermediate trading point and the
point of export. Minerals are tracked and data is
collected at each of these points by the relevant agents. The primary agencies involved in
implementing iTSCi are:
• DRC: the small-scale mining service, SAESSCAM; the Division of Mines; and the mineral
export certification authority, CEEC. All
of these are in the Ministry of Energy and
Mines.
• Rwanda: The Geology and Mines Department
(GMD) of the Rwanda Natural Resource Au-
iTSCi, By the Numbers *
Country
DRC
Province
Average Monthly Production
(metric tonnes)
iTSCi Mines
Miners
2014
thru May 2015
Katanga
232 sites, 141 active
26,489
475
426
Maniema
178 sites, 167 active
6,672
176
177
South Kivu
46 sites, 43 active
2,211
38
153
North Kivu1
15 sites, 14 active
4,250
89
70
Rwanda
All
815 sites, 442 active
37,976
990
840
Burundi
All2
40 sites, 35 active
3,051
25
32
1,326 sites, 842 active
80,649
1,793
1,698
totals
* Pact figures, not yet verified by ITRI
1
Launched March 2014
thority (RNRA), which is part of the Ministry
of Natural Resources (MINIRENA).
• Burundi: The Ministry of Energy and Mines.
Pact also supports partner governments in facilitating multi-stakeholder consultation meetings at national, provincial and local levels.
At these meetings, other government services
are represented including civilian and military
security forces and local and traditional authorities. During these meetings, stakeholders
including miners, traders, companies, security
services, mining services, local administration
and civil society discuss issues related to the
mining sector. They also implement mitigation measures to lower risks of fraud, conflict,
human rights violations or other abuses in the
mineral supply chain.
As of April 2015, there were 30 national, provincial and local committees overseeing the
implementation of the program and following
up on risks in the supply chain.
2
Launched April 2014
iTSCi uses an incident matrix to identify and
categorize by severity violations of the system
and abuses that occur in mining areas or during
transport. These incidents may include infractions of the tagging system, security problems,
instances of corruption or human rights violations. Every incident is recorded and examined
using the OECD risk assessment and mitigation
model for progressive movement.
iTSCi is designed to operate as a sustainable
self-financed system through a levy paid by
mineral exporters. The levy is paid per tonne of
metal contained in each tonne of ore covered
by the system and varies by mineral. However, the time lag from mine to smelter can be
considerable, and local exporters have struggled with years of embargo. Loss of earnings
have limited their cash flow to restart business.
Therefore, iTSCi needs external donor support
to get the system up and running – to prime the
pump, so to speak — before levies can be collected. iTSCi is a not-for-profit system in that it
covers its operating costs and nothing more.
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A Weighty Question
Short ton, long ton, metric tonne. What’s the difference?
The smaller U.S. ton is usually called a short ton. It is equal to
approximately 907 kilograms, or 2,000 pounds. The larger British ton is usually called a long ton. It is equal to approximately
1,016 kilograms, or 2,240 pounds. There is also a third measure,
the metric tonne – sometimes written as metric ton – equal to
1,000 kilograms, or approximately 2,204 pounds.
iTSCi now has 231 members. This is an extremely important factor in the system’s success.
About 67 percent are local businesses that just a
few years ago were invisible to outside observers. These companies are working to achieve
OECD standards in their operations to comply
with iTSCi membership requirements, and this
represents a sea-change in the way business is
done in the region. iTSCi’s policy of inclusivity,
which promotes best practice, provides market
incentives for change and engages actors by
bringing them in from the cold, has been critical to its success.
The Current Implementation of
iTSCi in Numbers
Five years after the first iTSCi pilot was
launched in Nyabibwe, South Kivu, there are
now 1,326 identified mine sites in the iTSCi
program in the DRC, Rwanda and Burundi (of
which more than 800 are currently active as
of the date of this report). In March 2015, there
were more than 80,000 miners participating in
the program. Mines provide employment for
many additional individuals who transport,
process and trade minerals and other goods
and services. If they are counted, along with
immediate dependents of miners – conservatively estimated at five per miner – the total
number of people whose livelihoods have been
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safeguarded by the iTSCi program is estimated
to approach 1 million. This number does not reflect the development of communities around
mining hubs, the inclusion of which would considerably increase the total number of indirect
beneficiaries of the program.
In 2013, it was estimated that 1,395 metric
tonnes of the 3Ts were produced within the
iTSCi program on a monthly basis. In 2014, this
number increased to 1,793 metric tonnes. So
far in 2015, production figures have dropped
somewhat as there has been a significant drop
in the price of tin due to reduced international
demand. This is not related to conflict-free
minerals sourcing issues but is a global issue
affecting tin production worldwide.
The latest analysis of the international mineral
trade estimates that 87 percent of DRC cassiterite and 92 percent of central African cassiterite
came from a mine that was formally included
in the iTSCi program. Percentage coverage of
tantalum and tungsten trade is expected to be
similar, although it is more difficult to define
precise figures for those metals. Added to this,
the trade has generated legal taxes paid to governments in the region.
Current Challenges for the
iTSCi System
Over the years, despite its importance for local
communities, the iTSCi program has faced challenges.
The iTSCi program had to cope with the
mobility of the sector, as artisanal miners
frequently move among sites looking for better
opportunities. This means that new baselines
are always required for mines, yet there are
limited resources for this kind of repeat activity. Artisanal miners lack proper equipment
to maximize production, but funding for the
system depends on production levels, resulting
in difficulty achieving financial sustainability. Solutions undertaken by the iTSCi team
have included expansion of the program and
motivating other actors in the supply chain
(such as mine owners and mineral traders) to
provide more equipment for miners. However,
problems remain in places such as Maniema
and Burundi where low production levels make
economies of scale difficult.
With expansion of the program to North and
South Kivu, the level of required monitoring
of the security and human rights situation at
mines and along transport routes is high. While
this monitoring is essential for every mine in
the program to stay conflict free, it comes at
a cost. The iTSCi team has also reinforced its
anti-smuggling work and is in the process of
starting a partnership with a local NGO to carry
out a whistle-blowing mechanism to reinforce
iTSCi’s efficiency in reporting and following up
on incidents along the supply chain.
Other challenges include difficulty transmitting data from remote sites, missing or illegible
information and limited numbers of available
government agents, some of whom are not consistently paid. Continued retraining of government agents is necessary, although many have
become experts in traceability procedures. The
introduction of electronic data collection and
transfer is helping, but it is not an ideal solution
in all areas and comes with additional costs.
The Next Five Years
tions persist, yet the benefits of Dodd-Frank
are visible and tangible, with transparency in
a previously opaque sector and security as the
norm rather than a distant aspiration.
The current reality of visible, identifiable mines
where government agents are present and civil
society is monitoring security is an exceptional
platform for strengthening security and good
governance in the mining sector in the region.
There is enormous opportunity to invest in
local monitoring committees, to strengthen
government capacity and to address other challenges in the mining sector by partnering with
and building on the network of traceability and
on-the-ground field teams.
So what do the next five years hold?
Leveraging and Expanding Security
Zones
To date, there has been a failure to routinely
connect broader security processes with what is
being achieved in the mineral sector. The value
of these monitored oases of security should be
built upon for effective scaling-up of stabilization. Unless this happens, 3Ts sites will remain
islands of security in a landscape of conflict.
Dodd-Frank is based on the expectation that
cleaning up the minerals sector will result in
less conflict in the region. However, this is not
automatic. It requires an integrated, coordinated and large-scale approach. Imagine the illegal
trade as a balloon: Squeezing one part simply
pushes air into another part. As conflict has
gone down at 3Ts mines, it has increased for
gold, charcoal and other natural resources.
Five years after Dodd-Frank, the landscape for
the 3Ts in the Great Lakes region is dramatically
different than it was in July 2010. At that time,
there was a palpable desperation about what
was going to happen and extreme frustration
that regulation was being forced upon the
region against its will. Today, these frustra-
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Responding to Critics: Understanding iTSCi
iTSCi draws criticism from various critics as being expensive and
lacking transparency, and it is worth addressing these concerns
as doing so leads to improved understanding of the current situation and liberates thinking about the future.
In terms of its cost, iTSCi is a not-for-profit model. It is funded
by a levy that should cover its cost of operation. The levy is
subject to economies of scale; therefore, the wider the reach of
the system and the more production that passes through it, the
lower the cost of participation becomes. The system is free to
artisanal miners. It is unrealistic to imagine that a system that
meets complex international standards, that builds government
accountability and transparency, and that is implemented in an
area that has some of the greatest challenges in the world — from
infrastructure, access and security to corruption and conflict —
can be implemented without some degree of cost.
The cost of the system is borne upstream. The levy is paid by
exporters with no significant contributions coming from downstream companies. There is no premium for iTSCi material; it
must be commercially competitive with other sources if the
system is to be sustainable. The cost of the system places a significant burden on local businesses, and there is constant pressure
Strengthening Governance in the
Mining Sector
Important efforts are being made to improve
governance in the sector, and this is a key area
for further development in the coming years.
The PROMINES project of the government of
the DRC and World Bank is supporting the articulation of appropriate policy and building of
essential capacity to manage the artisanal mining sector, as well as supporting interventions
such as the registration of artisanal miners.
The government of Rwanda has articulated its
vision for the formal development of its sector
with impressive commitments to business
resources, investment and gender equity.
The government of Burundi is undertaking
measures to facilitate and accelerate access to
licenses for artisanal miners. The World Bank
is supporting Pact and the government of Burundi to use mineral traceability as the basis for
revenue transparency with a groundbreaking
project to implement the Extractive Industries
Transparency Initiative (EITI) using iTSCi as its
base. All of these are building on the basis of
vibrant, formal trade that has been facilitated
by mineral traceability.
to find ways to reduce the levy, especially when mineral prices
drop. Over time, as confidence in the market increases, some
oversight activities may be reduced, thereby cutting costs. However, this would have to be acceptable to the smelter audit process, OECD Guidance and end users.
In terms of data transparency, all iTSCi data is collected by the
governments of the region and transferred to iTSCi by government agents. Data that is analyzed by iTSCi is shared with governments on the basis of memorandums of understanding that
are regularly reviewed. Much of this aggregated data is publicly
available but some is not for reasons of commercial confidentiality. No system working with companies will be able to share all
data at its own discretion. This is neither acceptable to industry
nor required by international standards.
Formalization of Artisanal Mining
Even though iTSCi is creating safer mines
where miners work free from abuse and predation by armed groups, their working and living
conditions in many mines remain pitiful. Some
local companies and cooperatives are making
real efforts to improve their mining operations,
but these are the exception. Artisanal mining
remains blisteringly hard manual labor carried
out with little consideration for health and
safety. The legal status of many miners is, at
best, fragile. The sector is under-resourced
and performs poorly in terms of efficiency and
productivity.
It will be a game-changing achievement if efforts to deliver conflict-free minerals become a
stepping stone to a comprehensive process for
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the formalization of artisanal and small-scale
mining in the region. The ultimate goal is to
strengthen legal, safe and secure artisanal and
small-scale mining under an appropriate policy
framework that allocates resource rights and
access, with investments to make it an effective, efficient and resilient livelihood for the
men and women of the region.
sector to develop. Importantly, the inclusion
of civil society in the process of developing
new policies has become the norm through
multi-stakeholder monitoring of iTSCi. As due
diligence and traceability become the accepted
standard, their relative importance will reduce
as other mineral sectoral governance issues
come to the forefront.
Greater Regional Collaboration
Local Ownership
Incorporating other countries into the shared
process will also strengthen regional coordination of natural resource governance and flows.
Uganda, Tanzania, Republic of Congo and
Zambia are natural points for expansion of a
unified due diligence and traceability system in
the region.
Ongoing Challenges
Three countries in the Great Lakes region are
using the same system for tracking their mineral flows. This presents an important opportunity for regional collaboration and cross-border
strengthening. The International Conference on
the Great Lakes Region (ICGLR) is the primary
mechanism for collaboration between these
countries on natural resource flows, and iTSCi
is integral to the ICGLR Regional Certification
Mechanism. Improved data sharing, tax harmonization, customs integration and related activities can build on the shared system currently
in operation.
Greater Transparency Leads to
Greater Prosperity
The DRC, Rwanda and Burundi have all made
great efforts to turn an obligation into an
opportunity. Each one of these countries is
using iTSCi as a means to extend the reach of
their mining services, to gain visibility into
their mining sectors, to attract new investment
to the country and to generate taxes for the
national treasury. The conflict-free minerals
agenda is creating opportunities for the mining
A key part of Pact’s vision for the coming years
is that our involvement will be reduced. This
is Pact’s signature approach, which focuses on
building the capacity of local partners in government, business and civil society so that over
time they can sustain the work with true local
ownership, independent of international NGO
support. We believe that our success comes
from creating an environment in which we are
no longer needed. However, our ability to withdraw depends on several factors: donor investment in capacity building to allow responsible
transfer of duties to local partners in a timely,
planned manner; the confidence of international markets in local partners; and the context of
the legislation and market changes.
Many reports about the region focus on difficulties and challenges. While these indeed exist
and should not be downplayed, they are not the
only story. A concerted effort focused on collective commitment to improvement by strengthening systems that includes some celebration
of positive change could make an important
contribution to donor and industry confidence
in remaining engaged in the region.
The idea of alternative, competing traceability
systems is sometimes proposed. However, the
practicalities of having multiple systems oper-
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ating should be evaluated, as this could lead to
exporters and other industry actors effectively
paying for multiple sets of compliance, cost
barriers to participation for miners, government agents expected to cover two or more
Changing the Face of Artisanal Mining
Pact is one of the leading organizations in the world working on
development issues in the mining sector. One of our signature
programs, Mines to Markets, works with organizations and
businesses around the world on the social impact of mining and
social opportunities connected to responsible business practice
by mining companies. But much our effort is focused at the
other end of the mining spectrum, working with the “hidden
workforce” of millions of men, women and children who carry
out back-breaking work in hazardous conditions in rudimentary, artisanal mines across the world.
Our M2M program aims to help artisanal miners to have increased access to health care, improved livelihoods, technical
support, access to finance, access to markets and a safer working environment in a legal framework that respects and protects them. Pact’s vision is that all people, regardless of which
profession they choose, are able to earn a dignified livelihood
and lead healthier lives.
While our portfolio of practical action demonstrates our efforts,
we intend to go beyond a suite of projects. We aim to change
the way people see and understand artisanal miners. We hope
to address the lack of dialogue between companies, consumers
and the public and artisanal miners and their families about
how international regulations and market demands affect their
lives.
It is our belief that seeing artisanal miners as individuals with
families, stories and aspirations will help to change perceptions
of the sector and to direct greater effort and support to making
artisanal mining a dignified, legal, safe livelihood.
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systems, mineral mixing at depots becoming
impossible (so only closed pipe monopolies
can operate, rather than an open market) and
a breakdown in the integrity of having a single
system across the region’s borders. In the next
five years, a consolidation of progress and a
strengthening of a single system for the 3Ts,
operating in partnership with national governments and ICGLR, can be a reality if all actors
agree to focus on strengthening what already
exits.
The issue of mineral fraud in the Great Lakes
region persists as a point of concern. However,
it is important to note the difference between
mineral fraud (illegal or criminal activity) and
conflict minerals (an issue specific to DoddFrank and OECD). Any system for mineral
traceability will focus specifically on the
minerals moving through its processes and
cannot be held accountable for operations that
choose to conduct business outside the system.
Expansion of traceability so that it is available
in all sites on an equal basis will go a long way
toward reducing incentives for fraud.
Despite the success seen in the 3Ts supply
chain, gold remains a challenge. Dodd-Frank
aspires to control gold but is probably not the
most appropriate instrument. A reassessment is
required to design an approach that is grounded in the realities of the international gold
market and local supply chains. The approach
should bring local industry, intermediate
traders and all other local actors to the table
and be rooted in business barriers and incentives. Treating gold traceability as a governance
project will have only limited success; gold
traceability needs to be framed as a business
opportunity and should embrace the concept of
inclusion, which has been an important factor
in the 3Ts transformation.
New legislation will be enacted by the European Union, and perhaps also by Canada and
others, in relation to conflict minerals. It is
important that there is a reasonable degree of
coherency among the various instruments to
avoid delivering mixed messages and allowing
for so-called compliance shopping as miners,
traders or illegal actors seek to find opportunities and loopholes.
International supply and demand, mineral
prices, competitive sources, new conflicts,
changes in government, geopolitical priorities
and other macro-level issues all will continue
to shape the context in which mineral sector
interventions occur. These factors will contribute to determining the relevance and success of
Dodd-Frank in Africa. What is sure is that the
last five years have delivered huge upheaval,
extraordinary change and unexpected benefits
in equal measure. The next five may be even
more dramatic.
Conclusion and
Recommendations
In considering how different actors and sectors
can consolidate and scale-up the success of
conflict-free programs in the region, the following points are raised for consideration.
Governments in the region should embrace
opportunities for sectoral governance that are
presented by the new dynamics related to conflict-free mineral markets. Governments must
also recognize that systems depend on genuine security in mining regions and credible,
coordinated effort to address violations of the
system and mineral fraud. Market confidence
is relatively fragile and is knocked by media
reports of violence, NGO reports of fraud and
other negative stories. The governments of the
DRC, Rwanda and Burundi need to make all
possible efforts to maintain market confidence
by ensuing rigor in the credibility of the system
and integrity in the actions of their agents as
well as penalizing infractions in a timely and
appropriate manner.
External governments in their capacity as bilateral donors should also determine how their
development resources can strengthen and
expand achievements to date. Seed funding for
the final stages of expansion of 3Ts traceability
is still needed. Investment in security interventions, social opportunities and needs and
better local business services and opportunities
all will make major contributions. Artisanal
and small-scale mining is a critically important
rural livelihood in the region, and investment
in making it safer, more efficient, and more
productive, coupled with initiatives to reinvest
mining revenues into improved income-generating activities, are desperately needed.
For companies, the most important point is
to remain engaged. Compliance takes time,
costs money, absorbs staff and creates legal
and reputational risks. Committing to source
minerals from the remote artisanal mine of the
Great Lakes region is not necessarily the easiest
option, but it is the right one. The successes
that have been achieved in terms of improved
security can only be maintained by ongoing
market engagement that demonstrates and
delivers peace dividends to all.
There are key technical, organizational and
social issues still to be addressed as a matter
of priority, although it must be noted that this
could increase operating costs. In considering
how donors and downstream actors might add
value, attention should be given to: Occupational Safety and Health (OSH) to improve
working conditions in mines; the eradication
of the Worst Forms of Child Labor (WFCL) from
mines; technical and financial assistance to
miners, along with support for organization
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15
and representation; and gender equity in the
sector.
There are challenges in asking companies to
go beyond compliance and add social value
to their purchasing activities. Social programming by upstream businesses in the region
does occur, both as part of managing local
stakeholder relations as well as ensuring that
these companies can meet local social investment obligations. However, some downstream
companies are also engaging with the social
agenda. Qualcomm Technologies, Inc. is supporting improved OSH through development
of an appropriate curriculum to be rolled out
in iTSCi mines. Boeing, General Electric and
Microsoft have made significant contributions
to pilot projects to eradicate child labor from
mines in the DRC in line with the requirements
of the OECD guidelines. If more companies
could make commitments to support collective
efforts for social benefit, the impact could be
significant and would further galvanize local
support for traceability.
Media, researchers, NGOs, lobby groups and
others have an important role to play. Lobbyists successfully brought the issue of conflict
minerals to the attention of policy makers, as
shown by the enactment of Dodd-Frank. As a
result, huge efforts have been made to develop
conflict-free mineral supply chains, and for 3Ts,
the vast majority of these minerals in the region
are now formal, traceable and conflict-free.
iTSCi handles 35,000 transactions per week
to enable 400 metric tonnes of clean minerals
to enter the international market every week.
However, this side of the story gets very little
attention in a region where too often good
news is no news. Reports still focus on problems and often report them at a disproportionate scale and out of context. Information and
observations that would allow the systems to
be strengthened would be immensely valuable
if shared in the spirit of improvement.
Closing Thoughts
Pact did not support the passing of DoddFrank. We were deeply concerned about its
likely negative impacts on the already impoverished and vulnerable miners of the Great
Lakes region and the lack of resources available
to respond to this new legislation. However,
we are now the first to say that it has had a
profoundly important impact in the region. Yes,
it has caused hardship and created costs and
burdens, and it is too broad in reach and inappropriate in some parts of its focus. But without
it, we simply would not have seen the massive
change that has come about.
iTSCi was developed by industry in partnership
with the governments of the region. When
Dodd-Frank was enacted, iTSCi was ready as
a viable, effective solution to enable responsible mineral sourcing to take place. Through
the implementation of iTSCi, Pact is proud to
report that, today, tens of thousands of miners
are working in hundreds of conflict-free mines
supporting hundreds of thousands of people.
Artisanal mining is still hard and dangerous
work, but it is an essential livelihood without
which these miners and their families would
be in even worse poverty. Hundreds of companies in the region are seeking to adhere to
international standards of operation and to be
credible suppliers to the international market.
They bear considerable costs and participate in
audits and reviews to do this, but they do it to
safeguard their operations and the jobs of thousands of people they employ. The governments
of the DRC, Rwanda and Burundi have made
enormous efforts to comply with international
expectations and every day hundreds of their
agents carry out the tasks necessary to trace
huge volumes of minerals from remote mines.
They are using the system to improve the governance of their mineral sectors and to increase
their national revenues.
There is a remarkable success story to tell in the
Great Lakes region of central Africa. Of course
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there are challenges, as no system is perfect.
But collaboration to strengthen the system can
contribute enormously to our vision of a time
when we would no longer need to categorize
minerals as ‘conflict free’ – as this would be the
norm, not the exception.
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