Earlier this week, Evode Imena, Rwanda’s Minister of State in Charge of Mining appeared before the House Financial Services Monetary Policy and Trade Subcommittee to provide testimony on the effectiveness of the US conflict minerals requirements under Dodd-Frank Section 1502. The video of the hearing can be viewed here.
Through his comments, Minister Imena maintained that Rwanda’s situation relative to conflict minerals mining and transportation is completely different from that in neighboring Democratic Republic of Congo (DRC). Imena testified that there is no conflict in Rwanda and therefore, Rwanda should be inherently classified as conflict-free under US requirements. He also denied that Rwanda had any role in mineral/ore smuggling from the DRC.
These statements are at odds with findings presented in the United Nations Group of Experts (GoE) Mid-term Report on the Democratic Republic of Congo issued October 16, 2015. Paragraphs 56 – 67 of the Report set forth evidence found by GoE of gold smuggling from the DRC into Rwanda and black market sales of iTSCi tags and supporting documentation.
The United Nations Group of Experts (GoE) on the DRC released their latest mid term report covering the first half of CY2015. The report can be downloaded below. This report, much shorter than previous GoE reports, presents findings of continued conflict minerals problems in the DRC with gold smuggling, non-compliance with the Congolese Ministerial Decree, illegal taxation on transit routes of cassiterite, concerns about air cargo manifests and illegal sale of iTSCi tags along with irregularities with the associated logbooks. See paragraphs 49 – 78.
In response to the GoE report, ITRI posted detailed comments on the report that “clarify certain points”. ITRI provides commentary on specific facts cited by the Group, but also adds some context as well:
…the extent of gold mining in Shabunda and the extent of RM and FARDC interest in control of that sector, as well as the potential earnings from gold are significantly higher than for the 3T minerals as also described in the Groups report.
While all partners understand that the occurrence of risks impacting the supply chain need to be minimised, it is the identification and follow up of such issues that is key. iTSCi has developed many tools to mitigate and resolve risks in the supply chain in alignment with the concepts of due diligence described in the internationally accepted OECD guidance…
Mitigation and risk management continues to be the approach of iTSCi and we do not support expectations of perfection which lead to disengagement, embargo and a regressive spiral of events.
The GoE’s findings may or may not be a surprise, but it does raise questions and potential concerns for downstream companies – especially issuers filing Conflict Minerals Reports to SEC signed by an executive officer.
UN Group of Experts Midterm 2015 DRC report