Conflict minerals – Kimberley Process, Dodd-Frank and OECD Guidelines


Diamonds – old news

This is a controversial issue, first introduced into mainstream media and politics in the early years of this millenium and popularized with 2006 Hollywood’s “Blood diamond” movie. As a result of public outcry, the Kimberley Process was created to control international trade in rough diamonds (a PR exercise of damage control on part of the industry and producing countries).

The Kimberley Process started when Southern African diamond-producing states met in Kimberley, South Africa, in May 2000, to discuss ways to stop the trade in ‘conflict diamonds’ and ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments. In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the creation of an international certification scheme for rough diamonds. By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the Kimberley Process Certification Scheme (KPCS) . The KPCS document sets out the requirements for controlling rough diamond production and trade. The KPCS entered into force in 2003, when participating countries started to implement its rules. – http://www.kimberleyprocess.com/en/about.

As the conflicts in Sierra Leone (portrayed in the movie) and Angola subsided, the KP remained as public assurance tool. There is some discussion on the future role of the organization; it will undoubtedly remain active, eventually redefining its mission and the meaning of the word “conflict”. As a side effect, the great numbers of small miners not involved in conflicts of any sort will see a fall in their revenues (as the prices they get from their stones are lower, for not being certified) and companies trading diamonds in advanced economies will able to sell ethical diamonds at a premium.

3TG minerals – recent developments

As time went by, those conflicts subsided and ended and the diamond headlines became scarcer, other minerals got the attention of NGOs, the public and legislators. Now it’s time for the 3TG (Tin, Tantalum, Tungsten and Gold) – elements commonly obtained from easily mined alluvial or decomposed rock deposits, the targets being again far away, politically irrelevant, uncivilised countries (definitely not in our backyard – them, not us).

The reasoning is similar, the control of mineral resources is the reason for war being waged in these countries. As a result, the US enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to the use of conflict minerals and the EU will soon follow, adopting OECD guidelines – OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

Doing the right thing

Are these measures needed? Are they effective in their stated objectives? Have we weighted all their effects? Should controls be extended and generally adopted in all internationally traded products, with strict control of human rights compliance? What about the practical consequences (with power shifts, higher prices in complying economies, lower at the source values for small producers) ? Should we forget principles and human rights? What’s being done is it enough or too much?

These are not easy questions: what is right?

Information resources

I have compiled some information on this issue (sources and documents). Just look for them at xmbl.wordpress.com, under Economic Geology, subsection Other Resources .

 

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