This blog post, written by Prof. Dr. Jana Hönke & Lisa Skender was first published by the blog of the Friedens Akademie Rheinland-Pfalz (10.10.2022), the German original version can be accessed here. Below, we share with you an English translation of the original German article.
Copyright of the title photo: © Fairphone https://www.flickr.com/photos/60295192@N08/8051678292
Finally driving an e-car and surfing on your smartphone and tablet with a clear conscience? This is what “clean” or “ethical” cobalt is supposed to promise. Although cobalt has so far not been included in supply chain legislation among the raw materials defined as “conflict minerals”, such as tin, tantalum, tungsten and gold, it has attracted attention. Due to the surging global demand for cobalt, there are increasing reports of poor working conditions, child labour and exploitation in cobalt mines in the Democratic Republic of Congo. As a solution to increase the enforceability of human rights in the context of an “ethical” cobalt trade is being discussed.
The Democratic Republic of Congo (DRC) is by far the world’s largest producer of cobalt, accounting for more than 50% of global cobalt reserves. Cobalt is an essential material to the production of batteries for electric vehicles, smartphones and tablets – among others – and thus has experienced a surge in global demand (“cobalt run”) in recent years. With this growing demand, poor working conditions, child labour, sexual exploitation of women and other human rights violations in Congolese cobalt mines have increasingly become the focus of public reporting.
In addition to focusing on technical solutions to the problem (e.g. blockchain1), there are also efforts at the political and legal level for an “ethical” trade in cobalt and other “conflict minerals”. For instance, in 2021, the German government earlier this year also the EU Commission proposed new supply chain legislations. This legislation requires companies (above a certain size) to review, take responsibility for and enforce due diligence along their supply chains. By making companies liable for human rights violations along their global production and supply chains, environmental damages and human rights violations should be prevented. However, the German Supply Chain Act, which will come into force next year, does not apply to the entire supply chain, but only holds companies accountable for their relations with their direct suppliers (see Maihold et al. 2021, p. 2). Therefore, it is not expected to have significant implications for the trade in cobalt. Although the EU Comission’s new legislative proposal is more ambitious and aims to hold companies accountable for their entire supply chains as well as providing for civil liability for companies, it remains to see what impact the planned EU supply chain law will have on cobalt mining and the working conditions in the mines in the DRC.2
In the following, we draw on the existing Dodd-Frank Act in the US to discuss the potential implications and challenges for future supply chain laws and policies. While the Dodd-Frank Act was introduced as part of a package of financial market regulations and focused on due diligence and the avoidance of complicity with violent actors, both the German and the European Supply Chain Acts are independent legislative initiatives that are politically legitimised in particular by the improvement of the living conditions of local producers. For this reason, but also because of the problems with the effects of the Dodd-Frank Act, they must also be measured against this aim. Therefore, in the second part, in addition to the inclusion of companies and consumers, we argue for a stronger consideration of production conditions and for the inclusion of the complex living conditions of local workers in future legal regulations.
The importance of conflict minerals: Who benefits? Who loses?
The Dodd-Frank Act, actually a law to reform US financial market law in the wake of the 2008 financial crisis, requires US-listed companies in Article 15 (1502) to document and disclose the use of so-called “conflict minerals”. Conflict minerals (defined in the Dodd-Frank Act as tin, tantalum, tungsten, and gold) are raw materials with which armed groups from the DRC and neighbouring states trade and thus co-finance their activities. The Dodd-Frank Act is therefore intended to ensure that companies no longer support or co-finance armed groups by purchasing these commodities. The law constitutes explicitly not a ban, but contains a transparency obligation and is thus intended to put companies under public pressure according to the “naming and shaming” principle. National, regional and international initiatives such as Dodd-Frank have multiplied and require companies to disclose these minerals’ use and make their supply chains “conflict-free”.
Efforts to make mineral supply chains “conflict-free” are not new; long before the 2010 Dodd-Frank Act, international human rights organisations had been calling on states to legally enshrine the term “conflict mineral'” or “conflict commodity” in international supply chain legislation, and to extend traceability and due diligence in the supply chain of conflict minerals to artisanal cobalt mining. For example, a more detailed report by Amnesty International and Afrewatch describes the poorly paid and dangerous conditions under which children and adults work in the cobalt sector.
So why not also define cobalt as a “conflict mineral” in supply chains and thereby contribute to preventing the financing of armed groups, child labour and exploitation? Expanding the category of “conflict minerals” to include minerals mined under exploitative, inhumane conditions would have far-reaching consequences. For example, Congolese and international researchers have shown that Dodd-Frank has had unintended and negative consequences. Some industry players avoided sourcing minerals from the Democratic Republic of Congo through a quasi-boycott. As a result, artisanal miners, their families, and people in mining-related industries have been affected both economically through loss of income and livelihoods, and indirectly through, for example, increased infant mortality (see Parker et al. 2016). For example, in March 2017, Apple announced that it had temporarily stopped buying manually mined cobalt from the DRC due to public reporting on poor working conditions and child labour in cobalt mines. Public reporting on child labour and corruption also prompted other investors to outsource cobalt mining to other countries.
While the abolition of child labour, sexual exploitation of women and funding of armed groups normatively legitimised an import freeze, the question is whether the means of quasi-boycotts triggered by the Dodd-Frank Act actually prevent the very same child labour, (sexual) exploitation and funding of armed groups. In the short term, initiatives to improve the supply chain have no significant impact on the actual aim of these legislations, traceability, and may even exacerbate socio-economic hardship and thus trigger conflicts or increase the frequency of fighting, looting and violence against civilians (cf. Seay 2012; Stoop et al. 2018).
It has also been shown that armed groups in eastern DRC finance themselves in more complex ways than micro-mining, and have alternative funding channels available (e.g. Laudati 2013a, Vogel 2022); while little has been done to stop armed fighting, the costs of the Dodd-Frank quasi-boycott have been borne by the most vulnerable. Other scholars point out that multiple factors contribute to conflict in the DRC. These factors include, among others, the expansion of large industrial companies, which further intensify already existing social conflicts (cf. Hönke 2014). In line with Harvey’s principle (2004) of “accumulation by dispossession”, the appropriation of land by large companies deprives people of their land and thus displaces small farmers and small-scale peasant workers. Legal regulations such as supply chain laws or conflict minerals regulations must not become an additional moral back up for companies to legitimise a private profit interest as “ethical” (cf. ibid.).
The negative impacts reported in the Kivu provinces, particularly the estimated loss of jobs for tens of thousands to millions of workers (see Seay 2012, p. 10), suggest that similar impacts are to be feared in the south-east of the DRC. This region already faced economic difficulties before the implementation of the Dodd Frank Act due to low copper prices (see Seay 2012). The de facto boycott has had negative consequences for those in the east of the country who depend on artisanal mining, including loss of income, negative impacts on child mortality and health care, and an expansion of illegal activities and smuggling. Further evidence from both Kivu provinces points to the disproportionate negative impact of supply chain interventions, particularly on artisanal miners and women in related industries. In the south-east of the DRC in the Katanga Province, these groups are already disadvantaged as multinational companies have been evicting artisanal miners from their concessions and displacing them to less productive locations even before the Dodd-Frank Act.
For example, while legislation on “conflict minerals” attempts to prevent the financing of armed groups, it ultimately ignores the global political economy and the role of international companies in the cobalt sector. Not only armed groups from the DRC and neighbouring states are involved in “resource grabbing”. Many international (European and Chinese) companies are also profiting from the “cobalt run”. Implementing supply chain measures without taking into account the broader economic and social contextual conditions could further marginalise artisanal miners. They are already under pressure from large-scale mining, even if a quasi-boycott were avoided and the tracing of minerals to non-militarised mines was successfully implemented. As the relevant certifications are expensive and burdensome, without countermeasures, there is a risk that the inclusion of cobalt in supply chain initiatives will unilaterally further expand the market shares of multinational corporations. In the above-mentioned regions in the DRC, mining companies already dominate the economy, without providing income-generating opportunities and social protection for small businesses, micro-explorers and their dependent families.
The EU Conflict Minerals Regulation adopted by the EU in 2017 is to be welcomed, but may promote rather than reduce such inequality in favour of multinational corporations. While the regulation focuses on human rights, it hides the violent practices of capital accumulation through land grabbing by international corporations. Partzsch (2018) describes many existing regulations as merely “symbolic” (ibid., p. 486). Some shift responsibility to individual consumption, or individual consumers (ibid., p. 486), who can decide to buy or not to buy, for example, a “Fairphone”. The EU regulation sets binding rules that are enforceable under civil law, which is a very important step in comparison. At the same time, however, we observe a political “outsourcing”, a shift of political responsibility for ethical trade and its verification to private companies in the supply chain itself. Also, the social and environmental risks of our resource consumption are still passed on to countries such as the DRC.
But what now? Because, of course, dangerous and exploitative conditions for artisanal workers in the mines need to be addressed. But the framework for “conflict materials” is only one option.
Outlook: What other options are there?
Looking ahead to the next few years, the role of cobalt could change at the political level. Although according to the 2017 EU regulation cobalt does not play a role as a conflict mineral at the moment, this could change when the regulation is evaluated in 2023. There is therefore a need for a systematic assessment of the potential risks to people’s livelihoods that could result from the expansion of the conflict minerals category. For example, the planning of the Dodd-Frank Act largely ignored the views of the Congolese government and cross-regional and civil society initiatives from the DRC. However, expertise and cooperation with governmental and civil society organisations from the DRC are the first indispensable prerequisite for political action. A group of Congolese academics, for example, proposes including former armed conflict actors in new “conflict-free” arrangements. However, in addition to legal frameworks, this would require concrete projects on the ground that can also fulfil these requirements.
Acknowledging complexity would be another important step; simplistic dichotomous views or answers do not contribute to a “solution to the problem” nor to an “ethical” trade and production of cobalt. For example, armed groups rely on a range of sources of income; for some, minerals play little or no role (see Laudati 2013b). In addition, most mines are not controlled by armed groups at all. Attempts to regulate supply chains thus have potentially negative consequences, such as a de facto boycott of all minerals from the DRC, regardless of who mined them and how. It is therefore not about the dichotomous politicisation of “regulation” or “no regulation” as raised by then US President Trump with the announcement to suspend the Dodd-Frank Act on conflict minerals. While an investigation found that the claim that Dodd-Frank Act has caused some Congolese to lose their livelihoods is correct. However, Trump and the Republicans have ideological reasons and oppose government regulation in general, not just the Dodd-Frank Act. The issue should therefore in any case not be reduced to the question of “regulation” or “no regulation”, but should be seen as an opportunity to develop better transnational governance in cooperation with the already existing transregional initiatives to address conflicts and human rights in mining (cf. Katz-Lavigne and Hönke 2018).
If political regulations are to improve the situation of the two million people, especially women and children, who work in small-scale mining, the already existing mining unions must be considered and strengthened in national and international regulations. Congolese academics therefore call for the promotion of fair competition. Future regulations must be based on competition that allows not only international companies but also Congolese producers to influence local price regulations. “This, in turn, would promote a regime that ensures minimum wages that mining unions can guarantee their members due to their greater influence on price fluctuations” (Tegera et al. 2014).
In this way, the focus would shift from regulating supply chains and consumer behaviour to changing production conditions. Then the question would no longer be whether you or I consume “ethical” cobalt, but with which political measures small-scale miners can be supported.
1The blockchain technology is already being used in the diamond industry. Gemstones are assigned a digital fingerpring, which is then tracked via the blockchain when they are sold. Thereby, the origin of the stone can be documented in a forgery-proof way. Especially large companies want to apply the same principle to cobalt in order to trace its path from artisinal mines to intermediate products for smartphones and electric cars (see Clarke 2018).
2Various studies have pointed to the opportunities but also limited impact of social business regulation and supply chain regulation, see for example the positive assessment of the German Supply Chain Act as a ‘first step’ in Maihold et al. 2021 as well as the limitations pointed out in scientific studies on existing regulations, e.g. in Partzsch 2020; also Bartley 2018, Hönke 2014.
Bartley, T. (2018). Rules without rights: Land, labor, and private authority in the global economy. Oxford: Oxford University Press.
Clarke, D. (2018). Blockchain to track Congo’s cobalt from mine to mobile. CNBCAFRICA. https://www.cnbcafrica.com/2018/blockchain-track-congos-cobalt-mine-mobile/ (zuletzt abgerufen am (20.04.2022).
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Hönke, J. (2014). Business for peace? The ambiguous role of ‘ethical’ mining companies. Peacebuilding, 2(2), 172-187.
Hönke, J. (2014). Business for peace? The ambiguous role of ‘ethical’ mining companies, Peacebuilding, 2(2), 172-187.
Katz-Lavigne, S. & Hönke, J. (2018). Cobalt isn’t a conflict mineral. Africa is a country. https://africasacountry.com/2018/09/cobalt-isnt-a-conflict-mineral (zuletzt abgerufen am 28.02.2022).
Laudati, A. (2013a). ‘Beyond Minerals: Broadening “Economies of Violence” in Eastern Democratic Republic of Congo’. Review of African Political Economy 40, no. 135, 32-50.
Laudati, A. (2013b). Beyond minerals: broadening ‘economies of violence’ in eastern Democratic Republic of Congo. Review of African Political Economy, 40(135), 32-50.
Maihold, G. & Müller, M. & Saulich, C. & Schöneich, S. (2021). Verantwortung in Lieferketten. Das Sorgfaltspflichtengesetz ist ein erster Schritt. SWP Aktuell. Stiftung Wissenschaft und Politik.
Parztsch, L. (2018). The new EU Conflict Minerals Regulation: Normative Power in International Relations? Global Policy, 9(4), 479-488.
Partzsch, L. (2020). Alternatives to Multilateralism. New Forms of Social and Environmental Governance. Cambridge: MIT Press.
Parker, D.P & Foltz, J.D. & Elsea, D. (2016). Unintended consequences of economic sanctions for human rights. Conflict minerals and infant mortality in the Democratic Republic of the Congo. WIDER Working Paper 2016/124. United Nations University World Institute for Development Economic Research.
Seay, L. E. (2012). What’s Wrong with Dodd-Frank 1502? Conflict Minerals, Civilian Livelihoods, and the Unintended Consequences of Western Advocacy. Center for Global Development. Working Paper 284.
Stoop, N. & Verpoorten, M. & van der Windt, P. (2018). More legislation, more violence? The impact of Dodd-Frank in the DRC. PLoS ONE, 13(8).
Tegera, A. et al. (2014). An open letter. https://ethuin.files.wordpress.com/2014/09/09092014-open-letter-final-and-list.pdf (zuletzt abgerufen am 03.03.2022).
Vogel, C. N. (2022). Conflict Minerals, Inc.: War, Profit and White Saviourism in Eastern Congo. Hurst Publishers/Oxford University Press.
Prof. Dr. Jana Hönke directs the INFRAGLOB Project. She is a Professor of Sociology of Africa at the University of Bayreuth specialising in global political sociology and peace and conflict studies.
Lisa Skender studies Development Studies in the Master’s programme at the University of Bayreuth and works as a student assistant at the Chair for Sociology of Africa.