Promoting responsibly sourced minerals: What can donors do?

 

Like other natural resources, minerals tend to make good situations better and bad ones worse. In conflict-affected and high-risk areas, the mining sector represents an opportunity to generate jobs and growth, but they also risk contributing to serious human rights abuses and conflict. These adverse impacts also sap the results of donors’ broader development activities.

 

Broadly accepted guidance now exists to help companies avoid these negative impacts, opening a unique window of opportunity for change.
 
To make good use of this window of opportunity, donors need to make a big push for co-ordinated efforts across sectors, across countries and across donors.

 

For the latest updates on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, please click here.

 

Why are responsibly sourced minerals a central issue for development?

 

More and more low- or middle-income countries are becoming natural resource-dependent, with fuel or minerals representing more than 25% of exports. These include 20 countries in fragile situations, with nine of them non-fuel minerals-dependent (in decreasing order: DR Congo, Guinea, Sierra Leone, Papua New Guinea, Burkina Faso, Central African Republic, Georgia, Somalia and Zimbabwe) and 11 fuel-dependent.

 

In situations of fragility, natural resources and particularly minerals have the potential to be looted and feed insurgencies; to create rents and opportunities for corruption; to limit incentives for investment in manufacturing and services and ultimately stifle growth; and to further expose what are often small economies to boom-and-bust commodity cycles. Yet, with robust measures and clear standards, this "natural resource curse" can be turned into a force for peace and prosperity.


 

The OECD Due Diligence Guidance 


From 2009 to 2011, the industry (including major MNEs and trade associations), the UN Security Council, the OECD's 34 member countries and seven emerging economies, and the International Conference on the Great Lakes Region's 11 member countries developed and endorsed a set of practical, realistic guidelines for companies extracting or sourcing minerals from conflict zones.

 

The OECD-UN Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas aims to help companies identify and address the potential negative impacts of their mineral sourcing practices so that they do not fuel conflict. It is structured around a five-step framework for risk-based due diligence, which companies are expected to integrate into their management systems, if they source or buy minerals from conflict-affected and high-risk areas. The OECD-UN Guidance, as it is known,  is being piloted by over 80 companies since September 2011 (latest updates here).


 

A unique window of opportunity for change in Central Africa 


With the OECD Guidance in place, momentum is building in the region towards increased regulation of the mining sector. In Central Africa today, robust measures are being taken by host governments (e.g. DRC and Rwanda) and OECD governments (e.g. US Dodd-Frank Act, section 1502; EU Directives being developed). These initiatives provide an unprecedented opportunity to severe the link between conflict and minerals.

 

Whilst donors have recognized this window of opportunity and started to support certification, tracking and tracing mechanisms in Central Africa, a big push is needed to develop a concerted approach:

  • Across sectors, because even a well-reformed mining sector cannot secure conflict-free minerals unless there is, for example, basic state capacity to deliver security, control borders, levy taxes and managed public funds; basic civil society capacity to play a watchdog function; and alternative livelihoods to reduce minerals-dependency and the high stakes in minerals control.
  • Across countries, because reform in one country can't work without coherent action in adjacent countries, and the increased cross-border collaboration among countries of the ICGLR needs to be supported.
  • Across donors because a critical mass of donor support is needed to tip the equation on the side of conflict-free minerals.

 

These are essential enabling conditions for responsible sourcing of minerals.

 

 

For more information on DAC-INCAF's work to support implementation of the OECD Due Diligence Guidance, contact INCAF.Secretariat@oecd.org.

 

 

 

Related Documents

 

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas

Towards Conflict-Free Minerals: what can Donors do ? (pdf)

 

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