Beyond Due Diligence: A multi-stakeholder approach to responsible mineral sourcing

The African Great Lakes region, and specifically countries including the Democratic Republic of the Congo (DRC), Rwanda, and Burundi, have significant reserves of these minerals. In fact the DRC has almost half of the world’s total reserves of Cobalt at an estimated four million metric tons1. Together with Rwanda, the DRC also produces nearly half the world’s coltan, from which tantalum is derived, as well as a significant share of global tin and tungsten ores. These minerals are known to be extracted from areas where armed groups and criminal networks vie for control, which has led to exploitation, violence, forced labour, and extrajudicial killings.

The issue of conflict minerals first received international attention in 2010 with the introduction of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, which required companies to determine the source of these minerals and disclose. Despite the implementation of such due diligence measures, according to a recent report by Global Witness, "tainted minerals" continue to enter international supply chains, contributing to violence and child exploitation in the DRC.

Artisanal mining, which is often informal and unregulated, is common in the DRC and it is a source of livelihood for many, particularly people living in rural areas where alternative employment is limited. Of the 2 million people actively involved in mining in the DRC, an estimated 250,000 of these are classed as artisanal miners. These workers, which estimates include up to 40,000 children, are often exposed to violence and exploitation, forced to work in unsupported and unventilated pits with no more than basic hand tools. Injuries, collapse and deaths are common. The electronics industry, which relies heavily on these minerals, has come under increasing scrutiny in recent years for allegedly turning a blind eye to these human rights abuses, as well as the environmental impacts associated with the sourcing of these minerals.2

The DRC is the world's largest producer of cobalt, accounting for over 70% of global production. Whilst some manufacturers have implemented due diligence measures and established certification schemes, it is still challenging to ensure that minerals sourced from conflict-affected areas do not enter global supply chains, not least because these minerals pass through multiple intermediaries before reaching their final destinations.

China is the world's largest consumer of the majority of the minerals produced in the DRC, including cobalt, copper and coltan, and despite being a signatory to the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Guidance, has faced criticism for its lack of transparency and oversight. Chinese owned companies also account for a significant proportion of the smelters and refineries that process these minerals, in fact China’s share of the global production of these critical materials has become overwhelmingly dominant, at more than 80% for tungsten and roughly 90% for antimony3. According to the Responsible Minerals Initiative (RMI) an estimated 90% of the cobalt that enters the markets is refined by Chinese SORs which only adds to the difficulties of traceability4.

As investors, consumers and citizens, we all have a role to play. Addressing this problem will require a coordinated effort from all stakeholders and improving transparency in the supply chain is a critical first step. In response, at the end of 2021 we launched the collaborative engagement: Tackling conflict mineral content in the semiconductor supply chain. This initiative was supported by 160 signatories amounting to US$6.59 trillion of assets. Since then it continues to attract more interest from a number of large financial institutions.

The demand for minerals and metals used in electronics and green technologies is growing rapidly, however, addressing the root causes of the problem will also require a long-term commitment to promoting sustainable development in the DRC and surrounding countries. This includes investing in infrastructure, education, and healthcare, and supporting responsible mining practices that prioritise the well-being of workers and the environment.