About Purchasing Mining Rights in Africa’s Congo

The United States Securities and Exchange Commission (SEC) voted last summer in favor (3-2) of a final conflict minerals regulation. This affects companies who report to the SEC and who source raw materials from areas of the Democratic Republic of Congo (DRC) as well as certain areas in neighboring countries. As quality and data are sometimes easier to trace and manage if you own the supply, some companies are looking towards buying mining rights in the region. This is usually done on a geographical basis; but it can also be done in regards to a specific deposit.

Purchasing mining rights in the Congo

Administrative procedure. Any private party can engage in non-artisanal research or exploitation of mineral substances in the DRC provided he or she is the holder of a valid mining right (research or exploitation), which is obtained upon completion of the corresponding administrative procedure.

First come, first served. The granting of mining titles is based on a first-come, first-served basis.

By area, except when…  Applications for mining rights for a given “perimeter” (demarcated surface area with indefinite depth) composed of quadrangles or “squares” are registered in the chronological order of their filing. In exceptional cases, the minister of mines may submit to tender, open or by invitation, mining rights relating to a specific deposit.

Begin within 6 months. To maintain the validity of its mining rights, the holder must commence exploration within six months (research permit) or commence development and construction works within three years (exploitation permit) as of the date the title evidencing its right is issued, and pay the surface duty per square relating to its title at the counter of the Mining Registry. If he or she fails to fulfill any of these obligations, the holder may be deprived of its right.

Foreign vs. domestic. There are no stated distinctions between mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties, except for:

  1. artisanal diggers and traders, who can only be individual DRC nationals
  2. foreign companies that are requested to incorporate a local company before they apply for an exploitation permit

Foreign parties must elect domicile with an authorized domestic mining and quarry agent and act through its intermediary.

We hope this helps give a general perspective on how possible it is or isn’t for your business to purchase DRC mining rights if needed. For some, software for supply chain traceability will do the compliance and quality trick. But others may want to go deeper into ownership of their supply chain. For more information on purchasing mining rights, may we refer you to this excellent document on the subject:


Conflict Minerals, Electronics and the SEC

A letter has been circulating, collecting signatures.  The letter has been passed to mining, metals, electronics, and other industry corporate heads for signing, and it’s addressed to the U.S. Securities and  Exchange Commission (SEC) Chairman Shapiro.

The point of the letter is to amass signatures and put pressure on the SEC to address the conflict in the Democratic Republic of Congo (DRC or “the Congo”) by three primary avenues:

  1. Government engagement and diplomacy.
  2. Supply chain responsibility.
  3. Economic development and capacity building.

Conflict minerals are minerals mined in conflicted areas, such as the Congo, which provide revenue to militia committing human rights atrocities.  Efforts by the US Congress and other governments, human rights groups, non-governmental organizations (NGOs), as well as industry, are underway to improve transparency in the minerals supply chain so that conflict areas are not receiving subsidy that is in turn funding terrible crimes against humanity.  Here is a slide-show around conflict mineral mining; images are artfully done and recommended.

Conflict mineral ores include:

NGOs are increasingly urging consumers to reject electronics made with conflict minerals.  This forces electronics companies to pay much closer attention to the source of the metals in products.  Some suppliers are being asked to certify that the tin, for instance, used in their products is not conflict tin.

Conflict minerals pose a new twist on an old problem: supply chain visibility. This deep level of supply chain visibility is what we talk about often these days. Efforts by NGOs and human rights groups have been somewhat successful in the U.S. in getting consumers to demand sourcing from non-conflict areas. Thus — to some extent at least — there is general industry support of the conflict metals issue and bills in both the Senate and House of Representatives.

Also, see the July 2010 (version 3.0) of proposed SEC revision.

Title XV of the Dodd-Frank Wall Street Reform and Consumer Protection Act was put into place to provide for financial regulatory reform, to protect consumers and investors, to enhance federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes. Within the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama on July 21, 2010, are new requirements for manufacturers of products containing tin, tantalum, gold, tungsten, or any other “conflict metals.” The Act contains several specialized disclosure provisions:

Section 1502 requires persons to disclose annually whether any conflict minerals that are necessary to the functionality or production of a product of the person, as defined in the provision, originated in the Congo or an adjoining country and if so to report on due diligence on the source and chain of custody of those minerals, which must include an independent private sector audit of that report that is certified by the person filing the report.

Section 1503 requires any reporting issuer that is a mine operator, or has a subsidiary that is an operator, to disclose in each periodic report filed with the Commission information related to health and safety violations, including the number of certain violations, orders, and citations received from the Mine Safety and Health Administration (MSHA) among other matters.

Section 1504 requires reporting issuers engaged in the commercial development of oil, natural gas, or minerals to disclose in an annual report certain payments made to the United States or a foreign government.

Regulations required by Sections 1502 and 1504 must be adopted no later than 270 days after the Dodd-Frank Act’s enactment, so the latest would be April 15, 2011.

Signatories of the recent letter to the SEC signed that they generally agree to the following:

  1. The SEC regulation should support meaningful reporting and transparency that drives ethical behavior for the sourcing of minerals from the DRC.
  2. The SEC should coordinate with other global pr ocesses in the effort to address financing of the conflict in the DRC.
  3. The SEC should coordinate with the State Department on options to implement more robust accountability and reporting mechanisms with key stakeholders – in particular, the State Department’s progress on diplomacy under The Democratic Republic of Congo Relief, Security, and the Democracy Promotion Act (PL 109-456).
  4. Extreme violations of human rights, including slavery and sexual violence should be eliminated.
  5. The US government to proactively contribute to resolving the underlying sources of conflict in eastern DRC.
  6. That minerals would contribute to the real development of communities in the eastern Congo.

Most agree that joint action by the DRC government, influential governments like the US, industries and Congolese and international civil society is needed to end conflict-related abuses, slavery and other human rights violations.