U.S. rules denting Congo rebels' mineral profits: study

UNITED NATIONS Tue Aug 7, 2012 7:01pm EDT

M23 rebel fighters celebrate in the rain at Rumangabo after government troops abandoned the town 23 km (14 miles) north of the eastern Congolese city of Goma, July 28, 2012. REUTERS/James Akena

M23 rebel fighters celebrate in the rain at Rumangabo after government troops abandoned the town 23 km (14 miles) north of the eastern Congolese city of Goma, July 28, 2012.

Credit: Reuters/James Akena

UNITED NATIONS (Reuters) - A U.S. law and an electronics industry code governing the use of conflict minerals have slashed profits among armed groups in the Democratic Republic of Congo by 65 percent in the past two years, a report by a nonprofit rights group found on Tuesday.

But the Enough Project - an arm of the Center for American Progress that combats genocide and crimes against humanity - also warned that months of unrest in Congo's volatile east is hampering progress made in curbing the conflict minerals trade.

"Economics are at the heart of the renewed violence in eastern Congo, and M23's latest advances indicate a move to open the floodgates of conflict minerals smuggling to Rwanda," said Enough Project senior policy analyst Sasha Lezhnev.

"The time for robust monitoring of mines and traders is now," said Lezhnev, who co-authored the report.

Tutsi-led M23 rebels are fighting government forces in the resource-rich eastern Congo and U.N. experts and Kinshasa have accused neighboring Rwanda and Uganda of supporting the uprising. Both countries have rejected the allegations.

The Enough Project said the armed groups in eastern Congo were still generating income by smuggling tantalum, tin and tungsten through Rwanda.

The report, citing Rwandan government data, found that from 2010 to 2011 Rwanda's mineral exports jumped 62 percent compared with a 22 percent rise in domestic mining production.

The group said increased diplomacy, greater investment from companies, and a consolidated push to go conflict-free were needed to strengthen the progress already made that had seen armed groups' minerals profits drop by two-thirds in two years.

"The Dodd-Frank law is making a serious dent on the militias in eastern Congo, cutting their profits from the conflict minerals," said Enough Project policy consultant and report co-author Fidel Bafilemba.

The 2010 Dodd-Frank financial reform law requires companies to disclose whether they use tantalum, tin, gold or tungsten from the Democratic Republic of the Congo. The U.S. Securities and Exchange Commission (SEC) is due to vote on August 22 on long-delayed guidelines needed to enforce the conflict minerals law.

The conflict minerals rule has been arguably one of the most controversial rules in the Dodd-Frank law.

Companies would need to identify if any conflict minerals are used in their products. If the minerals are present, the companies would then need to conduct a due diligence check to track them through the supply chain to their origins.

Electronics companies such as Dell and Intel have also signed up to codes of conduct excluding conflict minerals from their supply chains, and jewelry retailers are pressuring manufacturers to do the same.

(Reporting by Michelle Nichols; Editing by Eric Walsh)

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