Ban on 'conflict minerals' would hurt Congo's poor

* Mineral tracing scheme would hit exports * Mining one of east Congo’s few economic activities

KINSHASA, April 8 (Reuters) - Banning minerals exported from violence-ravaged eastern Congo would threaten the livelihoods of a million miners and could worsen the world’s deadliest conflict, a study said on Wednesday.

Democratic Republic of Congo’s resource-fuelled 1998-2003 war and the humanitarian disaster it sparked have killed an estimated 5.4 million people in the last decade, more than any other conflict since World War II.

The country’s eastern borderlands, which remain a patchwork of rebel and militia strongholds, are the source of the majority of its tin, tungsten, and coltan ore.

The metals are essential components in household electronics such as mobile phones and computers. Last week the Enough Project, a U.S.-based human rights watchdog, called upon electronics manufacturers to trace the minerals they use in order to prove they are not funding the violence.

However, critics of the campaign say the additional costs involved in mineral tracing would amount to a de facto ban on Congolese exports.

A study funded by the British government, the London School of Economics and Belgium’s Ghent University published this week found such measures, although well-intentioned, would likely do more harm than good.

“The ‘blood diamond’ scenario where soldiers force workers to mine at gunpoint is largely absent in eastern Congo,” Nick Garrett, an analyst with Resource Consulting Services and one of the study’s authors, said in a statement.

“Most miners choose to mine for lack of livelihood alternatives, so stopping or disrupting the trade in minerals will hit the most vulnerable the hardest, and in all likelihood exacerbate conflict dynamics and retard development,” he said.

Rwandan Hutu rebels involved in Rwanda’s 1994 genocide and responsible for a vicious campaign of rape in eastern Congo are among a number of armed groups the report said use revenues from illegal taxation of minerals to fund their activities.

But shutting down the mineral trade completely would only push them into other sectors, possibly increasing instances of extortion and abuse of civilians, and drive them into new geographical areas, Garrett said.

Mining is one of the few remaining economic activities in eastern Congo, where infrastructure is in ruins and about a million people have fled fighting since late 2006.

Research found that in Congo and neighbouring countries, around 1 million people, including those directly involved in the trade as well as their dependents, are supported by mineral exports from eastern Congo.

Out of work miners, the report said, would become vulnerable targets for recruitment by armed groups.

The study recommended an active engagement with mineral traders that would allow the sector to come under government regulation, boosting tax revenues to cash-strapped Congo’s state coffers.

It warned that punitive measures, such as trade sanctions, risked driving the trade further underground while doing little to curb violence.

Congo’s copper, cobalt and diamond industries are already suffering from the impact of the global economic downturn, which has seen dozens of mining companies close up shop and lay off workers amid a drop in world demand for mineral exports.

Around 300,000 informal miners have already been left jobless by the economic downturn in southern mineral-rich Katanga province alone, according to provincial authorities. (Editing by Daniel Magnowski)