Legal, Regulatory, Compliance and Guidelines Background

In consideration with how corrupt and unethical the mining of these minerals can be in some parts of the world, there have been a number of mechanisms taken by states and ONGs to discourage the making use of these by private and public actors.

As mentioned previously in the social risk factors, there is a continuous violation of human rights and international law in the areas where conflict minerals come from. Even if those violations and crimes could be prosecuted at an international level through International Humanitarian Law and Human Rights Law, practice shows how difficult it is to condemn those activities. The fact that so many human rights are violated still nowadays in mineral-rich countries like the DRC, is a clear indicator of how limited the efficiency of international law is in this area.

Individual criminal responsibility would indicate that in such cases multinationals are to pay an economic compensation amount to the victims of the crimes they are responsible for. However, as in the previous case, the courts and laws applied to the cases may fail to do so, creating a responsibility-free scenario in those countries.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (known also as the Dodd-Frank Act) was made by the government of the United States (U.S.) and signed in 2010. As the name says, this extensive act is created to protect consumers, but it has one particular section that deals with conflict minerals: Section 1502. Nevertheless, this act is a federal norm, meaning that it applies only to U.S.-listed companies and is not an international law.

The 1502 Section basically prohibits the use of minerals that finance or are related to conflicts, such as the case of the DRC. There is a list of covered countries which are the countries that companies have to check if the minerals they obtain come from them and if this supply is related somehow to conflicts in them. However, not all companies are affected by it; only issuers from the SEC are affected and, within these, only the ones who need conflict minerals for “functionality or production” of their products. This means that if the company would just repair a product that would have these minerals, it would not be affected by this section.

The main purpose of the European Union with it is, of course, prevent European companies from financing armed conflict in high-risk countries. The European Union cannot directly interfere in internal affairs of these countries as to prevent armed conflicts, but since peace and security are also important principles for the union to promote, it can limit the benefits these armed groups get.

This regulation will aim four main points: that EU 3TG importers meet the Organization for Economic Co-operation and Development’s (OECD) standards of sourcing [which will be mentioned later], that the smelters and refineries have responsibility in sourcing, stop the relation between conflicts and illegally exploiting minerals, and stop the exploitation of communities. Responsibility and conflict-free are the two main ideas this regulation supports.

The regulation is aimed to come into force in 2021, which is to be considered since it is not applicable at the present point and is still a legislative project. This means that right now European companies are not legally required, only morally, to the due diligence requirements.

Even if this regulation is a good initiative, like the U.S. Dodd-Frank Act it has a limited scope of application, which requires that other legal mechanisms are implemented in other parts of the world. China is one of the countries where more refinery companies are for conflict minerals, as we have seen before. It is a very important step, therefore, that the government took a legislative response to the lack of due diligence companies in the world showed in the 3TG industry.

The Organization for Economic Co-operation and Development’s (OECD) created a set of standards in this guidance[footnoteRef:10] to promote due diligence by companies working with or using conflict minerals. The main goal is to make businesses conscious about where the minerals they use in their products come from and also to improve the transparency in their supply chains. [10: OECD (2016). OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

The current version of the guidance is the third edition, released in 2016. However, the first edition of it came out in 2010 and served as a precedent for other legal mechanisms, at an international and national level, for the implementation of due diligence requirements. It can be even said to be the first written compilation of requirements on due diligence for the sector of conflict minerals created.

The fact that this mechanism, even if just being rather voluntarist, has been the international standard for so many other rules gives it an immense power and, together with the fact that it keeps being upgrade, makes this tool a very important one for the future development in this area.The main concepts in the current legal framework would be: transparency, reporting and accountability. All the mechanisms mentioned previously are rather soft law. The OECD guidance, for example, are guidelines of reporting for transparency, but it is not possible to consider those hard law since they make recommendations.

There is a spectrum of legislation, in which the one made by the United Nations is the most tangible and developed one. Whilst on the other hand the OECD has just guidelines and the European Union’s regulation is still to be seen.

What can be concluded is the fact that there is wishful thinking in general – under my opinion –. Instead of creating a regulatory system, these mechanisms are oriented to calm stakeholders and the civil society, but it is not a legal code at use. The current framework is voluntarist, like a recommendation.

Mobile phones continue evolving into devices that can do every time more functions, which is also how smartphones were created. The mobile industry went from flip-phones to the iPhone X in about fifteen years, having both many different qualities. The moral question raising is whether technological evolution justifies the use of conflict minerals, or if it would be better to use other materials even if it would mean a prince increase.

The average consumer does not know what conflict minerals are, and most certain does not know that these are in its smartphone. However, under my personal opinion, this does not make them guilt-free, since consumers should gain awareness on what they are buying and what buying that certain product involves.

The role of non-governmental organizations [like Amnesty International] has to be valued here, as they did and still do investigations on this problem, looking for solutions and alternatives, and asking companies to use conflict-free minerals. The awareness to consumers was led by non-governmental organizations and the United Nations. As a result, internal reports were made by companies themselves in order to modify their behaviour and be more transparent in their access to the minerals. As mentioned before, Apple, Inc. is a clear example of this.

However, since no hard law has been created on the matter, there are still several problems raising from countries having 3TG resources. According to the United Nations, “the abundance of natural resources in the DRC and the absence of regulation and responsibility in this sector” lead to the violation “of human rights and international humanitarian law”.

One of the main problems is the fact that the currently existing regulatory framework is simply voluntarist. The UN gives, in its UN Guiding Principles on Business and Human Rights[footnoteRef:16], companies [independently of the State] the responsibility to be aware and make sure human rights are respected through their practice. However, these rather voluntarist principles, that just guide as the title says, are not strong enough to make companies comply with them. It is here where internal regulations of each State and international norms can help to improve current situations like the one in the DRC. If countries and international organizations would implement stronger measures, with a harder and more imperative tone, there would be less companies obtaining the minerals they need from conflict areas. So, the first proposal would be to strengthen these existing mechanisms, and even impose sanctions to companies that do not have conflict-free products. [16: United Nations (2011). Guiding Principles on Business and Human Rights.

In order to control if companies comply with this, they shall do reports as the OECD guidelines explain. This is something the European regulation wants to require to companies from January 2021, but it is yet to see what impact this regulation will have.

Sanctions, by international organizations like the UN, could also be given to countries that allow the export of conflict minerals from their territory, or aid to those governments who cannot defeat by themselves the armed groups in control of the extraction of 3TG minerals.

As another recommendation, the trade with other mineral extracting countries, that are conflict-free, should be promoted. Australia and Brazil[footnoteRef:17], for example, are rich in tantalum extraction, and could be a replacement for other suppliers of those minerals who invest in armed conflicts. If smartphone-producing companies make sure they obtain the necessary minerals from suppliers that are not related to armed conflicts, the ones that are related to it will have less demand and eventually no buyers at all.

There are nowadays some smartphones that are being produced with a certificate that guarantees that in the fabrication of the components and the assembling of these phones, all human rights are respected. These are called “fairphones”, and it was a Dutch enterprise [called Fairphone] who promoted this concept by creating the first gold supply chain that was considered Fairtrade[footnoteRef:18]. Multinationals like Apple or Samsung, even if done reports on their production, their products are still not completely conflict-free (or it is unsure if they are). Therefore, fairphones are such an innovative and good idea, so that consumers can be completely sure that by buying a smartphone, they are not contributing to the violation of human rights; that by buying it, it does not mean children are forced to work in mines.

It can be concluded that what is needed in modern society are conscious consumers, activist shareholders and committed companies. Smartphones are nowadays key for human beings. We use them in our daily life for things as simple as setting an alarm to wake up or reminding ourselves to go to the doctor on a concrete day and time. The functions that used to be from other products, are now compiled in our mobile phones.

It is therefore why these devices have turned irreplaceable for us, and so it attracted my attention to know that they need the four conflict minerals to be produced, remembering that part of the extraction of these is related to armed conflicts in some countries. This is what motivated this essay, together with the legal response of states [and international organizations] and the violation of human rights itself.