Working with USAID to support responsible sourcing efforts in the DRC

The Challenge

Occupying a mass of land the size of Western Europe, the DRC could be the richest country in Africa. The country’s vast mineral wealth means mining is a key industry and the livelihood for an estimated 2 million miners and hundreds of thousands of families. Yet mining revenues have fuelled armed conflict and the country has suffered decades of instability, especially in the mineral-rich areas of the East. This has led to uncertainty and the withdrawal of many reputable international investors. As such, mining largely operates in small, localised communities, operating with artisanal and small-scale mining (ASM) methods. In response, international regulations aimed at reducing and ultimately breaking the connection between the minerals trade and conflict have been adopted. The most well-known of these are Section 1502 of the United States Dodd Frank Act and the European Union’s Regulation on Conflict Minerals, which require international companies to investigate their supply chains. While seeking to address the conflict minerals challenge, the older Dodd Frank 1502 regulation has also led to local operators and buyers of minerals in the DRC facing significant scrutiny against what they perceive as complex expectations, and unintentionally prevented many ASM operators from entering the global conflict-free market. Several other countries have since adopted similar legislation.

BSP in partnership with USAID

Since 2014 the Better Sourcing Program (BSP) has received funding from and been an implementation partner of USAID through the CBRMT project. BSP is implementing its due diligence systems to improve transparency in mineral supply chains in the provinces of Maniema and South Kivu, and supporting ASM communities and the Government of DRC to profit from its mineral wealth.

Maniema and South Kivu are challenging business environments. Maniema, in the centre-East of the country, is one of the most remote provinces in DRC. Roads are practically non-existent and a 300-km journey can take up to 10 hours.

South Kivu, located in the East along the borders of Rwanda, Burundi and Tanzania, is one of the provinces most severely affected by the two Congo wars. Mining here is a particularly important economic activity, but it is further tainted by suspicions of minerals smuggled into neighbouring countries.

On a typical day, miners here walk or cycle several miles, carrying a shovel and a plastic container. They spend the day digging for minerals and washing them in a nearby creek, before finding a local trading intermediary to sell them to. This chain of intermediaries goes a long way before the minerals reach the final buyer, making it virtually impossible for the final buyer to know where those minerals came from and the conditions under which they were extracted.

This prevents the final buyer from meeting the international requirements to sell them into international conflict-free markets, forcing many ASM communities to accept prices below the market price offered by grey market operators.

BSP worked with USAID to implement a due diligence system and shine a light on every stage of the mining process in Maniema and South Kivu.

Our local agents met directly with the ASM operators and local Government representatives to implement our technology-based communication solution. BSP agents conducted a Supply Chain Evaluation, determining production feasibility, supply chain risks and conducting KYC on the supply chain participants.

BSP then trained local mining authorities on how to use BSP’s electronic traceability system, which consists of a barcoded tag, a scanner, and a laptop, preventing the disappearance or tampering of bags, and legitimising the production for each individual miner.

BSP’s agents subsequently deployed BSP’s Information Management System (IMS), using a smartphone based technology solution to assess and continually monitor risks in real-time. The IMS prevented the presence of conflict financing, child labour, corruption and various other responsible sourcing relevant indicators in the BSP assured trading chains, which are key international responsible sourcing expectations enshrined in the Better Sourcing standard.

All of the data was fed live to a database, allowing for risk mitigation to occur prior to export into international conflict-free markets.

The Solution

The combination of local expertise and technology enabled the production and communication of unprecedented levels of data on every stage of the supply chain. BSP’s due diligence system also enabled all participants in the trading chain to remain abreast of developments and to work together to address incidents and mitigate risks prior to export. The first fully international legislations and market expectations compliant from our project in Maniema is scheduled to occur before the end of April 2017, providing international buyers with the confidence to engage with ASM operators in the DRC. Upon this achievement, BSP will be scaled and replicated across further mine sites in the country.

The Outcome