Wednesday, January 20, 2016

Amnesty International Wants Cobalt Included in Conflict Minerals Disclosure

By John M. Jascob, J.D., LL.M.

Noting that cobalt currently falls outside the scope of the SEC's conflict minerals rule, two human rights organizations have called for mandatory human rights due diligence and disclosure concerning the cobalt used by multinational companies such as Apple and Samsung in their portable electronic devices and other consumer products. A joint report issued by Amnesty International and African Resources Watch (Afrewatch) documents the hazardous conditions faced by child miners of cobalt in the Democratic Republic of the Congo (DRC), which produces more than half of the world’s total cobalt supply. Despite these abuses, however, no country legally requires companies to publicly report on their cobalt supply chain.

“The abuses in mines remain out of sight and out of mind because in today’s global marketplace consumers have no idea about the conditions at the mine, factory, and assembly line,” said Afrewatch Executive Director Emmanuel Umpula in a news release. “We found that traders are buying cobalt without asking questions about how and where it was mined.”

Artisanal mining in the DRC. The report observes that “artisanal” mining of cobalt became a source of livelihood for many people in the DRC when the largest state-owned mining company collapsed in the 1990s. These artisanal miners, who often end up working in unauthorized areas or trespassing on land controlled by industrial mining companies, mine by hand using basic tools to dig out rocks from tunnels deep underground. Artisanal miners include children as young as seven who scavenge for rocks containing cobalt in the discarded by-products of industrial mines, and who wash and sort the ore before it is sold.

The report takes the DRC government to task for failing to put in place and enforce adequate safeguards for artisanal miners. Miners face the risk of long-term health damage, working long hours with cobalt without protective equipment, and face a high risk of fatal accidents. According to UNICEF, approximately 40,000 children worked in mines across southern DRC in 2014, many of them mining cobalt. Children interviewed by Amnesty International stated that they worked for up to 12 hours a day in the mines, carrying heavy loads to earn between one and two dollars a day. The children said that they had to work, since their parents lacked formal employment and could not afford school fees.

Public reporting of cobalt supply chains. According to the report, companies along the cobalt supply chain are failing to conduct adequate human rights due diligence. The report notes that many companies contacted by researchers for the report denied sourcing cobalt from the DRC, but did not explain whom they sourced cobalt from. Considering the predominance of cobalt from the DRC in the global market, the report states that it is “unlikely” that all these large multinational companies are not sourcing any cobalt from the DRC.

In addition, many of these companies using cobalt in their downstream products are U.S.-listed companies which are already subject to reporting requirements for conflict minerals under the Dodd-Frank Act. Section 1502 of the Dodd-Frank Act requires these companies to check whether tin, tantalum, tungsten and gold used in their products are contributing to the funding of armed groups or fuelling human rights abuses in the DRC or surrounding countries.

Accordingly, the report recommends that countries where multinational companies trading in cobalt are headquartered should legally require those companies to: (1) conduct human rights due diligence on their mineral supply chains; and (2) report publicly on their due diligence policies and practices in accordance with international standards. The report also asks those countries to provide international cooperation and assistance to the government of the DRC to support its efforts to extend labor protections to all artisanal miners and remove children from the worst forms of child labor. Further, the report calls upon companies themselves to take remedial action, in cooperation with other relevant actors, if human rights abuses have occurred at any point in a supply chain relationship.