November 17, 2016
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Posted by NCID

Ambassador Jaime de Bourbon de Parme in NCID's Weekly Seminar series. Pictured in the atrium of the ICS.

“Minerals do not cause conflict. However, they serve as the fuel that ignites them,” was Prince Jaime de Bourbon Parme’s response to one of the questions he was asked during his conference at the Navarra Center for International Development on natural resources, presently one of the most important factors considered when analyzing international conflicts. Despite his youth, the Prince has extensive experience in diplomacy. His work has taken him to various countries such as Iraq, Afghanistan, and the Democratic Republic of Congo. In the latter, he developed the project described at the session.

It is a known fact that minerals- such as coltan and gold- extracted from mines plunged in conflict have several purposes, one of which includes the now ubiquitous smartphones. The objective of the project is to prevent the use of conflict minerals by multinationals by increasing transparency along every step of the supply chain; from the moment the resource is extracted until its arrival at different manufacturing plants.

The idea comes as a response to the implementation of the Dodd-Frank Act in the United States, which in one of its many clauses set out to reduce armed conflicts in Central Africa, by eliminating mining as a source of revenue for armed parties. To this end, American companies and the affiliates around the world were prohibited from buying metals and minerals from Congo and adjacent countries unless they were able to certify their provenance from conflict-free zones. Indeed, intentions were good, however, results were not as helpful as expected. 

There are numerous difficulties in certifying the legitimate origin of metals and minerals acquired in Central Africa. This, coupled with the fact that Congo’s reserves- which amass in gold, tantalum, tin and tungsten up to 24 trillion dollars according to a United Nations report- are not unique, drove American companies out of the African markets. Hence, many jobs were lost. It also resulted in the further impoverishment of already marginalized individuals due to the price slashes that aimed to retain buyers such as China and India. In fact, sales of tin decreased by up to 90% after Dodd-Frank was enacted. Moreover, rampant unemployment and scarce opportunities drove youngsters to militias.

It is in the context of this failed policy, which does not grasp that natural resources are just one way of financing armed conflicts, that the initiative is born at a conference in Paris, France. Prince Jaime, serving as a neutral agent, led a multidisciplinary commission- governments, multinationals, NGOs, and research centers- that established guidelines for multinational companies to be able to reactivate its supply interests in the region without fear of economic penalties and public scandal.

The initiative uses a “bag and tag” system to certify the origin of natural resources. Unique labels accompany metals and minerals from the moment they are extracted until it reaches the end user. To minimize the risk of corruption and manipulation, mine owners are vetted to verify that they do not maintain relationships with military entities. Also, before the ore or metal is first packaged, it is weighted and examined so that third parties can verify their provenance from a conflict-free zone.

This mechanism is hardly new and it has been subject to criticism in the past. Furthermore, Prince Jaime acknowledged that mines continue to suffer from other endemic issues, that are equally important, such as child labor, low wages and poor working conditions. However, the current Dutch ambassador to the Holy See responds to such criticisms by simply stating that “the better is the enemy of the good.” He admits that there is still much to improve in numerous aspects, but he points out the positive effect that this initiative has had, after three years of implementation, on the lives of people who were living under extreme conditions.

Consumption has increased, reviving the livelihood of business located near mining areas. In addition, the return of multinationals to the African market and the fact that the take on the cost of the tracking system increase profitability, which in turn, encourages mine owners to reinvest in their endeavors in order to improve working conditions and increase hiring practices.

In case of a breach or manipulation of the aforementioned system, which is closely monitored by different neutral institutions, the penalty would be the mine’s closure. Unfortunately, this has happened on occasion. However, this speaks positively of the rigor in monitoring the supply chain, which falls mostly on multinationals since they are greatly exposed to damages in case the supply chain is not transparent enough.

Nowadays, the program has approximately 140 mines- tin, gold, tungsten- located in Congo, Burundi, and Rwanda. Once again, the impact they have on local communities is enormous. Each mine can employ up to 1000 people.

Nevertheless, this is not the Prince’s first social project. During his tenure as Special Envoy for Natural Resources, he was in charge of providing resources for Bolivia to set up a battery factory to take advantage of its lithium reserves, the largest in the world. Also, with the help of research centers, it encouraged research on the uses of this material, which will be of great importance as electric cars gain relevance in the future.

Eradicating conflict minerals is not an easy task, especially given the complexity and diverse interests of the parties that partake in the process. Yet, Price Jaime emphasized the vital role of diplomacy and market efficiency in order to tackle the problem. Finally, he stressed that multinationals must recognize the finite nature of natural resources and work with interested parties to accomplish a conflict-free supply chain. 

 

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