VonJana Hönke & Lisa Skender

Finally driving an electric car and surfing on your smartphone and tablet with a clear conscience? That's what "clean" or "ethical" cobalt is supposed to promise. Although cobalt is not yet included in the defined "conflict minerals" in supply chain laws, such as tin, tantalum, tungsten and gold, it has attracted attention. Due to the rising global demand for cobalt, there are increasing reports of poor working conditions, child labor and exploitation in cobalt mines in the Democratic Republic of Congo. As a solution, the inclusion of cobalt as a conflict mineral for the enforceability of human rights for an "ethical" cobalt trade is being discussed.

With over 50 percent of global cobalt deposits, the DR Congo is by far the largest miner and producer of cobalt in the world. With a global increase in demand for cobalt ("cobalt run"), which is required for the production of batteries for electric cars, smartphones and tablets, among other things, poor working conditions, child labor, sexual exploitation of women and other human rights violations in Congolese cobalt mines have increasingly become the focus of public reporting in recent years. In addition to the focus on "problem solving" through new technical possibilities (e.g. "blockchain")¹, there are also efforts at a political and legal level to promote "ethical" trade in cobalt and other "conflict minerals". For example, last year the German government and this February the EU Commission presented supply chain laws that oblige companies above a certain size to review, take responsibility and enforce corporate due diligence obligations along the entire global supply chain. By making companies liable for human rights violations along the global production supply chain, the aim is to prevent environmental and human rights violations. However, as the German Supply Chain Act, which comes into force next year, does not take the entire supply chain into account, but only holds companies liable for their direct suppliers (see Maihold et al. 2021, p. 2), the law will probably have little impact on the trade in cobalt. Although the EU Commission's new legislative proposal goes further and explicitly intends to hold companies accountable along their entire supply chain and provide for civil liability for companies, it remains to be seen exactly what impact the EU's planned supply chain law will have on cobalt mining and working conditions in the mines in Congo.²

In the following, we will discuss the potential consequences and challenges for future supply chain laws and policy regulations based on the existing Dodd-Frank Act in the US. While this was introduced as part of a package of financial market regulations and focused on due diligence and avoiding complicity with violent actors, both the German and European supply chain laws are independent legislative initiatives that are politically legitimized in particular by improving the living conditions of local producers. For this reason, but also because of the problems with the effects of the Dodd-Frank Act, they must also be measured against this. Therefore, in the second part, in addition to the inclusion of companies and consumers, we argue for greater consideration of production conditions and for the inclusion of the complex living conditions of local workers in future legal regulations.

The importance of conflict minerals: Who benefits? Who loses?

The Dodd-Frank Act, actually a law to reform US financial market law in the wake of the 2008 financial crisis, obliges US listed companies in Article 15 (1502) to document and disclose the use of so-called "conflict minerals". Conflict minerals (defined in the Dodd-Frank Act as tin, tantalum, tungsten and gold) are raw materials with which armed groups from the DR Congo and neighboring countries trade and thus co-finance themselves. The Dodd-Frank Act is therefore intended to ensure that companies no longer support or co-finance armed groups by purchasing these raw materials. The law is explicitly not a ban, but contains a transparency obligation and is therefore intended to put companies under public pressure according to the "name and shame" principle. National, regional and international initiatives such as Dodd-Frank have multiplied and require companies to disclose the use of these minerals and make their supply chains "conflict-free".

Efforts to "de-conflict" mineral supply chains are not new; long before the 2010 Dodd-Frank Act, international human rights organizations were calling on states to legally enshrine the term conflict mineral or conflict commodity in international supply chains and to extend traceability and due diligence in the supply chain of conflict minerals to artisanal cobalt mining. A more detailed report by Amnesty International and Afrewatch describes the poorly paid and dangerous conditions under which children and adults work in the cobalt sector.

So why not also define cobalt as a "conflict mineral" in the supply chains and thereby help prevent the financing of armed groups, child labor and exploitation? Extending the category of "conflict minerals" to minerals that are mined under exploitative, inhumane conditions would have far-reaching consequences. Congolese and international researchers have shown that Dodd-Frank has had unintended and negative consequences. Some industry players avoided sourcing minerals from the Democratic Republic of Congo with a quasi-boycott. This has affected artisanal miners, their families and people in mining-related industries, both economically through loss of income or livelihoods and indirectly through, for example, higher infant mortality rates (see Parker et al. 2016). In March 2017, for example, Apple announced that it had temporarily stopped purchasing manually mined cobalt from the DR Congo due to public reporting on poor working conditions and child labor in the cobalt mines. Public reporting on child labor and corruption also prompted other investors to outsource cobalt mining to other countries.

Although the abolition of child labour, sexual exploitation of women and the financing of armed groups normatively legitimized a ban on production, the question arises as to whether the quasi-boycotts triggered by the Dodd-Frank Act actually prevent child labour, (sexual) exploitation and the financing of armed groups. In the short term, initiatives to improve the supply chain have no significant impact on the actual task of the Act, i.e. traceability, and can even exacerbate socio-economic hardship and thus trigger conflicts or increase the frequency of fighting, looting and violence against civilians (see Seay 2012; Stoop et al. 2018).

It has also been shown that armed groups in eastern Congo are financed in a more complex way than through small-scale mining, and have alternative financing channels available (e.g. Laudati 2013a, Vogel 2022); while little was done to end armed fighting, the costs of the quasi-boycott through Dodd-Frank were borne by the most vulnerable. Other researchers point out that multiple factors contribute to conflicts in the DRC. These factors include the expansion of large industrial companies, which exacerbate existing social conflicts (see Hönke 2014). In line with Harvey's principle (2004) of "accumulation by dispossession", the appropriation of land by large companies deprives people of their land and displaces small farmers and smallholder workers. Legal regulations such as supply chain laws or conflict minerals regulations must not become an additional moral support for companies in order to legitimize a private profit interest as "ethical" (cf. ibid.).

The negative effects reported in the Kivu provinces, in particular the estimated loss of jobs for tens of thousands to millions of workers (see Seay 2012, p. 10), suggest that similar effects are to be feared in the south-east of the DR Congo, which was already in economic difficulties due to low copper prices before the implementation of the Dodd-Frank Act (see Seay 2012). The de facto boycott has negative consequences for those in the east of the country who depend on artisanal mining, including loss of income, negative impacts on child mortality and health care, and an increase in illegal activities and smuggling. Further evidence from the two Kivu provinces points to the disproportionate negative impact of supply chain interventions, particularly on artisanal miners and women in related industries. In the southeast of the Democratic Republic of Congo in the Katanga province, these groups are already disadvantaged, as multinational companies had already driven artisanal miners out of their concessions and displaced them to less profitable locations before the Dodd-Frank Act.

Although the legislation on "conflict minerals" attempts to prevent the extraction of armed groups, it ultimately ignores the global political economy and the role of international companies in the cobalt sector. Armed groups from the DR Congo and neighboring states are not the only ones involved in "resource grabbing". Many international (European and Chinese) companies are also profiting from the "cobalt run". Implementing supply chain measures without considering the broader economic and social context could further marginalize artisanal miners, who are already under pressure from large-scale mining, even if a quasi-boycott were avoided and the tracing of minerals to non-militarized mines were successfully implemented. As the relevant certifications are expensive and complex, without countermeasures, there is a risk that the inclusion of cobalt in supply chain initiatives will unilaterally expand the market shares of multinational corporations, in the DRC in a region where mining companies already dominate the economy without ensuring income opportunities and social protection for small businesses, micro-miners and families dependent on them.

The EU Conflict Minerals Regulation adopted by the EU in 2017 is to be welcomed, but may promote such inequality in favor of multinational companies rather than reducing it. While the regulation focuses on human rights, it ignores the violent practices of capital accumulation through land grabbing by international companies. Partzsch (2018) describes many existing regulations as merely "symbolic" (ibid., p. 486). Some shift the responsibility to individual consumption, or individual consumers (ibid., p. 486), who can decide for or against a "Fairphone", for example. The EU regulation sets binding rules that are enforceable under civil law, which is a very important step in comparison. At the same time, however, we are also observing a political "outsourcing", a shift in political responsibility for ethical trade and its monitoring to private companies in the supply chain itself. The social and ecological risks of our resource consumption are also being shifted to countries such as the DRC.

But what now? Of course, dangerous and exploitative conditions for artisanal workers in the mines need to be addressed. But the "conflict materials" framework is only one option.

Outlook: What other options are there?

Looking ahead to the next few years, the role of cobalt could change at a political level. Although cobalt does not currently play a role as a conflict mineral under the 2017 EU regulation, this could change when the regulation is evaluated in 2023. There is therefore a need for a systematic assessment of the potential risks to people's livelihoods that must result from the expansion of the "conflict minerals" category. In the planning of the Dodd-Frank Act, for example, the views of the Congolese government and supra-regional and civil society initiatives from the DR Congo were largely ignored. However, expertise and cooperation with governmental and civil society organizations from the DR Congo are the first indispensable prerequisite for political action. For example, a group of Congolese academics suggests including former armed conflict actors in new "conflict-free" arrangements. However, this would require a legal framework and, in particular, concrete projects on the ground that can meet these requirements.

Recognizing complexity would be another important step; simplistic dichotomous views or answers contribute neither to a "solution to the problem" nor to an "ethical" trade and production of cobalt. For example, armed groups rely on a number of sources of income; for some, minerals play little or no role (see Laudati 2013b). In addition, most mines are not controlled by armed groups. Attempts to regulate supply chains therefore have potentially negative consequences, such as a de facto boycott of all minerals from the Democratic Republic of Congo, regardless of who mines them and how they are mined. It is therefore also not about the dichotomous politicization of "regulation" or "no regulation" as raised by then US President Trump with the announcement to suspend the Dodd-Frank Act on conflict minerals. While an investigation found that the claim that Dodd-Frank had led to some Congolese people losing their livelihoods was true However, Trump and the Republicans have ideological reasons and oppose government regulation in general, not just Dodd-Frank. In any case, the issue should not be reduced to the question of "regulation" or "no regulation", but should be seen as an opportunity to develop better transnational governance in cooperation with existing supra-regional initiatives to address conflicts and human rights in mining (see Katz-Lavigne and Hönke 2018).

If political regulations are to specifically improve the situation of the two million people, especially women and children, who work in small-scale mining, the existing mining unions must be considered and strengthened in national and international regulations. Congolese scientists are therefore calling for the promotion of fair competition. Future regulations must be based on competition that gives not only international companies but also Congolese producers the opportunity to influence local price regulations. "This in turn would promote regulation that ensures minimum wages that mining unions can guarantee to their members due to their greater influence on price fluctuations" (Tegera et al. 2014).

This would shift the focus from regulating supply chains and consumer behavior to changing production conditions. Then the question would no longer be whether you or I consume "ethical" cobalt, but which political measures can be used to support small-scale miners.