Cablegate: Tin Industry Seeks Usg Support For

DE RUEHKI #0949/01 2921112
R 191112Z OCT 09



E.O. 12958: N/A

1. (SBU) Summary: The global tin association ITRI is actively
working to seek support, both in the DRC and with international
donors, for its Tin Supply Chain Initiative aimed at enhancing due
diligence in the minerals trade in eastern DRC. The initiative
comes in response to continuing pressure by a number of
international NGOs, as well as the UN Group of Expert's November
2008 recommendations, later formally encouraged in UN Security
Council Resolution 1857, that exporters and consumers of Congolese
mineral products conduct due diligence on their suppliers. ITRI
briefed econoffs on October 7 on the initiative and key challenges
for its implementation. While Phase I of the initiative, which
addresses the final stage of the supply chain, has been launched,
ITRI noted several outstanding issues that need to be resolved
before implementation of the second and third phases. In
particular, ITRI stressed the need for an independent body to
certify mining sites as well as have oversight responsibility for
the issuance of security seals and oversee the planned data center.
ITRI is requesting USG endorsement of the Tin Supply Chain
Initiative to help ensure GDRC buy-in, encourage other donor
support, and diffuse NGO criticism. End Summary.


2. (U) ITRI's Tin Supply Chain Initiative involves a three-phase
system aimed at implementing a comprehensive due diligence and
traceability program. Phase I focuses on due diligence on the
formalized end of the supply chain (including traders, known in
French as "negociants," and export companies , known in French as
"comptoirs") through documentary evidence including ensuring the
legal status, legitimacy, and export authority of traders and
comptoirs, as well as the issuance of Certificates of Origin by
comptoirs. ITRI members introduced Phase I of the system in July.
Phase II focuses on the traceability and verification of the mineral
supply from the mine site to the traders and comptoirs, utilizing a
certificate of origin back to the mine site. ITRI hopes to
implement Phase II in 2010. Phase III focuses on the entire supply
chain with a comprehensive due diligence system covering
traceability and business ethics, with verification provided through
certification combined with supplier assessment through the supply
chain. Implementation of Phase III is anticipated by ITRI in 2010
or 2011.

3. (SBU) ITRI noted to Econoffs that Phase I puts much of the onus
on the comptoirs regarding verification of the supply chain. They
stated, however, that they had received strong cooperation and
support from the comptoirs since they understand that their
continued business depends on the successful implementation of a due
diligence system. Likewise, the smelters (who are members of ITRI)
noted their strong commitment to full implementation of the system.
The tin industry has seen increased engagement from the negociants
(traders), but even greater support and buy-in will be required as
ITRI moves to implement Phase II.

4. (SBU) Comment: The supply chain for the minerals trade from the
point of purchase from comptoirs in Goma into international markets
is well understood and largely formalized. There is much less
visibility in the supply chain, however, from both the mine (point
of origin) to the point of sale and along the chain of custody. The
largely artisanal structure of much of the DRC's mining sector,
Qlargely artisanal structure of much of the DRC's mining sector,
combined with limited or non-existent infrastructure and continuing
insecurity in some parts of the country create additional challenges
to the effective monitoring and control of the minerals trade. End

--------------------------------------------- --

5. (SBU) ITRI noted that implementation of Phase II will present
greater challenges than that of Phase I since it will address the
much less formalized aspect of the supply chain, from the mine to
the "negociant." According to ITRI, they have tried to address in
Phase II the inherent difficulties of implementing a monitoring and
verification system starting at the mine sites by creating a system
that would allow tracking of all minerals through the subsequent
supply chain. Specifically, the system calls for a mine
identification/paper tracking system (certificate of origin),
accompanied by a unique code attached to each bag exiting a mine
site in the form of a security tag or seal, to accompany the product
at all stages of transport. Key to the process will be the
establishment of a data center to track the flow of the product,
which will be made possile due to the unique reference numbers for
each bag and security seals.

6. (SBU) ITRI highlighted several key challenges for the
implementation of Phases II and III. First, the system calls for
the identification or certification of "clean" (e.g., conflict free)

KINSHASA 00000949 002 OF 002

mine sites. ITRI stated that the industry was not in a position to
make this determination, noting that both the criteria and mechanism
used to certify sites remained outstanding questions. Rather, ITRI
is seeking an international body, perhaps led by MONUC but also
including industry, NGOs, the GDRC and industry, to play this role.
In addition, ITRI would like an independent body to oversee the
control and distribution of the control seals. Finally, ITRI is
seeking an independent body to oversee the data center.

7. (SBU) COMMENT: The GDRC (specifically, the Ministry of Mines)
has indicated its support for ITRI's initiative. A key aspect of
current GDRC efforts to better control and monitor the minerals
trade in eastern DRC includes the establishment of "buyers' centers"
(centres de negoce, in French), which the GDRC believes will
increase the control and traceability of minerals from the mines to
export. ITRI is working closely with the Ministry of Mines to
ensure that their system both complies with the DRC's 2002 Mining
Code and complements GDRC efforts. At the same time, the
implementation of the ITRI's Tin Supply Chain Initiative presents a
number of key challenges that have yet to be resolved. Key among
these is what body will actually have responsibility for the
independent verification of documentation and certification of
sites. This challenge has been highlighted in recent criticism of
ITRI's initiative by NGOs, led by Global Witness. ITRI is seeking
USG endorsement for the supply chain initiative in part to help
counter negative press from NGOs.

8. (SBU) Comment continued: While these are serious issues that
will need to be addressed before an effective due diligence and
traceability can be fully implemented, it is hardly the only hurdle.
The very nature of the DRC's mining sector, characterized by
artisanal miners and limited government control of mining sites,
presents challenges for both the industry and government. While a
rigorous due diligence and traceability process is possible, it
would require the presence of inspectors and monitoring staff at the
mine site, along the transportation corridor and up to the point of
sale, and a high degree of material and technical support to manage.
At the moment, the GDRC simply does not have the resources or
capacity for such a presence. Post believes that the Ministry of
Mines and ITRI are both sincere in their efforts to improve the
control, monitoring and traceability of the minerals trade in
eastern DRC, though additional resources, political commitment and
coordination will remain key to the successful of any initiatives.
We would welcome the Department's views on ITRI's initiative. End


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