Memorandum submitted by Amalgamated Metal
Corporation Plc
1. BACKGROUND
TO SUBMISSION:
This evidence has been prepared by AMC and its
subsidiary, Thailand Smelting & Refining Company (Thaisarco).
Both AMC and Thaisarco have been named in sessions held by the
Joint Committee as companies whose trade with the Democratic Republic
of the Congo (DRC) should give rise to human rights concerns.
AMC and Thaisarco absolutely refute that suggestion.
These submissions cover two main issues:
(a) the issue of Business and Human Rights; and
(b) a human rights framework for trading with
the Democratic Republic of Congo.
The Committee has not asked AMC to respond to
individual allegations but are interested in our views on the
general issues raised by the inquiry. Nevertheless, in view of
the specific criticisms of AMC made by Global Witness, the following
facts are pertinent:
(i) Contrary to Global Witness' evidence AMC
was not "cited in UN Experts Panel report as funding warring
factions in Eastern DRC".
(ii) AMC was included in a 2002 UN report
(S/2002/1146) but, importantly, Global Witness overlooked the
fact that AMC was subsequently cleared by the UN panel (S/2003/1027).
2. THE AMC BUSINESS
AMC is a broadly based metals, raw materials
and intermediate products supplier to industry. It operates in
a number of sectors ranging from dealing on the London Metal Exchange
to the manufacture of construction products in Canada to tin smelting
in Thailand. It operates in eleven different countries, is a significant
contributor to the UK economy and is,a long established corporation
with a reputation for reliability and probity.
AMC operates in line wifh generally accepted
business standards for multinational enterprises. Where it operates
in developing countries (eg Thailand) it has a strong social policy—supporting
education and development through scholarship schemes and donating
to local communities in need.
These submissions relate mainly to the need
for business to be given clear guidance on whether trade with
countries like the DRC is acceptable and, if so, what standards
of due diligence need to be applied.
Thaisarco has historically purchased cassiterite
from the DRC for tin smelting. In September 2009 it suspended
purchases from the DRC, although it will continue to honour existing
contracts.
3. BUSINESS AND
HUMAN RIGHTS
Business can only take place if there is a clear
legal framework, both in the UK and elsewhere, within which it
can work. It is largely for Governments to set that framework.
Internationally, Governments should take responsibility for ensuring
that states have proper systems of human rights enforcement. Each
Government should take responsibility for setting clear standards
with which it expects businesses to comply. Business should clearly
respect those standards and should face enforcement measures where
there are transgressions.
In the absence of a legal framework or clear
standards, it is difficult for business to operate, particularly
in countries such as the DRC, where state based human rights systems
are at an early stage of evolution and where local responsibilities
are sometimes opaque. The difficulties arise from the establishment
of appropriate standards for a developing economy such as the
DRC, for which the application of generally accepted developed
economy standards of operation would lead to an effective embargo
on external economic activity. Business needs to operate in a
certain trading environment and it should be the task of Government
to set appropriate minimum standards for developing countries,
which may be different to those applied in a developed economy,
to ensure that trade can continue. Furthermore, Government should
clarify the extent of the responsibility of companies to ensure
compliance at all points in the supply chain. These issues were
recognised in the evidence of Lord Malloch-Brown to the Joint
Committee. He said:
"…who is responsible for enforcing
human rights law? I just want to make the point that the FCO,
which is engaged extensively internationally in terms of capacity
building with states to make them implement human rights law better,
is engaged with a whole range of actors on different corporate
social responsibility issues. In the US we established the voluntary
principles on security in human rights; with Professor Ruggie
we have been doing a lot; we have the Kimberley Process on diamonds.
But behind all of them lies the assumption that what you are trying
to do is to strengthen a states-based system of human rights enforcement
Obviously there are those voices which would argue that with corporates
operating now multinationally across borders that somehow, either
through pressure on those corporates directly or through the evolution
of law, the right way of addressing this is to hold corporations
directly responsible to the international community for human
rights enforcement. That has not been our approach and I just
wanted to lay that out straightaway because it is, as I say, in
a sense the conceptual dividing line with which the human rights
community has to struggle in dealing with these issues."
Without a clear legal framework which includes
appropriate standards, it is possible for lawful business in states
such as the DRC to be mischaracterised and criticised, with significant
effects on wider business relationships by bodies who may simply
have a different opinion about whether business has "done
enough" to force improvement in the supply chain. Without
a clear legal framework responsible businesses will disengage
and will seek alternative uses for their capital, with profound
effects on local economies. This will have adverse effects on
the quality of life and basic human rights of those left without
functioning economies.
By contrast, with clear legal frameworks, business
can make a real contribution to local economies, with significant
human rights benefits. This framework should set out the clearly
the standards to which business should be expected to work, and
the type of due diligence process that needs to be followed to
achieve those standards.
4. HUMAN RIGHTS
AND TRADING
WITH THE
DRC
The minerals trade in DRC supports up to two
million artisanal miners, and an even greater number of dependents.
It is a major driver of economic activity in the country, and
in the eastern region of the DRC in particular. There is a general
consensus that continued trade with the DRC is beneficial.
There is no embargo or ban on trading with DRC.
The UN sanctions regime applies to those who through illicit trade
in natural resources directly or indirectly fund illegal armed
groups. So far as the minerals trade is concerned it is clear
that the UN focus is on ensuring that illicit trade does not fund
continuing conflict and the consequent human rights abuses. UN
Member States are encouraged to take such measures as they deem
appropriate to ensure that importers, processing industries and
consumers of DRC mineral products under their jurisdiction exercise
due diligence on their suppliers and on the origin of the minerals
they purchase. Neither the UN nor any Member State has yet developed
any guidance, standard or system for the exercise of due diligence.
There is a climate of criticism of companies
continuing to trade with the DRC on the basis that there is a
risk that some natural resources might unknowingly have been sourced
from areas or passed through areas in the control of both illegal
armed groups (subject to the sanctions) and the DRC army (clearly
outside the scope of the sanctions). The absence of a clear legal
framework within which trade can take place, and which clearly
identifies when trade cannot take place, allows this type of criticism
to flourish.
In order to fill the gap left by the lack of
a clear legal framework, AMC is working with the tin industry
body ITRI, and with the rest of the supply chain, to implement
a due diligence system that could be used in the DRC. No due diligence
process in the DRC will provide an absolute guarantee that an
element of the funds generated have not been misdirected. Standards
of due diligence must be set that reflect what can be achieved
with the aim to improve these as local governance improves. This
will then give businesses the confidence that, if they comply
with the agreed due diligence standards, they will have taken
all appropriate steps to limit human rights abuse.
The ITRI Tin Supply Chain Initiative (iTSCi)
provides a standard against which business activities can be measured,
and provides a good level of traceability of minerals. Further
due diligence procedures are being developed that will monitor
the provenance of minerals more closely from the mine and in transit.
It will take time for these measures to be implemented.
At the moment the core responsibility in the
iTSCi is on the exporter (the Comptoir) to certify provenance
and to confirm that there has been no interference with the minerals
in transit. If they do so then businesses should be able to rely
on that certificate. Comptoirs are licensed in the DRC and there
are DRC Government representatives in Comptoir offices to confirm
the trade that is taking place. As multiple parties have pointed
out, the Comptoirs have a good level of local knowledge and are
capable of giving accurate and honest certificates.
If there is any real evidence that a Comptoir
has failed to exercise due diligence then they should be considered
for designation under the sanctions regime. So far, despite concerns
having been raised, no Comptoir has been designated. If there
is insufficient evidence to designate Comptoirs then it is difficult
to see circumstances in which businesses who purchase from them
can properly be designated.
The iTSCi is an industry led mechanism. As a
consequence it cannot, by itself, give business the comfort that
would be provided by a clear legal framework. If the iTSCi was
endorsed and supported by the UK Government it could do so and
would allow appropriate trade with DRC to continue and to grow.
If continued trade is seen to be one way to reduce longer term
human rights concerns in DRC, then Government should either endorse
the iTSCi due diligence standards or develop an alternative workable
set of standards.
As noted above AMC has directed Thaisarco to
suspend trading with the DRC, despite it being lawful, because
of public criticisms causing damage to the Groups' good name.
Although AMC continues to sponsor the iTSCi, the suspension of
trade risks the withdrawal of one of the potential catalysts for
positive change in DRC.
Thaisarco will only lift its suspension if it
receives satisfactory support for the ITSCI due diligence initiative
or an appropriate alternative.
5. SUMMARY
AMC and its subsidiary Thaisarco are responsible
organisations and employers and are concerned that human rights
should be upheld throughout the supply chain. It is concerned
to ensure that it meets UN requirements, and does not fund illegal
armed groups by purchasing illicit minerals.
AMC has been working with ITRI to implement
a due diligence system. It has worked with the DRC Government,
the UK Government, Non Governmental Organisations and the supply
chain in general to develop a workable system. This builds on
practices that AMC already had in place to prevent indirect funding
of illegal armed groups.
The continuing absence of an agreed due diligence
process will drive the minerals trade underground, or into less
discerning hands, with no improvement to human rights. AMC believes
that the most responsible approach is for the UK and other Governments
to engage with all members of the supply chain to develop due
diligence standards, that will improve progressively over time.
That will provide security for business trading in the DRC, and
that business will bring improvements to the quality of life and
human rights.
It is the role of Government to set out a clear
legal framework and to identify the appropriate due diligence
standards. Without such clarity business cannot do business, and
cannot help economies to recover in a way that is able to protect
human rights.
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