January 8, 2019 / 9:04 AM / 2 months ago

UPDATE 1-Congo miner SMB leaves ITSCI responsible-sourcing scheme over cost

* SMB says it cannot afford ITSCI’s “higher and higher costs”

* ITSCI not immediately available for comment

* Rwandan miners also complain of scheme’s cost (Updates with SMB joining Better Sourcing)

By Fiston Mahamba and Barbara Lewis

GOMA/LONDON, Jan 8 (Reuters) - The Democratic Republic of Congo’s biggest miner of coltan, an ore containing metals used in mobile phones, is leaving the ITSCI certification scheme relied on as a guarantee that minerals are free from human rights abuses.

Societe Miniere de Bisunzu (SMB) has given 30 days’ notice to end its contract with the ITSCI supply chain initiative, SMB Communications Director Philippe Stuyck told Reuters, citing the scheme’s rising costs.

In emailed statements, SMB later announced it was instead joining another scheme, the Better Sourcing programme, which was implemented by responsible-sourcing group RCS Global.

“The transparency of our supply chain remains our main priority, which is why we are doing everything we can to improve and modernise it,” Stuyck said.

Many others in the industry have complained about ITSCI for reasons including cost but have been reluctant to pull out because of concerns they will not be able to sell their minerals without ITSCI certification.

ITSCI did not respond to requests for comment.

SMB, in a letter to the Democratic Republic of Congo’s mines minister dated Dec. 13 and seen by Reuters, said “the Societe Miniere de Bisunzu had no choice but to end its relations with ITSCI” because it could no longer pay “higher and higher costs”.

Coltan is an ore that contains tantalum, used in technology such as mobile phones and laptops. SMB declined to name its clients, but the company supplies the mineral to Europe, the United States and Asia.

ITSCI was introduced after the 2010 Dodd Frank legislation, drawn up in response to the global financial crisis and which requires U.S. companies to vet their supply chains.

The scheme has provided a way for companies to continue to use minerals from Congo and neighbouring Burundi, Rwanda and Uganda.

The system of bagging and tagging metals is designed as a guarantee that the minerals in question are unconnected with conflict, child labour or other human rights abuses.

However, many mining companies have said the costs of ITSCI are increasingly burdensome.

“That ITSCI does not review the traceability cost is a huge burden to all of us,” Rwanda Mining Association Chairman Jean Malic Kalima told Reuters.

“The only challenge that stops some of the Rwandan miners from joining other traceability programmes is whether end-buyers are comfortable with them,” he said.

The pressure on ITSCI to lower costs has increased as others working in responsible sourcing seek to use blockchain, the technology behind cryptocurrency bitcoin, to help to track minerals and guarantee they are clean.

Kalima said that costs range between $130 and $180 a tonne, depending on the mineral. (Additional reporting by Clement Uwiringiyimana, Pratima Desai in London and Aaron Ross in Dakar Editing by Susan Fenton and David Goodman)

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