Metals, Mine Cos Buying Congo Conflict Minerals-Global Witness

July 20, 2009: 07:16 PM ET

LONDON -(Dow Jones)- A number of metals and mining companies, including a subsidiary of U.K .-based broker Amalgamated Metal Corporation PLC and Belgium's Trademet, have been buying minerals from Congo that are funding armed groups and fueling conflict, non-governmental organization Global Witness said in a report published Tuesday.

AMC's Bangkok-based subsidiary Thaisarco, the world's fifth largest producer of tin, is "fueling the conflict in eastern Congo" by receiving minerals from a local trading company linked to the warring factions, Global Witness said. Congo government data shows Thaisarco bought minerals supplied by this local trading firm, the report says. AMC also owns Amalgamated Metal Trading Ltd., a London Metal Exchange ring dealer.

"Global Witness is calling on the U.K. government to request that the United Nations Sanctions Committee add the U.K.-based entities of AMC and their directors to the list of companies and individuals against whom sanctions should be imposed," the report said.

The report details how foreign companies are buying from suppliers trading in minerals from the warring parties in east Congo, and called on the International Criminal Court to investigate them and initiate prosecutions where necessary. It also asked for foreign companies to conduct due diligence, and for governments to cut off warring parties' access to the mines and to hold companies accountable.

Many mining areas in eastern Congo which produce minerals including cassiterite, or tin ore, coltan and gold, are controlled by rebels and the national army. Cassiterite and coltan are used to make mobile phones, computers and other electronics.

Global Witness said international companies are using the fact that trading houses in Congo have government licenses as justification for continuing to trade with them. Foreign companies don't verify the exact origin of the minerals or the identity of the intermediaries, the report said, when in reality these trading houses are among the main facilitators of the illicit trade.

In December and January Global Witness wrote to over 200 companies, including Malaysia Smelting Corp. Berhad (5916.KU), U.S. Freeport McMoRan Copper and Gold (FCX) and Luxembourg-based minerals merchant Traxys SA, to inquire about their trade with Congo and their due diligence policies. According to Global Witness, "most had no controls in place to stop conflict minerals entering their supply chain."

AMC responded Jan. 19 and Thaisarco on both Jan. 20 and March 18, with the pair "(attempting) to create a distance between their trade and the situation in eastern Congo by stating that they do not operate directly in Congo," the report said.

Belgium's Trademet meanwhile responded Jan. 22 and "tried to shift the burden of responsibility onto the Congolese government" by stating it wasn't the company's role to verify the origin of Congo's minerals, the report noted.

Global Witness doesn't advocate that mining activities in eastern Congo cease altogether or that trade is boycotted as there are sections of the mineral trade which aren't controlled by any of the warring parties. Congo produces roughly 6% of total global tin production a year, according to the International Tin Research Institute.

-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@ dowjones.com