Mineral Uses

If a mine is controlled by armed groups who use mineral profits to purchase weapons — or other supplies or luxuries — the minerals from the mine are sometimes called conflict minerals. Tantalum, tin, tungsten and gold are useful minerals mined in many parts of the world. But sometimes those minerals come from a very conflicted area in Africa, most notably but not exclusively from the Democratic Republic of Congo (DRC).

Four so-called conflict minerals and their uses are highlighted below.

Tantalum / coltan

  1. Tantalum capacitors enable energy storage in electronic products
  2. Tantalum capacitors are used in every laptop, smartphone, camera and video game console you’ve heard of – as well as in aircraft engines and military equipment
  3. Highly conductive and corrosive-resistant, tantalum is considered virtually “irreplaceable”
  4. Some alternatives include aluminum, ceramic and passivated nichrome – but none have the industry devotion of tantalum
  5. Armed groups in regions of the DRC who control mines earn an estimated $8 million per year from sales of coltan (the raw ore where tantalum comes from)
  6. 12% of all tantalum was mined in the DRC in 2011 (USGS data)
  7. Tantalum is predominantly mined in areas such as Australia, Brazil, and Canada but the amount mined in the DRC is not insignificant. A spike in tantalum export from the DRC since the tech boom of 2000 is apparent in the chart at bottom of page

The so-called “Africa’s World War” has been ravaging the eastern parts of the DRC for over a decade (map below).

Tin / casserite / coltan

  1. Tin is found in food packaging, in steel coatings on automobile parts, and in some plastics. Many industries use tin in the form of tin solder, for example, as solder on circuit boards
  2. Tin is predominantly mined in China, Indonesia, Peru, and Bolivia, as well as in the DRC
  3. About 3% of the global tin supply of the global gold supply, was mined in the DRC in 2010
  4. Tin earns armed groups in the DRC an estimated $85 million per year

By conservative estimates, the war and its effects has killed over 5 million people, making it the deadliest conflict since World War II.

Tungsten

  1. Tungsten is used in automobile manufacturing, drill bits and cutting tools, and other industrial manufacturing tools. It is also the primary component of filaments in light bulbs
  2. From 2006 through 2011, 77% to 87% of tungsten was mined in China
  3. Less than 1% of all tungsten was mined in the DRC in 2011 (USGS data)
  4. Yet, tungsten brings armed groups in the DRC about $2 million a year

The idea behind conflict mineral restrictions is no funds = no weapons = less violence and less war.

Gold

  1. Gold is used as currency, by the automotive industry in catalytic convertors, in electronics, medicine, coatings, nanotech, high tech; used in jewelry, fashion, fuel cells, jet engines, space exploration, and almost anywhere you can think of
  2. Gold is mined in many different countries, including the DRC
  3. Industry uses about 440 tons of gold per year globally
  4. Less than 1% of the global gold supply was mined in the DRC in 2010
  5. Only 23 kilograms of gold were “officially” exported from eastern Congo in the first half of 2012
  6. It’s estimated that 2 tons to 4 tons of gold was exported through illegal routes in the first half of 2012
  7. Roughly $30,000 worth of gold can fit in a pocket, and around $700,000 in a briefcase (source: The Enough Project)
Resources:

Chart: How much tantalum is mined each year?

Coltan-quantity-mined-mining

Useful reference:

Download a complimentary white paper here.

Information on software for minerals management – and SEC compliance – click here.

Map of Conflict Mineral region (note how green it is, with ample fresh water lakes):

mineral-uses

Afterword: Some say it’s not the international community’s place to monitor human rights issues in a distant country. Yet — such a huge event as this WWII-scale reality demands international attention. And don’t be duped into thinking conflict mineral legislation is strictly a humanitarian gesture.

Economic interests are involved. Consider: many say Africa is the new Asia in terms of potential for production, industry and an economic boom. But regional warring drains resources and restrains the region’s growth. This in turn badly affects western nations and corporations who would prefer to invest there rather than Asia – if the political landscape is stable enough to do so.

If the regional warring could simmer down, look out world. In ten years we’ll be talking about Africa before India, Brazil and possibly China.

About Purchasing Mining Rights in Africa’s Congo

The United States Securities and Exchange Commission (SEC) voted last summer in favor (3-2) of a final conflict minerals regulation. This affects companies who report to the SEC and who source raw materials from areas of the Democratic Republic of Congo (DRC) as well as certain areas in neighboring countries. As quality and data are sometimes easier to trace and manage if you own the supply, some companies are looking towards buying mining rights in the region. This is usually done on a geographical basis; but it can also be done in regards to a specific deposit.

Purchasing mining rights in the Congo

Administrative procedure. Any private party can engage in non-artisanal research or exploitation of mineral substances in the DRC provided he or she is the holder of a valid mining right (research or exploitation), which is obtained upon completion of the corresponding administrative procedure.

First come, first served. The granting of mining titles is based on a first-come, first-served basis.

By area, except when…  Applications for mining rights for a given “perimeter” (demarcated surface area with indefinite depth) composed of quadrangles or “squares” are registered in the chronological order of their filing. In exceptional cases, the minister of mines may submit to tender, open or by invitation, mining rights relating to a specific deposit.

Begin within 6 months. To maintain the validity of its mining rights, the holder must commence exploration within six months (research permit) or commence development and construction works within three years (exploitation permit) as of the date the title evidencing its right is issued, and pay the surface duty per square relating to its title at the counter of the Mining Registry. If he or she fails to fulfill any of these obligations, the holder may be deprived of its right.

Foreign vs. domestic. There are no stated distinctions between mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties, except for:

  1. artisanal diggers and traders, who can only be individual DRC nationals
  2. foreign companies that are requested to incorporate a local company before they apply for an exploitation permit

Foreign parties must elect domicile with an authorized domestic mining and quarry agent and act through its intermediary.

We hope this helps give a general perspective on how possible it is or isn’t for your business to purchase DRC mining rights if needed. For some, software for supply chain traceability will do the compliance and quality trick. But others may want to go deeper into ownership of their supply chain. For more information on purchasing mining rights, may we refer you to this excellent document on the subject:

http://www.mcguirewoods.com/news-resources/publications/international/mining-drcongo.pdf  

Conflicts over Conflict Metals

A top Avnet sales executive is advocating a market-driven solution to the Conflict Metals problem; that is, that industry should go along with US legislation charging companies with oversight of their supply chains back to the mines.

Gerry Fay, senior vice president, supply chain solutions, Avnet, argues that the death of millions should be enough impetus for industry to comply with the Dodd-Frank bill that requires companies to trace the source of minerals used in their products. The law essentially bans the import of gold, columbite-tantalite, cassiterite and wolframite, and their derivatives, from the DRC by US-based publicly held companies, enacts strict reporting standards, and implements a new labeling procedure. Under the new law, any publicly traded company that makes products that use conflict minerals and buys those minerals either in the DRC or an adjoining country must exercise due diligence on the source and supply chain.

That prompted a reply from an IPC executive who rejects the notion that the electronics industry can resolve a “long-standing social [sic] conflict.”

Then there’s Cookson Electronics president Steve Corbett, who asserted last year that the US government should stay out of the matter because it simply has no hope of resolving a civil war in Africa.

I won’t begin to pretend I have the answer, but it’s interesting that three people so entrenched in the matter could have such differing opinions on how to (or how not to) address it.