Bloomberg News

Congo Clashes Thwart Plans to Export Conflict-Free Minerals

May 02, 2012

Renewed fighting in Democratic Republic of Congo’s eastern Kivu provinces will block plans to start exports of so-called “conflict-free minerals” from the region next month, North Kivu’s provincial mines ministry said.

In March, Congolese Mines Minister Martin Kabwelulu approved sales from 11 tin-ore and coltan mines in the Masisi territory in North Kivu, where Congo’s army is now battling a breakaway faction of soldiers loyal to former rebel General Bosco Ntaganda. Both minerals are used in the manufacture of electronics ranging from mobile phones to jet engines.

“We were hoping to start exporting from green-lighted sites in Masisi, mostly coltan, but unfortunately the trouble we’re seeing is in Masisi,” Emmanuel Ndimubanzi, the head of North Kivu province’s Division of Mines, said in an interview in Goma, the provincial capital, on April 28. “It won’t work.”

For more than a decade, armed groups and some members of the Congolese army, including Ntaganda, have funded their rebellions and enriched themselves through the sale of minerals found throughout the region, according to the United Nations.

As more buyers choose to avoid purchasing minerals that may have supported one of the world’s deadliest conflicts, Congo’s share of world tin sales dropped to 2 percent last year from about 4 percent in 2008, when it was the fifth-largest supplier, according to the U.S. Geological Survey.

In North Kivu, home to the country’s biggest tin mines, mineral sales have fallen more than 80 percent in the past three years, according to mines ministry statistics.

Millions Dead

War in eastern Congo began in the mid-1990s when the aftermath of the genocide in neighboring Rwanda spilled over the border. Fighting spread throughout Congo, a country about the size of Western Europe. Congo’s mineral wealth helped fund a series of international and civil wars that left at least 3.1 million dead between 1998 and 2007, according to the International Rescue Committee. Most died from starvation or preventable disease, according to the New York-based aid agency.

A mixture of ethnic, political and economic disputes still plague the Kivu region, which is rich in tin ore, coltan, wolfram and gold. In 2010, the U.S. passed a law designating those four metals “conflict minerals,” spurring an exodus of buyers from Congo worried about reputational risk.

Congo’s Mines Ministry is working with partners including the tin and electronics industries, regional governments and the Organization for Economic Cooperation and Development to create mineral-supply chains that don’t fund conflict.

Projects Derailed

The new fighting will derail those projects in the Kivu provinces, according to John Kanyoni, the president of North Kivu’s association of tin buyers and one of the biggest suppliers of Congolese tin.

“As long as there is conflict there, no one will be purchasing minerals,” Kanyoni said by phone from Kigali, the Rwandan capital, on April 30.

The current fighting began last month, when about 300 soldiers loyal to Ntaganda deserted the army amid speculation he would be arrested. The International Criminal Court has indicted Ntaganda for war crimes. Last week, fighting broke out between the army and fighters linked to Ntaganda on at least three fronts, according to the UN. The political wing of Ntaganda’s former rebel group denied he was involved in the mutiny in an e- mailed statement April 30.

Trade Relocating

Congo’s tin and coltan trade has begun shifting to other provinces with less exposure to armed groups, Kanyoni said. In Katanga province, companies including Schaumburg, Illinois-based Motorola Solutions Inc. (MSI:US), Finland’s Nokia Oyj (NOK1V) and AVX Corp. (AVX:US) of the U.S. are backing a project to mine tantalum for their electronic devices that is certified conflict free.

In Maniema province, west of North and South Kivu, Malaysia Smelting Corp. (SMELT), the world’s third-biggest tin producer, is in talks with the government to develop an industrial-scale project.

Last year, Katanga produced 4,277 metric tons of tin ore, a 10-fold increase since 2009, when it accounted for only 3 percent of the country’s official tin exports and none of its coltan sales. The production compares with the more than 13,000 tons of tin ore North Kivu produced in 2008.

North Kivu’s mineral trade previously accounted for 90 percent of export earnings and as much as 50 percent of provincial revenue, North Kivu provincial official Ndimubanzi said. That money “has dried up,” he said.

Western companies have stopped buying from the region, according to ministry statistics, and the Chinese businesses that are buying about 85 percent of the province’s remaining tin ore production are paying lower prices, Ndimubanzi said.

More than 2,800 tons of tin ore worth about $37 million and 111 tons of coltan valued at $2.5 million was shipped out of Goma in the first three months of this year, according to provincial statistics.

“We’re hoping the security situation won’t degenerate further,” he said. “The only hope for us is to export these conflict-free minerals.”

To contact the reporter on this story: Michael J. Kavanagh in Goma at mkavanagh9@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • MSI
    (Motorola Solutions Inc)
    • $63.99 USD
    • 2.26
    • 3.53%
  • AVX
    (AVX Corp)
    • $14.16 USD
    • 0.21
    • 1.48%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus