Conflict Minerals Act Compliance Poses Difficulties for Industry

By Michael Montgomery—Exclusive to Tantalum Investing News

The mining of tantalum in Eastern Congo was halted as a means of curbing illegal mining, and the funding of rebel groups committing horrible human rights abuses. However, the mining ban has had unintended consequences as it influences not only the reduction of funding to rebel groups, but also to the implementation of the “Conflict Minerals Act” passed by the US congress earlier this year. The Congolese army has even taken up artisanal mining in the same regions as the rebel groups they are trying to oust. The road to eliminating the use of minerals as funding for rebel groups is likely to be a long and bumpy one.

Implementation of the “Conflict Minerals Act” is expected to take place early next year in March 2011 according to reports from the ITRI and the TIC, associations that represent tin and tantalum mining. The short deadlines set by the legislation have made the complete implementation of the act difficult, and some of the material may slip through the system.

“We are not just talking about implementing a system in areas where conflict funding is known to exist, but in other provinces of the DRC, and other adjoining countries, an area covering practically a third of Africa. Realistically, with the resources available to us, it is unlikely that all cassiterite from the region can be covered by the system in time and many current production areas will unfortunately as a result be subject to an effective embargo by next April,” stated the press release from the ITRI.

The organization has also stated that the mining ban in Eastern Congo has halted the group’s efforts to document mining activity. The organization is in need of $6 million in funding “in order to have any chance of reaching the implementation target.”

The tight time periods allotted by the act may be in conflict with supply agreements between suppliers and technology companies signed years in advance. Technology industry leader Hewlett-Packard is worried that the unknowns in their supply chain will also hinder the full effects of the law. The company sells 5 PCs every two seconds, and 3,500 servers per day, has 600 ‘first tier’ suppliers, and hundreds of ‘second tier’ suppliers; worries that accountability will be lost in the minutia are understandable.

“HP has run into a challenge common to many industries: when you get to the end of your supply chains, producers can range from large-scale operations, to individual small-scale producers – artisanal mining… HP relied at first on a supplier survey to determine that they were not sourcing materials from areas of concern; while that’s far from a perfect solution, it is a start,” reported Matthew Wheeland, for Green Biz.

Many companies are on board with the “Conflict Minerals Act” as their customers have demanded such changes to the accountability of supply chains. However, the corruptness of the DRC, which recently ranked 175 out of 183 in a World Bank study of ease of doing business in individual countries, makes the reality of a tagging system difficult to control.

Tantalum market news

Reports that China may be creating strategic stockpiles of ten metals, including tantalum and rare earths, in order to ease the effects of market fluctuations, have helped many miner share prices as the inflating future demand for several minor metals will only have positive effects on price. Stay tuned for more developments on this story.