Tracing the Tantalum Trade—Part Two

- February 25th, 2010

Companies like Apple and Hewlett Packard say they are taking measures to insure conflict minerals don’t end up in their products. But is the work of identifying conflict minerals in the supply chain as difficult has they say?

conflictBy Melissa Pistilli—Exclusive to Tantalum Investing News

Apple recently published a report on their site addressing how the global powerhouse is taking the responsibility to pressure its suppliers to not only treat their employees fairly, but also ensure conflict minerals are not a part of their products.

The report details a “Supplier Code of Conduct” to which companies are required to adhere as a condition of their contract. The Code deals with such issues as labour, human rights and ethical standards. Compliance is managed “through a rigorous monitoring program” of “factory audits, corrective action plans, and verification measures.”

The Apple report speaks directly to the problems associated with conflict tantalum in its supply chains, saying the company requires its tantalum capacitor suppliers to certify that the materials they use “have been produced through a socially and environmentally responsible process.”

Like Hewlett Packard and many other technology-producing companies, Apple maintains that “the combination of a lengthy supply chain and a refining process makes it difficult to track and trace tantalum from the mine to finished products—a challenge that Apple and others are tackling in a variety of ways.”

However, the United Nations and NGO’s such as Global Witness and the Enough Project have proven otherwise.

Apple states that it is an active member of the EICC and Global e-Sustainability Initiative’s joint project, the Extractives Workgroup, which is “focused on the extraction of minerals used by the electronics industry and their movement through its supply chains.”

According to Apple, the workgroup has asked the nonprofit RESOLVE “to map the supply chain for tantalum and tin, and to develop standards that apply throughout the supply chain.”

Perhaps RESOLVE will discover what the Enough Project did after its members travelled to the eastern provinces of the Democratic Republic of the Congo (DR-Congo) to trace the flow of tantalum and other conflict minerals from mine to consumer.

In their report “From Mine to Mobile Phone” Sasha Lezhnev and John Prendergast show how “the conflict minerals supply chain is far less intimidating than the industry would have consumers believe.”

Illegal Mining and Enslaved Labour

Lezhnev and Prendergast say the International Peace Information Service (IPIS) recently identified 13 major mines and about 200 total mines in the eastern region. Twelve of the 13 major mines are under the control of the Democratic Forces for the Liberation of Rwanda (FDLR) whose leaders were responsible for the 1994 Rwanda genocide.

In violation of DR Congo’s mining laws, the Congolese army controls some of the mines as well. The United Nations and IPIS believe the FDLR and the Congolese army control over half of the total mines. Whether the mines are controlled by the rebels or the army, the local peoples are often forced to work in the mines for poor wages if any at all and in life-threatening conditions. Women and girls are beaten and raped. Even children as young as ten are forced to work in the mines.

Trading Houses Turn a Blind Eye

The mined minerals make their way to the trading houses in the regions two major cities, Bukavu and Goma, on the backs of negociants (buyer-transporters), by large trucks or planes. Once at the trading houses, the minerals are sorted and processed.

Apparently, about 90 per cent of the transporters and trading houses operate illegally without licenses and everyone knows it.

“It is fairly straightforward to tell from where the minerals originate,” discovered Lezhnev and Prendergrast, “as both dealers at the buying houses and government mining inspectors demonstrated to us. Each sack of minerals had different coloration and texture, depending on which mine it came from.”

Lezhnev and Prendergrast estimate that last year’s take by gun-toting groups was about $75 million from transporting alone and a total of $180 million for the whole mineral trade. There’s no doubt amongst most in the region that the FDLR and the Congolese army involved in the illegal trade wouldn’t think twice about killing anyone who came in the way of their very profitable business.

The International Market

The minerals are then bought by export companies called comptoirs who process the minerals further before selling them to foreign traders. The comptoirs are legally required to register with the government. Last year, a United Nations investigation found that several major comptoirs were routinely buying minerals from the armed groups in the region.

Lezhnev and Prendergrast reported that “the only system that the exporters use to avoid buying conflict minerals is verbal assurance: they simply ask, “Did you get this from a conflict area?”

The laws controlling the traffic of conflict minerals in the Congo are “weakly enforced” and “smugglers, even armed fighters themselves, can easily walk into an exporting company and sell the minerals without difficulty.”

From Transit Countries to Refineries

The exporting companies send the minerals next door to Rwanda, Uganda and Burundi either through legal channels or by smuggling. Most of the smuggled minerals are fraudulently marked as mined from one of those countries to hide their Congo origins. Military involvement and threat of violence helps deter anyone involved from revealing the truth.

Once the minerals are sold into the global market and are refined by metal processing plants along with minerals from other countries, the Congolese tantalum becomes indistinguishable from non-conflict minerals.

“When it comes to tracing supply chains back to their sources, refiners are the critical link,” say Lezhnev and Prendergrast. “Supplies from all over the globe are mixed together at this step in the chain.”

The refined tantalum metals are then sold to electronics companies that manufacture the capacitors that help power our cell phones, laptops and video game consoles.

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