Coltan
Mining in the Democratic Republic of Congo • Karen Hayes & Richard Burge
“Let us choose to unite the power of
markets with the authority of universal ideals. Let us choose to reconcile the
creative forces of private entrepreneurship with the needs of the disadvantaged
and the requirements of future generations.”
By: Kofi Annan, Secretary-General of
the United Nations
The Global Compact, Corporate
Leadership in the World Economy
“Because the economic dimensions of
civil war have been largely neglected, both governments and theinternational
community have missed substantial opportunities for promoting peace”.
By: Paul Collier, former Director,
Development Research Group World Bank
Economic Causes of Civil Conflict
and their Implications for Policy
“Making the riches of the DRC work
for its people and not against them is a vital factor in achieving sustainable
peace and development in the Great Lakes region, and a question that the All
Party Parliamentary Group has been concerned with for some time. I am therefore
delighted to offer my support to this original and important contribution to
the debate.”
By: Oona King MP, Chair of the UK
All Party Parliamentary Group on
The Great Lakes and Genocide
Prevention.
Executive Summary
Tantalum is a rare, valuable, metallic
element that is twice as dense as steel and highly resistant to heat and corrosion.
It can store and release an electrical charge, a property that has made it a
vital material for capacitors in miniaturized and portable electronic equipment
including mobile phones. Other applications include surgical equipment, turbine
blades for jet engines and lining chemical reactors.
It is mined in several countries
with Australia responsible for over 60% of world production. All of the
production of the largest mines is sold, in advance, on fixed price contracts
to key tantalum processors. There is no central market for tantalum and, with
the exception of the major mine-processor contracts, prices are determined by
dealers on an individual transaction basis.
In 2000, increased demand for new
electronic products caused a tantalum supply shortfall, precipitating a rush of
panic buying and a massive price increase. In the Democratic Republic of Congo
(DRC) this became a Klondike-style rush into the World Heritage Site National
Parks where ‘coltan’, a tantalum-bearing gravel ore, can be easily
surface-mined with shovels and
sieves.The mines are in rebel-held areas of the war-torn, impoverished DRC
where warring factions are responsible for humanitarian atrocities and
neighbouring countries have been accused of human rights abuses on an unprecidented
scale as a cover for systematic exploitation of minerals. The mining camps had
a massive impact on local wildlife through commercial hunting for food,
including the wholesale killing of endangered species such as Grauer’s gorilla,
which now faces extinction.
An Expert Panel of the United
Nations Security Council has published four reports since 2001 on the illegal
exploitation of natural resources in the DRC.
The third report, in October 2002,
clearly states that the private sector must accept some responsibility for contributing
to this resource-based conflict through the purchase of illegally mined
material – the spoils of war. The panel has continued with its investigations,
and submitted a further report in the autumn of 2003.
Following significant media
coverage, public concern focused on the highest profile consumers of tantalum and,
as a result, the mobile telecommunications industry became the centre of
attention. The panic-buying boom was followed by a tantalum market slump in
2001. The plummeting prices were not, as widely reported, due to international
pressure to boycott Congolese coltan nor to the development of alternatives to
tantalum, but rather due to companies working off their expensive inventories –
they simply didn’t need to buy it. Despite significant planned expansion of
Australian mining capacity, demand for tantalum is likely to continue to grow
at a steady rate that may again outstrip supply. Hence, sources such as the DRC
will remain strategically important. Most importantly, while there has been a short-term
slump in the price of coltan from the DRC, coltan remains a key resource in the
eastern part of the country where conflict has continued between different
warring factions. The impact on human populations, and the environment, is devastating.
Two options are considered:
(1)
banning the trade in coltan from the
DRC, or (2) regulating coltan mining and export. Companies can boycott Central African
tantalum, which is the easiest and safest option, particularly in terms of
public relations.There is no need to purchase Congolese coltan at present due
to large inventories still being used up after the panic-buying phase. Due to
smuggling and the nature of the world market, however, it is almost impossible
to guarantee that shipments of ore purchased on the ‘spot’ market are free of
this ‘conflict coltan’. Denials and best intentions may be difficult to
substantiate and sanctions may adversely affect this poverty stricken region,
which is so desperately in need of investment.
Tantalum-using industries should
consider supporting the second option: regulation. A regulated, Congolese,
coltan industry would be beneficial for the orderly development of the tantalum
market. Tantalum-using industries could encourage tantalum processors to
establish a long-term, transparently negotiated business deal with a Congolese
coltan collective, which would pay a fair autumn of 2003market price for an
ethically sourced product. This option could contribute significantly to the
peace process in the region, as business intervention may be a viable route to
stability in a conflict that is predicated on economics.
This option is far more complex, not
least as it raises significant questions about the acceptability and risk of
doing business in a war zone. Paradoxically, however, this route could demonstrate
greater corporate environmental and social responsibility.
The steps involved in pursuing the
concept of regulation of the coltan industry are detailed in this report. It
would generate maximum value through collective action, discussed with and
approved by international bodies. Implementation would require a commitment to
purchase an ethical product (at market price, not at a premium) and the underwriting
of development and conservation projects.
Recommendations
1. All tantalum-using industries
should recognize that there is undoubtedly a direct relationship between the
illegal exploitation of coltan and the conflict in the DRC.
2.Tantalum-using companies,
individually or collectively, should determine the level of response to the
coltan mining issue that is most appropriate and feasible. The key factors
influencing this decision should be:
2a.
All user industries bear some responsibility, albeit distant, for the
situation.
2b. The issue will recur as
Congolese coltan will continue to be traded.
2c.
Denials of any purchase are, for the majority, impossible to substantiate.
2d.
The UN is seeking routes to resolution and will be responsive to input.
2e. The potential balance between
risk, resources and rewards.
3. Rather than being a threat, the
coltan crisis can be seen as an opportunity to engage with a complex issue
using an innovative approach, which will be an exemplary demonstration of collective
corporate social responsibility. Tantalum-using
industries can employ their:
3a. Influence: along the supply chain to either conform to a
ban or support an exploration of the potential of a regulated coltan mining industry.
3b. Peer pressure.
3c. Political support.
3d. Finances: to support community and conservation projects
as part of a greater scheme of investment for stability and development.
4. The most critical issue, now, is
timing. Though it was impossible to initiate activities beyond dialogue under
previous political conditions, support for the Congolese reconstruction process
under the Government of National Unity is now timely and urgent.
To this end we propose that:
4a. An appropriate international organization supporting a
partnership approach to corporate social responsibility (CSR), eg the UN Global
Compact, should circulate this report widely to tantalum-using industries and
other relevant institutions, and hold a meeting to gain wider support for the
initiative.
4b. A t this meeting a multi-stakeholder group should be
formed to advance the initiative.
4c. This group should comprise the Government of the DRC,
civil society and on- governmental organization (NGO) representatives, the
private sector, and international agencies, including the World Bank Mining
Unit and the Country Director for the DRC.
4d. The group should correspond directly with the UN
Security Council, the UN development Programme and the UN Panel of Experts to propose
the initiative as a component of DRC reconstruction planning.
4e. The group should also correspond directly with government
trade and development departments to advise them of the initiative.
INTRODUCTION
In spring 2001, the electronics and
mobile telecommunications industries were suddenly
approached by journalists asking
what they intended to do about the fact that their products were fuelling a
bloody war and destroying endangered wildlife in the DRC. Industry
representatives found themselves “scrambling to limit the potential public
relations fallout from an issue that they say totally blindsided them” (Silva, 2001).
Since 2001, a series of UN Security
Council reports has clearly stated that the private sector has played a vital
role in the continuation of the war in the DRC. Congolese and international
NGOs were pressing for an acceptable response, and headlines like ‘Gorillas
being killed to make your 3G phones’
we resplashed across the newspapers and the nternet (3G Newsroom.com, 2001).
The mining and extraction of
‘coltan’ (a tantalum-bearing ore) in the DRC is at the heart of the debate. While coltan no longer makes such prominent headlines,
it remains a key issue for the people and environment of the DRC and the Great
Lakes region.
The purpose of this report is to
provide an accurate analysis of the real story behind the headlines, to trace
its development and key events of the last two years, and to present a range of
recommendations as to how relevant industries could choose to respond to the
situation.
The report starts with a description
of the mineral in question, tantalum, and an analysis of the market conditions
that caused its price to escalate wildly in 2000. Whilst the historical
situation is described as background, the emphasis of the report is on the current
and predicted market for tantalum.
The second section provides a brief
on the politics, economy and society of the DRC with particular reference to
the key investigative reports that have been published in 2000-2003. Against
this socio-political backdrop, the impact of mining coltan is described with
regard to the role it has played in the humanitarian and environmental disaster
occurring
in eastern DRC. The equitable
management of natural resources, including coltan, is fundamental to the peace
process.
Despite the publicity and the
informed reports from the UN, NGOs and civil society, no effective action has
been taken by the private sector. The
international private sector could choose to ignore the situation on the
grounds that it is too far away and too complicated. There are, however, alternative
options. Firstly, companies can endeavor to clean up their supply chain by
boycotting Congolese coltan. Secondly, the private sector can support the
creation of a regulated coltan mining industry as a catalyst for economic
development and political stability.
Within this latter scenario, the
position of tantalum-using industries and their potential impact is considered. A framework of options for different levels
of engagement is presented along with actionable recommendations. This is a
real-time case study of corporate social responsibility on the front line.
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Coltan Mining in the Democratic Republic of Congo...
tierra.rediris.es/coltan/coltanreport.pdfColtan Mining in the Democratic Republic of Congo: How tantalum-using industries can commit to the reconstruction of the DRC Karen Hayes & Richard Burge
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