Tantalum Carnage Continues in the Congo

Electronic News, July 2, 2001 by Steven Fyffe

Component vendors adamant they were caught unaware

Bad publicity and slumping demand may have curbed the illicit trade in tantalum ore from the Democratic Republic of the Congo, but warring over the country's mineral-rich regions wages on. And civilians are still being caught in the crossfire, according to human rights groups.

In early April, the United Nations released a report that implicated some companies in a conspiracy of exploitation that stretched from the battlefields of the war-torn Congo to the electronics industry's supply chain. However, no capacitor companies were cited. Tantalum capacitor makers who use tantalum powder derived from tantalum ore say the U.N. report caught them by surprise, and they are now making sure their tantalum suppliers do not use illicit ore.

The U.N. report carried eerie echoes from the Congo's colonial past when King Leopold II of Belgium enforced a ruthless forced-labor system that stripped the country of much of its ivory and rubber resources and killed between 4 million and 8 million Congolese in the process.

"This is something that we've seen before in the Congo's history, but the way it is operating is different from the past," said Janet Fleischman, a director of the Africa division at Human Rights Watch. "I mean, who ever heard of coltan a few years ago?"

Tech Boom Leads to Exploitation

Coltan is short for columbo-tantalite; the tantalum ore that is dug from the ground, turned into powder and eventually used to make the tantalum capacitors that go into virtually every electronic product built today, including cell phones and computers. Over the last few years, while the technology bubble was still expanding, coltan was in high demand and low supply. One of the places it could be found was the Congo, where a bloody civil war was tearing apart one of the economically poorest, yet resource richest, countries in the world.

Warring factions from inside and outside the country have used profits from stolen or illegally mined coltan to fund their war efforts, according to the U.N. report. Those profits have come at a price for the civilian population that lives in the mineral-rich regions in the eastern Congo.

"The rush and scramble for coltan has led to villages being burned down and the displacement and massacre of civilians," said Suliman Baldo, senior researcher in the Africa division of Human Rights Watch.

The conflict has taken its toll on the local animal population as well, including gorillas and other rare species.

"Wildlife has also suffered a great deal from the conflict," according to the U.N. report. "In the Kahuzi-Biega National Park, a zone controlled by the Rwandans and (a Congolese rebel splinter group) that is rich in coltan, only two out of 350 elephant families remained in 2000."

Starting in 1998, the invading Rwandan Patriotic Army looted the Congo's existing stores of coltan, stealing about 1,000 tons to 1,500 tons, according to the report. Then the Rwandan army took over the mines itself, using child labor and prisoners under heavy guard to dig. The Geneva Convention forbids occupying forces from extracting natural resources during an invasion, Baldo said.

The report estimates the Rwandan army made at least $250 million in a period of 18 months, selling coltan from the illegal mines through companies such as Rwanda Metals and Grands Lacs Metals. The real figure could be much higher.

"Between late 1999 and late 2000, a period during which the world supply was decreasing while the demand was increasing, a (kilogram) of coltan of average grade was estimated at $200," the U.N.'s expert panel reported. "According to the estimates of professionals, the Rwandan army, through Rwanda Metals, was exporting at least 100 tons per month. The Panel estimates that the Rwandan army could have made $20 million per month simply by selling the coltan that, on average, intermediaries buy from the small dealers at about $10 per (kilogram)."

The report also accused the Ugandan army and its rebel allies of profiting from illegal mining.

In the middle of 2000, the coltan shortages created an opening for outside suppliers in a market usually governed by long-term agreements between mines and the processors that buy coltan, grind the ore and resell it to capacitor makers and other buyers.

"Last year, demand was so strong I'm not sure the mines could have ramped up quickly enough, so the processors went to the open market," said Glyndwr Smith, senior vice president of market intelligence at Vishay Intertechnology Inc., Malvern, Pa.

"I have to assume that is where the illegal ore was being offered."

Vishay (nyse: VSH) is the largest U.S. and European manufacturer of passive components (capacitors, resistors and inductors).

U.N. Points Finger at German Co.

The U.N. report accused H.C. Starck, the world's largest supplier of tantalum powder, of doing business with an exarms-dealer named Aziza Kulsum Gulamali, who had established a lucrative new trade in illegally mined Congo coltan and operated with the blessing of the Rwandan regime.