A Call to Arms - demand for Coltan causes problems in Congo - Industry Trend or Event

Industry Standard, The, June 11, 2001 by Kristi Essick, Mark Boslet, Boris Grondahl

The U.N. report does not directly blame computer manufacturers and mobile phone makers for the bloody trade, citing instead the companies trading minerals as "the engine of the conflict in the DRC." But the high-tech industry's demand for tantalum clearly has fueled an increase in coltan mining worldwide -- including in the Congo region. After all, the trading companies sell coltan to processing companies, which in turn sell to tantalum capacitor manufacturers -- whose clients are none other than high-tech companies such as Ericsson, Intel and Nokia.

These companies deny any knowledge that tantalum originating in the Congo is used in their products. That's not surprising, considering how murky the supply chain out of the Congo is and how complicated the global trade in tantalum gets. The reality is that there's little way to prove that the tantalum used in our cell phones and laptops is or is not from the Congo. Still, 8 percent of the tantalum ore imported into the United States in 1999 came from the Congo, and that doesn't count the ore U.S. companies imported from Rwanda and Uganda that may have originated in neighboring Congo. And there is much more of the precious dirt where that came from. At the moment, about 15 percent of the world's supply of tantalum comes from Africa. (Australia is the biggest producer, accounting for about 70 percent of the global supply of tantalum-bearing ore.) But the Congo is sitting on a potential gold mine. The mineral-rich nation is tied with Canada in having the world's fourth-largest coltan reserve, according to research firm Roskill Information Services.

WORTH ITS WEIGHT IN GOLD

Coltan - which is found in 3 billion year-old soils, like those in the Rift Valley region of middle Africa, western Australia and central Asia - has become a critical raw material in high tech manufacturing. The tantalum extracted from the ore is used mainly to make tantalum capacitors, tiny components that manage the flow of cur rent in electronic devices. Many semi conductors also use a thin layer of tantalum as a protective barrier between other metal coatings. The metal, which is also found in other minerals and can be extracted as a byproduct of tin refining, is used in the airline, chemical, pharmaceutical and automotive industries as well.

The market for the material is huge. Last year, about 6.6 million pounds of tantalum was used around the world, 60 percent finding its way into the electronics industry, where it can be found in products like mobile phones, computers, game consoles and camcorders. (The United States is the largest consumer of tantalum in the world, accounting for 40 percent of global demand.)

In 2000, demand for tantalum capacitors exploded in tandem with the mobile phone and PC markets, causing a severe shortage. Tantalum ore prices shot up, with per-pound charges for refined powder climbing from less than $50 to a peak of over $400 at the end of last year. Today, with demand softening worldwide, prices have fallen to around $100 a pound.