Tag Archives: China Congo

At Gunpoint in Congo: Is Coltan Worse than Oil?

Tantalum, a metal used in smartphone and laptop batteries, is extracted from coltan ore. In 2019 40% of the world’s coltan was produced in the Democratic Republic of Congo, according to official data. More was sneaked into Rwanda and exported from there. Locals dig for the ore by hand in Congo’s eastern provinces, where more than 100 armed groups hide in the bush. Some mines are run by warlords who work with rogue members of the Congolese army to smuggle the coltan out.

When demand for electronics soared in the early 2000s, coltan went from being an obscure, semi-valuable ore to one of the world’s most sought-after minerals. Rebels fought over mines and hunted for new deposits. Soldiers forced locals to dig for it at gunpoint. Foreign money poured into Congo. Armed groups multiplied, eager for a share.

Then, in 2010, a clause in America’s Dodd-Frank Act forced American firms to audit their supply chains. The aim was to ensure they were not using minerals such as coltan, gold and tin that were funding Congo’s protracted war. For six months mines in eastern Congo were closed, as the authorities grappled with the new rules. Even when they reopened, big companies, such as Intel and Apple, shied away from Congo’s coltan, fearing a bad press.

The “Obama law”, as the Congolese nickname Dodd-Frank, did reduce cash flows to armed groups. But it also put thousands of innocent people out of work. A scheme to trace supply chains known as ITSCI run by the International Tin Association based in London and an American charity, Pact, helped bring tentative buyers back to Congo.  ITSCI staff turn up at mining sites to see if armed men are hanging about, pocketing profits. They check that no children are working in the pits. If a mine is considered safe and conflict-free, government agents at the sites put tags onto the sacks of minerals. However, some unscrupulous agents sell tags on the black market, to stick on coltan from other mines. “The agents are our brothers,” Martin says. It is hard to police such a violent, hilly region with so few roads. Mines are reached by foot or motorbike along winding, muddy paths.

For a long time those who preferred to export their coltan legally had to work with itsci, which held the only key to the international market. Miners groaned that itsci charged too much: roughly 5% of the value of tagged coltan. When another scheme called “Better Sourcing” emerged, Congo’s biggest coltan exporter, Société Minière de Bisunzu, signed up to it instead.

Excerpts from Smugglers’ paradise: Congo, Economist, Jan. 23, 2021

The Plight of Electric Cars: Cobalt Batteries and Mining

About 60% of the world’s cobalt is found in Congo, scattered across the copperbelt that stretches east into Zambia. The people of Kawama, Gongo grumble that too much land has been sold to mining firms. “We used to dig freely,” says Gerard Kaumba, a miner. “But now the government has sold all the hills.” There are still some sites where miners can turn up and dig, but they have to sell to whoever owns the concession. A sweltering day’s work might earn you $7. Many people have found they can make more at night, pilfering cobalt from industrial mines.

Glencore, a commodities giant with two mines in Congo, reckons that some 2,000 people sneak into its pits every day. Other companies have even more robbers to contend with. In 2019 Congolese soldiers chased thieves out of a mine owned by China Molybdenum where, it was reckoned, 10,000-odd people were then illegally digging. Sneaking into Glencore’s mines is hardest, says a Kawaman, as its guards do not collude with thieves—and often chase them away with dogs.

Congo’s industrial miners are not all angels.  Gécamines, the state-owned company, has enriched crooked politicians for half a century. Global Witness, a watchdog based in London, says Congo’s treasury lost $750m of mining revenues to graft between 2013 and 2015. ENRC, which has mines in Congo, has faced allegations of corruption and an investigation by Britain’s Serious Fraud Office (it denies wrongdoing). So has Glencore, which has worked with Dan Gertler, an Israeli billionaire. Mr Gertler, a close friend of a former Congolese president, Joseph Kabila, is under American sanctions… 

While big firms rake in millions, many of the little guys languish in jail. The prison in Kolwezi, the largest city in the mining region, is crammed with men caught stealing copper and cobalt. More than a hundred inmates occupy one stinking room, sitting in rows on the ground, each wedged between another’s legs. Prissoners are allowed to use the toilet only once a day, so they often urinate in their clothes

Excerpt from Cobalt blues: In Congo the little guys are jailed for stealing minerals. Economist, Oct. 17, 2020

Mining Companies Love Least Developed Countries

An expert panel led by Kofi Annan, a former UN secretary-general, looked at five deals struck between 2010 and 2012, and compared the sums for which government-owned mines were sold with independent assessments of their value. It found a gap of $1.36 billion, double the state’s annual budget for health and education. And these deals are just a small subset of all the bargains struck, says the report, which Mr Annan presented in Cape Town, South Africa, on May 10th.

The report highlights some puzzling details. For instance ENRC, a London-listed Kazakh mining firm, waived its rights to buy out a stake in a mining enterprise owned by Gécamines, Congo’s state miner, only to acquire it for $75m from a company owned by Dan Gertler, an Israeli businessman, which had paid $15m for it just months earlier. Mr Gertler is close to Joseph Kabila, Congo’s president. ENRC, which is being investigated by the Serious Fraud Office in Britain, was Congo’s third-largest copper producer last year. Both ENRC and Mr Gertler deny wrongdoing.

African countries often fail to collect reasonable taxes on mining, says Mr Annan’s panel. For example, Zambia’s copper exports were worth $10 billion in 2011, but its tax receipts from mining were a meagre $240m. The widespread use by mining firms of offshore investment vehicles as conduits for profits creates scope for tax avoidance. Their use is not restricted to rich-world companies. Much of the oil that Angola ships to China is via a company called the China International Fund. Its trading prices are not made public…

Congo’s prime minister, Matata Ponyo Mapon, promises change. In January 2013… Mr Ponyo said he would rein in the state-owned mining companies and increase transparency in the industry. “We must avoid situations where we’re not publishing our mining contracts, where our state assets are undervalued, and where the government doesn’t know what its state mining companies are doing,” he told miners and officials at a conference in January….

Last year miners in Congo, which include Freeport-McMoRan and Glencore Xstrata, shipped $6.7 billion-worth of copper and cobalt from the country.

Business in the Democratic Republic of Congo: Murky minerals, Economist, May 18, 2013, at 74