A treasure trove under a curse

Congo fabulously wealthy in minerals few will dare exploit

MALAYSIA Smelting Corporation (MSC), the world’s secondbiggest tin producer, is among the many companies trying to work out if it is possible to mine profitably in the Democratic Republic of Congo without fuelling war.

Since the mid-1990s, when war broke out in eastern Congo in the aftermath of the genocide in bordering Rwanda, Congolese minerals have been linked to corruption, killing and sexual violence.

Rebels, unscrupulous traders and members of the army helped themselves to tin ore, of which Congo is Africa’s biggest producer, and to gold and columbite-tantalite, or coltan, an ore from which metals used in phones and laptops are extracted.

The illegal trade in minerals helped armed groups buy weapons and fund wars.

Last month, about 2 million people were still displaced by conflict in eastern Congo.

The country accounts for only 2.5% of global production of tin, but this “could easily grow to 5% over the next five years”, said Daniel Jones, CEO of Pioneer Management.

His company is considering building a tin smelter in Katanga. But it will have to work around the legacy of conflict.

The US Congress in 2010 passed legislation requiring all companies monitored by the Securities and Exchange Commission to report whether trade in metals used in their products might have supported conflict in the Congo.

This month, the European Union proposed a similar plan.

Soon after the US law was passed, most companies stopped buying from the Congo. It went from producing more than 12 000t of tin ore in 2009, about 4% of the world total, to 900t in 2011, according to the US Geological Survey.

In 2011, electronics-industry groups coordinated in testing a minerals-monitoring system that would tag and trace tin and coltan all the way from mine to the smelter to make sure no armed groups were involved.

The Congolese government is pushing for large-scale industrialised mining. Some companies are considering that route, but the risks are high.

In 2012, a tin smelter was built in Lubumbashi, but it has not produced an ounce of metal — the national electricity company will not provide the 2MW of power required.

Mining in remote parts of Katanga involves impassable roads and no banks. Company planes carry bags of cash to pay metal traders.

Katanga’s claim to be a place where minerals are guaranteed to be “conflict-free” is getting ever more shaky.

Congo’s government struggles to contain armed militias and rebel groups amid widespread poverty and desperation throughout the region. Most rebels are uneducated and unemployed, many just boys armed with no more than bows and arrows.

For companies sourcing tin and tantalum in the Congo, “the real issue isn’t the value of the trade, it’s the reputational damage they’re trying to avoid”, said Gregory MthembuSalter, who wrote guidelines for businesses buying minerals from Congo for the UN.

Public companies also fear running afoul of stock market regulations against corruption.

In a 2012 report, consulting group Channel Research said there was “extensive bribery at every level” in the country’s tin and tantalum trade. — Bloomberg