Africa is a continent of war, conflict, poverty yet unbelievable wealth. It seems that the its wealth is the real source of thewar and conflict as the Western powers like to capitalize on the continents woes while slipping in to whisk away its treasures. Congo alone is worth according to CNBC is $24 trillion in mineral wealth alone. With a population of 4 million, that would mean each of its citizens owning $6 million. What are the chances of them seeing $1 worth.
Global financial markets don’t pay much attention to the conflict in the Democratic Republic of Congo. They should. The central African country produces major quantities of tin and tungsten, about half of the world’s cobalt output and about three percent of the world’s copper and gold, according to the U.S. Geological Survey.
Consumer electronics makers would also be well-advised to watch developments in the war-torn nation, which is a key supplier of columbite-tantalite, or coltan for short—a mineral ore used to manufacture capacitors found in cellphones, tablet computers, laptops and practically every mobile device on the market today.
Like Sierra Leone with its notorious ‘blood diamonds’, DRC Congo has been blighted by the stigma of ‘conflict minerals’ ’ where the proceeds from resources extracted from mines controlled by government or rebel forces are used to fund war. ‘Conflict-free’ certification programs and legislation have sought to reduce market share of resources mined in war zones but convoluted supply-chain networks have allowed buyers to exploit loopholes in the system.
Legislators in the U.S. have sought to close those loopholes.
On August 22, the U.S. Securities and Exchange Commission adopted a rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to require companies to publicly disclose their use of conflict minerals that originated in the DRC or an adjoining country.
Under the rules, companies are required to disclose their use of conflict minerals that include tantalum, tin, gold, or tungsten if those minerals are ‘necessary to the functionality or production of a product’ manufactured by those companies, the SEC said.
But the industry has been slow to respond, according to market research firm IHS iSuppli.
The “vast majority” of U.S. companies are not yet ready for the new rules that go into effect in less than two years, IHS isuppli pointed out in an exhaustive study released on October 25. “The industry appears to be unprepared, given that about 90 percent of firms so far have not produced the data, declarations, or documentation that will help fulfill regulatory requirements detailing the presence of such minerals in their supply chains,” the firm said.
As of August, the percentage of electronics component manufacturers with available conflict minerals information amounted to only 11.3 percent of the peer group, according to the IHS Parts Management Service, accounting for just 17.1 percent of active electronic components on the market.
IHS estimates that 15 cents’ worth of tantalum was contained in every smartphone shipped when Dodd-Frank was originally signed in 2010. In 2012, this would amount to $93 million worth of tantalum in smartphones alone. The firm has been gathering information on conflict minerals for more than two years from a database on more than 300 million electronic, electromechanical and fastener components used in commercial and military applications.
$24 Trillion Mineral Wealth
A striking endnote from IHS estimates the value of DRC Congo’s mineral wealth at as much as $24 trillion, which stands in stark contrast to almost three-quarters of the population who live below the poverty line — a clear case, some might argue, where a developing country’s resources wealth has morphed into a resources curse.
A question for the immediate term is to what degree the unrest will affect production from major assets run by listed global miners.
Though the most recent bout of unrest in Congo threatens the eastern minerals-rich Kivus region near the Rwandan border, any impact will likely be limited as M23 rebels, reportedly backed by Rwanda, may have achieved their “primary strategic and commercial aims” by capturing Goma, the capital of North Kivu province, said Philippe de Pontet, Africa Director at political risk advisor Eurasia Group, in a report on Nov. 22.
“This limits the immediate commercial impact to the Kivus region, the world’s largest source of coltan – also known as tantalite, a crucial input in many electronic devices,” de Pontet said. The region is also home to Toronto-listed gold miner Banro Corporation’s Twangiza gold mine which entered commercial production on September 1.
“Absent a major escalation, or a plausible but unlikely army mutiny (or assassination) that topples President Kabila, we do not envision direct impacts on copper/cobalt producers concentrated in (southern province of) Katanga,” de Pontet added.
However, AngloGold Ashanti’s Mongbwalu gold asset is a “bit more exposed should conditions worsen,” the risk consultancy said. “The threat of escalation beyond North Kivu, while not our base case, cannot be discounted.”
AngloGold has held the Mongbwalu concession — with proven reserves of 2.5 million ounces — since 1998 and has had a presence there since 2004, but insecurity has hampered work, meaning that construction is only now getting under way, Reuters reported in April.
The world’s third-biggest mining firm partnered with Congo’s government to build the industrial gold mine in a vast zone deep in the hills of Ituri, a district in the central African state still recovering from a bloody ethnic conflict that ended in 2003, Reuters said.
n the Democratic Republic of Congo (DRC), the vast majority of people live in extreme poverty, earning only around $400 a year. The country is reeling from instability, hunger, and disease. One in seven children dies before they turn 5 years old. And more than 5.4 million people have died since 1993 because of armed conflict. But the issues plaguing Congolese citizens are in sharp contrast to the country’s wealth. The DRC sits on untapped, raw mineral ores worth $24 trillion — money that isn’t directly benefiting the people who live there.
“Why are we living through hell in paradise?” Vital Kamerhe, a Congolese politician and leader of the Union for the Congolese Nation, asks in the film When Elephants Fight, which details how foreign interests have ravaged the Congo region. “That is the paradox of Congo.”
Foreign companies have made large investments in eastern Congo’s mines, buying from suppliers funding armed groups within the country. This type of foreign investment in the Congo’s extraction industry has led to a loss of at least $1 billion in resource revenue that could otherwise be used to reform the country’s security, health, and education sectors.
Now, two well-known activists have begun a campaign to pressure mining companies, the DRC government, and Western governments to disclose exactly what they’re doing in the region. Alongside House of Cards television star Robin Wright, JD Stier, the president of the social activism organization Stier Forward, created the #StandWithCongo campaign to get mining entities to disclose the beneficial owners of offshore companies that are profiting from these mining deals.
Why are we living through hell in paradise?
“The #StandWithCongo campaign is addressing shady billion-dollar mining contracts — mostly relating to mining concessions in the south of the country,” Stier told ThinkProgress. “Transparency from technology companies to mining multinationals can ensure that the human rights of Congolese are respected and that more revenue can support development for Congolese people.”Advertisement
The affected mines, mainly in Congo’s Katanga and Kivu provinces, contain some of the world’s largest reserves of cobalt, gold, copper, and diamonds, as well as tin, tungsten, and tantalum.
These raw minerals have fueled one of the world’s bloodiest conflicts globally since World War II to an obscene degree: 48 women are raped every hour in the Congo while 10,000 civilians are estimated to die every month. Militia groups made an estimated $185 million from conflict minerals in 2008, while gold remains a steady source of funding for them and for Congo’s army.
And, because the minerals mined in the Congo are used to make everyday objects like smartphones, lightbulbs, computers, and jewelry, nearly everyone reading this article is complicit in the ongoing conflict.
At least some of the mines purportedly belong to Israeli billionaire Dan Gertler, named more than 200 times in the Panama Papers. An ally to Congo President Joseph Kabila, Gertler allegedly had a hand in the mining deals in 2011 “that robbed the Congolese people of more than $1bn,” The Guardian reported.
The Africa Progress Panel, a panel that promotes the equitable and sustainable development for Africa, estimated that the sale of mining contracts to five anonymous British Virgin Island companies deprived Congolese citizens of $1.35 billion, or about twice their health and education budgets combined. And while assets were sold at one-sixth their commercial value, these offshore companies bankrolled 500 percent in profits.Advertisement
“The DRC government should commit to immediate full disclosure of state-owned companies’ revenues and spending, to the publication of all mining contracts, and to ensuring company compliance with Organization for Economic Co-operation and Development (OECD) standards on conflict minerals,” Stier said. The OECD, an international economic organization, has helped to issue due-dilligence guidance for companies to move away from the use of such minerals.
Conflict in the Congolese region may only accelerate as the country’s term-limited president, Joseph Kabila, appears poised to extend his incumbency into a third term. Though he is bound by the DRC’s constitution to step down after two consecutive terms, Kaliba — under whom many abuses in the region, particularly those against women, have gone unpunished — has not categorically said that he will not seek a third term. In order to stay in power, Kabila could delay the November 2016 elections or change the constitution.
Kabila’s cling to power has so far resulted in the arrest and detention of opposition supporters. As many as 40 people were killed last year during protests opposing a draft law that would have extended his term. And on Thursday, peaceful protesters who took to the streets in Goma, an eastern city in the DRC, were met by armed security personnel who used tear gas to disperse the protests. As many as six people were shot, including a 12-year-old boy and 6-year-old child, according to a Human Rights Watch researcher.
Although the use of conflict minerals is unlikely to completely halt, Stier is hopeful that the DRC and Western governments may be able to follow other countries’ example to implement sustainable, peaceful trade “that fosters human rights.”
“In recent years, activist efforts have led to significant reforms in the technology sector,” Stier said. “Tech giants Apple and Intel acknowledged their products contain minerals linked to the financing of rape and war in eastern Congo, and have since invested significant resources in tracking their supply chains — moving in the direction of a closed loop, traceable minerals supply chain.”
Apple Inc. announced in March that it would now audit 100 percent of its suppliers sourcing minerals from the DRC. Intel Corp., the world’s largest chip maker, said in 2014 that the company was “committed to using only conflict-free mineral resources” and would track raw materials, though it appears to be a work in progress as evidence of fraud, smuggling, and a lack of oversight has plagued the current audit system.Advertisement
There’s also been some legislative movement here in the United States. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, companies using gold, tin, tungsten, and tantalum are required to make efforts to determine whether those minerals came from the DRC and whether those mineral purchases are funding armed groups in eastern DRC.
According to the policy organization Enough Project, “216 out of approximately 324 smelters and refiners worldwide (67 percent) have passed conflict-free audits and an additional 50 smelters/refiners are in the process of being audited, for a total of 266 participating companies (82 percent).” A 2014 International Peace Information Service study also found that “70 percent of tin, tungsten, and tantalum mines surveyed in eastern Congo were no longer controlled by armed groups, and 204 mines in Congo are now officially certified as conflict-free.”
One of the biggest myths about the DRC is that it is hopeless.
“We may not have serious strategic interests in this region, but that doesn’t mean we don’t care,” U.S. Special Envoy to the Great Lakes Region of Africa Thomas Perriello told ThinkProgress. “One of the biggest myths about the DRC is that it is hopeless. While that’s a convenient excuse for inaction, we have seen major progress from constitutionalism to conflict-free mineral programs.”
And Stier believes the momentum will only continue.
“Many people in the West feel detached from Congo and the conflicts there,” he said. “However, Millennials get it. They are Skyping with people around the world… and have the pragmatic idealism to act when they see some of the greatest unaddressed injustices on the planet. Further, they recognize that Congolese will ultimately create peace in their country but that we can help support these efforts.”