The coltan speculators: down with the Congo!
- 14 Jan 2011
Does international law apply to all countries? Israel flouts it with impunity. Colombia murders and deports its citizens while multinationals look on… and is rewarded with a free trade treaty with the European Union. The United States enjoys discreet but lucrative trade relationships with Arab dictators.
However, when the interests of the self-proclaimed "international community" are threatened, it is quick to reach for the pretext of human rights and the principle of humanitarian intervention beloved of Bernard Kouchner, France’s ex-Foreign Minister.
Take the Congo for example.
Raf Custers wonders why certain multinationals, who usually spare barely a thought for the life of populations in the South, have suddenly begun to raise the subject of human rights in relation to coltan and the Congo. Inquiry into a pseudo-mystery.
Investig'Action
On 8 December 2009, a certain Ron MacDonald took part in an OECD working meeting in Paris. He introduced himself as an international policy advisor for a Canadian mining concern. The meeting was about investments in the mining sector and how the trade can distance itself from "contaminated" minerals. Although the Congo was not on the agenda as such, MacDonald diverted the discussion with an intervention that was hardly to the taste of all present, calling for nothing less than an embargo on minerals exported from the Congo. However, the fate of the Congolese is not exactly MacDonald's main concern— he was there merely to defend the interests of the firm for which he works.
The OECD, the club of the richest Western countries, is also preoccupied with the mineral trade, especially the question of "dirty" or "contaminated" materials. More than one development organisation has raised concerns about these minerals, used for the manufacture of everyday electronic appliances. They are said to be "contaminated" as they are extracted under appalling working conditions, in mines exploited by rebels, for example, where children are also used as slave labour. At the heart of the matter is tantalum, a mineral used in the manufacture of certain GSM components, and the tin mineral cassiterite. These two minerals. amongst others, are produced in Eastern Congo, a region which has been devastated by a succession of wars since 1994 and which remains highly unstable. To prevent dirty minerals from entering the trade circuit. OECD practises "due diligence" [1a]. Traders or users of these materials are now therefore obliged to explicitly verify whether their raw materials come from "clean" mines that operate legally and in orthodox fashion.
At the OECS, MacDonald was representing the firm Commerce Resources, a mining concern from Vancouver in Canada. According to our research, Commerce Resources has no mining interests in the Congo; in 2008 and 2009, the company appeared on no list of mining concerns in the east of the country. Also at the OECD meeting were companies who source their tin from the Congo. It seems these were hardly best pleased by MacDonald's message, fearing that the Canadian was thwarting their activities and aware that Commerce Resources is on an equal footing with two heavyweights in the tantalum trade, Cabot and Talison, to which we return. Other participants were not even aware of the existence Commerce Resources and wondered just who was this White Knight with the distinctly unpalatable message.
MacDonald has not responded to our requests for information; we have however been able to establish that he is not a mining expert but a mere lobbyist. He heads a marketing company, Cansource Marketing, and it was via them that he was appointed by Commerce Resources—the latter paid Cansource Marketing fees for services rendered In September 2009. MacDonald and his partner Marc Buggio (or Baggio according to certain documents) received a portfolio of 8750 shares in Commerce Resources, quoted on the Toronto Venture Exchange. MacDonald and Buggio thus became shareholders in Commerce Resources.
As we have noted, Commerce Resources has no plans in the Congo but intends to open two mines in Canada, the Eldor project in Quebec and the Blue River project in British Colombia. In Eldor, in a territory stretching over 19,000 ha, Commerce Resources has discovered tantalum deposits. Since 2008, the company has been making an inventory of the mineral seams. Commerce Resources also claims to have discovered a tantalum seam at Blue River, a concession of around 1000 km². Look no further for the source of the firm's infatuation with the Congo. Commerce Resources needs money and backers to finance its Eldor and Blue River projects. It is trying to attract buyers, but especially investors at this stage, via the Toronto and Frankfurt stock exchanges where it is also quoted. Too entice these investors, it is pursuing a dual strategy: presenting Eldor and Blue River as "clean" and safe mines, while systematically denigrating the image of the Congo.
Political lobbying
The Commerce Resources campaign has been underway for some time, but is only now really stepping up. Initially, it was only in its literature that the firm waved a big stick at the Congo. In a February 2009 Blue River brochure, Commerce Resources wrote: “Mining practices in this part of the world are reported by the United Nations (UN) to often be conducted illegally and to be associated with extreme human rights violations. Additionally, funds from the sale of African coltan are known to support military and tribal violence."
On its websites, Commerce Resources prefers to play the 'nature-lover' card. Congo and neighbouring Rwanda are cited in the same breath—a sure-fire tactic. The text goes on: "The civil war, pillage of national marks and exports profiting the funding of militias have led the international tantalum organisation to strongly advise its members against buying the mineral from regions where human well-being as well as wildlife and nature are under threat". The conclusion is obvious: buyers should purchase from "ethical sources such as Blue River" in countries where stable laws protect human rights and the environment. Even though Blue River is not yet up and running and buyers will have to pay dearly. [3]
Meanwhile, Commerce Resources has joined the North American Lobby against the Congo, whose hard core lies within the US political establishment. The Enough Project, which targets US public opinion, is very active member. Its co-founder, John Prendergast, is now listed as a human rights activist. Under President Clinton, however, he was in charge of the Bureau of African Affairs on the National Security Council and acted as a Special Advisor to the US Secretary of State. He is now actively drumming up support for two Private Member's bills, the Congo Conflict Minerals Act in the US Senate and the Conflict Minerals Trade Act in the House of Representatives. [4] These propositions would hugely complicate the task of American firms seeking to purchase "conflict minerals” from the Congo (5] If these bills are passed, they will amount to a de facto US embargo against Congolese minerals. In practice, the Enough Project has already put companies processing tantalum from the Congo, such as Niotan in Nevada, on public trial [5b]
Not content merely to sympathise with this lobby, Commerce Resources also advertises for it. On 21 April 2010, in a message on Facebook, Commerce Resources quotes a link which carries the reader straight to Enough. The pressure group has just spent ten days enthusiastically bolstering its campaign for the Conflict Minerals Trade Act. And its efforts are reaping rewards. On Facebook on 23rd April, one Shaun Ledding informed Commerce Resources: "Interest is growing in the search for raw metals such as tantalum from conflict-free zones." It so happens that Ledding is one of the five Directors of Commerce Resources.
The company is also introducing the pro-embargo lobby in the world of business. In early April 2010, the Los Angeles Crowne Plaza hosted the Rare Metals Summit, a professional market for producers and traders. Commerce Resources was the event's principal sponsor. The company can therefore stamp its seal on the way things progress. It arranges for its own directors to intervene as speakers in a variety of working groups. And it has offloaded the by-now-familiar Ron MacDonald on the panel of the "Sustainable Mining" working group. This time, however, MacDonald is not there to act as an advisor to Commerce Resources, but as President of…. CanSource International. And who sits alongside MacDonald on the panel? A certain David Sullivan, from…. Enough. A friend in need is a friend indeed. The duo's message is hitting home. Via Twitter, Commerce Resources has let it be known that "US officials" (they are careful not to name any) are concerned. And that they will not buy tantalum from the Congo for US strategic reserves. "We need new clean supplies" is the conclusion on Twitter.
Crisis in the sector
If only, out of sheer selfish interest, there were only one company stoking fears about the Congo. But there are several more. According to the Enough Project, Congress Member James McDermott is supported by several electronics manufacturers. [6] It is not clear which companies are at stake, but all things considered, every single important tantalum players have an interest in suppressing the Congolese consignments, In January 2010, an Australian newspaper reported that the Talison company was leading "the battle against blood-soaked tantalum". "Electronics firms and other end users can now buy tantalum from responsible and ethical companies. And consumer power can help advance this cause" declared David Miller, a Talison executive. [7] Pure hypocrisy!
Raising prices and decreasing supplies
Although Talison is potentially the world's largest tantalum producer, in 2008 the firm closed its Wodgina mine for several reasons: with the economic crisis, the demand for tantalum on world markets collapsed, the electronics industry was cutting costs and demand increased for cheap tantalum from the Congo, amongst other places. And there was nothing Talison could do about it. Why is Talison claiming to be acting in favour of clean tantalum? The answer is simple. Back in 2008, Talison was already complaining that tantalum prices were more or less stable, while those of copper, gold, nickel and tin were rising. Talison declared in 2009 that it was going to re-open Wodgina. "But", says a trader, "Talison needs prices to start rising seriously. The price of tantalum is hovering around $40 a pound, whereas Talison wants to raise this to $120." This is possible, if supplies are substantially reduced. So why not reduce those from the Congo?
Another player is none other than Cabot, in the United States. The company owns a tantalum mine in Manitoba (Canada) but also supplies refined tantalum as a raw material to the electronics industry. Cabot is conducting its own advertising campaign by affirming that under no circumstances will it buy tantalum from the Congo. Their tantalum, says the firm on its website, is extracted exclusively from its mine in Manitoba, from Talison (Wodgina) and from Noventa, who own a mine in Mozambique. This declaration dates from August 2008. [8] Since then, much has changed. As stated earlier, Talison has stopped work at its most important tantalum mine with Cabot and Noventa following suit. But Cabot is far from being in dry dock. According to insiders, the firm has enough tantalum stocks for two years.
Another heavyweight player is HC Starck, a company based in Goslar near Hanover in Germany. Like Cabot, HC Starck acts as an intermediary between mining companies and tantalum users. Along with Cabot and the Ningxia company of China, HS Starck would be able to buy 70% of all raw tantalum on the world market. And it seems that HC Starck also has important stocks for the time being.
Getting rich at the expense of the Congolese
It seems Congo is now becoming an important factor in escaping this impasse of large stocks and low prices. In the autumn of 2009, an American analyst announced that the tide was turning. Given that supply has been substantially reduced and that stocks can run out rapidly, he says, we could face a serious shortage of tantalum in 3 years' time. At the moment, he continues, there are only three possible sources, i.e. Brazil, China and a few mines in Africa. But he then reaches a surprising conclusion: let us hope that two new mines will start operating in Canada "including Blue River", as these will constitute " two sources of acceptable and ethical tantalum." [8b] Has this analyst succumbed to Commerce Resources' marketing rhetoric? A few months later, HC Starck also identified a new trend. The German firm declared that prices were returning to normal, for a remarkable reason. "Prices are under pressure because end users are beginning to ask for ethically untainted materials. And we are now witnessing a shift in purchases, from conflict-afflicted Congo towards other suppliers, which can only lead to higher prices. [9] "
If there is a source of contamination in the tantalum sector, it seems we would do as well to look for it at Commerce Resources as in Eastern Congo. The Canadian project developer—as Commerce Resources is little more than this for the time being—is making headway by harping on the negative image of the Congo in order to boost its own business. This is the height of cynicism. In fact, this "conflict marketing" also abuses the Congo in order to push up the price of Commerce Resources stocks. Such moves are certainly not going to help the situation of the Congolese.
Raf Custers
Notes
[1a] The OECD meeting on 8 December 2009 was publicised under the title: "Promoting responsible investment: towards due diligence. "
Translated fom the French by Andrew Morris
Source: www.investigaction.net
