What It Takes to Make a Conflict-Free Smartphone
On a moonscaped rise in eastern Democratic Republic of Congo, thousands of men and women carve a heavy, off-white mineral away from the hillside with pickaxes, then wash it with shovels in man-made streams and haul it down the hill in 110-pound sacks.
They are the sort of independent miners that big companies usually chase away when they get a minerals concession in Africa. Here, the workers instead are the face of a new collaboration that allows miners and company alike to profit -- while proving to companies such as Apple Inc. and Samsung Electronics Co. that what they mine doesn’t fund armed conflict.
The face of this effort is Ben Mwangachuchu, a 56-year-old University of Notre Dame graduate who came home from Washington, D.C., to try to make it work in a country still torn by factional conflict. It’s a struggle as he copes with low prices and spates of smuggling, he says. But the system is slowly paying off and he’s beginning to reinvest profits in mechanization that will help him improve efficiency and double revenue.
"It was the only pragmatic way we could work in this post-conflict environment," said Mwangachuchu, managing director of Societe Miniere de Bisunzu (SMB). On a hot day in late August, he stuck out in a checked blazer and sunglasses, joking easily with miners on the hill in their eclectic assortments of second-hand clothes.
The prize is tantalum, a scarce mineral extracted from coltan ore that’s used in Apple’s iPhones and almost every other smartphone on the planet. Tantalum is a key component in precision technologies in aviation, automobile, armaments and electronics, including products made by companies including Samsung and Huawei Technologies Co.
Three years ago, Mwangachuchu negotiated an agreement with a cooperative called Cooperamma that allows its diggers to mine parts of the site at Rubaya, northwest of the provincial capital of Goma. The condition: They only sell the mineral to SMB. That allows the company to track the mineral from mine to port, assuring that it’s untainted by conflict.
At the time, when Mwangachuchu took over from his brother Edouard after he became a legislator and senator in Kinshasa, the capital, the mine was overrun with independent diggers. SMB could only access small parts of the concession area. Now, SMB finances as many as 5,000 miners when the price is high. Each month, the company pays Cooperamma as much as $5 million for coltan ore; the town at the foot of hill has swollen to 45,000 people.
“Cohabitation between informal diggers and industrial mining companies is in everyone’s interest,” Robert Seninga, president of the Cooperamma cooperative, said by phone from Goma. “The agreement is bringing greater economic and physical security to the region.”
Congo officially shipped 992 metric tons of coltan in 2015, down 25 percent from the previous year. More than 80 percent of that output came from Rubaya, Mwangachuchu reckons. The U.S. Geological Survey puts the country’s share of global tantalum production at about 17 percent. If he could measure the resource, Mwangachuchu said, he’s convinced it would show the biggest deposit of the metal in Africa.
It’s a far cry from the near-stoppage of coltan production in Congo in 2010, after the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act included a requirement for listed companies to disclose their use of four conflict minerals sourced from Congo and adjacent countries. The law was a response to a plethora of reports showing that rebel militias were profiting from coltan mines across Congo, including Rubaya.
Mineral-tracing programs slowly encouraged buyers to return. Rubaya was one of the first sites to be declared "conflict-free" by the Congolese government in 2012 and SMB’s coltan is now tagged under a system organized by the Frogmore, U.K.-based International Tin Research Institute. Apple, Huawei and Samsung all said either on their websites or through spokespeople that they and their suppliers only buy minerals mined ethically and in compliance with international guidelines prohibiting conflict minerals in the supply chain.
Mwangachuchu’s biggest challenge now is maintaining liquidity in his cash-hungry business. When his buyers pay late, the system seizes up and diggers look to sell elsewhere. He would like a bridging facility, but says Congo’s banking sector hasn’t been helpful. The company is looking for investment to support mechanization, including $1.5 million for a 1.2-megawatt hydro project to power the mine and the surrounding community.
To date all investments have been funded by SMB cash. The coltan "is of an incredible quality and is extremely accessible,” Mwangachuchu said as he let a handful of the crumbly white ore fall through his fingers. "This is what has kept us alive."
But prices for coltan have been falling for more than a year, squeezing margins for SMB and Cooperamma and encouraging smuggling as diggers seek better prices on the black market. Tantalum prices have fallen about 54 percent since a peak monthly average of $126.39 per pound in December 2012 to about $58.50 this year, according to Roskill Information Services. Both figures are well short of a record of $350 in the late 1990s.
The cooperative model can improve working conditions for diggers, allow for gradual mechanization and should be followed by other companies, said Greg Mthembu-Salter, a former member of the United Nations Group of Experts, who studied Rubaya with the group in 2010 and 2011.
“A mine owner, a cooperative and diggers who were previously at war with each other are now working together,” he said. “That has to be good news. And there are opportunities under this arrangement for improving facilities for diggers, improving health and safety, semi-mechanization and so on.”
The challenges are many. SMB estimates it loses as much as 50 percent of its production to smuggling, despite the tagging process introduced by ITRI. Buyers in neighboring Rwanda purchase as much as 75 tons a month directly from traders who take product from the diggers at Rubaya and tag it as mineral from other sites in either Congo or Rwanda, Mwangachuchu said, over lunch of chicken, rice and stewed beans at SMB’s hilltop headquarters.
The cooperative says smuggling only increases if SMB can’t keep up payments for diggers’ production. “Once there is a delay of two or three months without paying and other buyers are ready to inject cash behind our backs, it is difficult to control,” Seninga said.
Mwangachuchu says he hopes further mechanization of his mine will make it easier to regulate output and reduce smuggling. SMB already produces about 15 tons a month industrially and plans to excavate and expand a second part of the mine. Industrially mined coltan will then be crushed and washed in a processing facility that will increase mineral capture by 50 percent and could also treat the diggers’ production, according to SMB.
Seninga is less convinced by mechanization and says informal digging is more profitable at Rubaya than industrial mining. However, the cooperative is preparing for the future by investing in farming and commercial activities that can provide opportunities for diggers if work at SMB ends.
“We know the resource will not last forever,” Seninga said.
--With assistance from Jungah Lee in Seoul, Alex Webb in San Francisco and Samuel Dodge in London