Photo by Aleksandrkozak at Shuttlestock
Conflict in eastern Democratic Republic of Congo (DRC) and an ongoing dispute between two due diligence organisations
has made global tantalum smelters more wary of sourcing material from DRC and Rwanda in recent months, however bottlenecks have been minimal and tantalite prices remain pressured by slow downstream demand.
A conflict in the DRC’s major coltan (columbite-tantalite) producing region of North Kivu between the DRC’s official
government forces (FARDC), local self-defence groups known as Wazalendo, and the armed rebel group M23 has
escalated since the end of 2023.
This conflict combined with an ongoing dispute over recognition between the International Tin Supply Chain Initiative
(ITSCI) and the Responsible Minerals Initiative (RMI) has led to uncertainty among traders and smelters and caused
some smelters to reconsider sourcing from the DRC and Rwanda entirely.
ITSCI is an upstream programme that assists companies with due diligence and raw material traceability for the 3T
conflict minerals — tungsten, tin and tantalum — around the Great Lakes region of central Africa, including in DRC
and Rwanda. While the RMI works with downstream smelters and processors to ensure companies source material
from conflict-free areas through its Responsible Minerals Assurance Programme (RMAP).
But the two organisations have been in a recognition dispute with each other since 2022, which has meant that smelters cannot rely on the ITSCI scheme to complete their RMAP assessments and must do extra due diligence work
to fill any gaps.
Most recently at the start of July, the RMI suspended its recognition process for ITSCI until 2026 at the earliest,
stating that ITSCI had not sufficiently answered questions on risk management considering the escalating conflict in
DRC and its impact on mineral trade.
ITSCI has said that the RMI must clarify its recognition process and that it is closely monitoring the conflict in DRC,
suspending operations when needed.
DRC conflict raises risk for supply chain contamination.
The RMI’s decision to suspend its recognition process for ITSCI came a month after a report from the United Nations
Group of Experts (UNGoE) on the DRC, which stated that the UNGoE had shared information with ITSCI about the presence of armed groups at mining sites in parts of the major coltan mining area of Rubaya and along mineral trading routes that ITSCI was monitoring. In particular, the report stated that in April 2024 the North Kivu Governor opened new mineral transport routes between Rubaya and the city of Goma, which would avoid M23 held areas.
But at the time the pro-government armed group PARECO-FF was controlling some mine sites in Rubaya, making minerals mined there “ineligible for trading” according to the UNGoE.
ITSCI resumed operations in the area that same month, stating that state control and oversight had improved. ITSCI said in a statement in July 2024 that unlike the UNGoE it had not received any reports of PARECO-FF at the sites it was overseeing, but that PARECO-FF was present in the general area at that time, including at mine sites not monitored by ITSCI. ITSCI also told the UNGoE that it had communicated any associated risks to its member companies at the time for their own due diligence.
ITSCI has since withdrawn entirely from Rubaya and the wider Masisi territory in North Kivu after the M23 rebel group took control of the area in May, cutting off a major source of monitored tantalite supply.
Market impact
While the conflict in the DRC, increased risk of supply chain contamination and due diligence complexities have made some smelters more wary of sourcing from the Great Lakes Area of Central Africa, trade has largely continued with material sourced in South Kivu, Rwanda, and Burundi.
Some western smelters are also avoiding Rwanda-sourced material, deeming there to be an increased risk of material
from M23-controlled areas entering the supply chain.
These factors have contributed to price fluctuations throughout the year, but overall the global tantalite market remains
pressured by weaker-than-expected demand from the electronics sector and the US decision to apply section 301 tariffs
to Chinese tantalum products.
The Argus tantalite assessment has hovered between $70-80/lb cif main port since the start of 2024 down from the
2023 average of just over $83/lb. The consumer electronics sector is gradually recovering from a tough 2023 but progress
is slow. Shipments from the top five global smartphone manufacturers fell by just over 3pc last year to 1.17bn units,
down from 1.21bn units in 2022, preliminary data from the International Data Corporation (IDC) show.
The IDC expects smartphone shipments to grow by 4pc in 2024, supported by the launch of more smartphones equipped with artificial intelligence capabilities. But this growth is coming from a low base and 2024 shipments are still expected to be well below pre-Covid levels of 1.37bn in 2019. Market participants tell Argus that tantalum demand is
still lower than they had expected, despite the projected electronics recovery.
Furthermore, in May of this year the US trade representative (USTR) added Chinese tantalum products to the list of imports
affected by section 301 tariffs. This would mean that Chinese tantalum products would be subject to a 25pc tariff in the US from the start of August. This prompted a bump in demand for tantalite through May-June, but as the August start date drew closer, demand for tantalite dropped as Chinese smelters anticipate lower demand from the US once the
tariff came into effect.
However, the USTR delayed the implementation of the section 301 tariffs for two weeks and now some Chinese smelters
are hopeful that the tariffs may not be applied until after the US general election in November. This has led to an uptick
in spot demand for tantalite and to higher offers from sellers in mid-August.
By Sian Morris
Senior Reporter, Minor Metals
Argus Media
