Congo's tin men
The global electronics industry has made tin a hot commodity. But that's cold comfort to the miners of Walikale.
by Anjan Sundaram, FORTUNE magazine contributor

(FORTUNE Magazine) - Pascal Kasereka emerges from a forest carrying his weight in rocks slung over his back. "We are lucky to have these rocks in the earth," says the 16-year-old, who has spent two days walking from a tin mine in Walikale in eastern Democratic Republic of Congo to sell his load. "I hear the Americans like them."

Soldiers with Kalashnikovs herd Kasereka and a dozen other miners to a corner of a clearing as middlemen weigh their sacks of ore and pay them 14 cents a pound - about $15 for the rocks on Kasereka's back - a price guaranteed by the guns pointed at him. The teenagers fall to the ground in exhaustion, while a few feet away those same sacks are sold for five times the price. They will ultimately fetch $350 on world markets, after they are flown out of the area on rusty Russian Antonovs and smuggled to neighboring Rwanda and other destinations.

Cassiterite, the ore that contains tin, is a hot commodity now that environmental regulations have forced the global electronics industry to use tin instead of lead in circuitboards and other components. The price of tin has nearly doubled since 2002, to about $7,000 a ton. But few end users are aware of the hazardous conditions and low wages that miners like Kasereka endure.

"The tunnels in Walikale are not safe," whispers Kasereka, who climbs into mines wearing flimsy rubber boots and a flashlight tied to his head. "There's no space to breathe. The mines collapse every few days, and miners die. Their graves are in the forests." But Kasereka says his family would starve without the money he brings home.

Far from Walikale, Bruce Moloznik, a vice president at Cookson Electronics Assembly Materials, the New Jersey manufacturer of more than a fifth of the world's solder, which is used in circuitboards, expresses surprise to learn that experts estimate 10% to 15% of the world's tin comes from Congo. "Africa has never been mentioned as a source of our tin," he says, adding that his company "is not interested in supporting anything illegal." Says Samsung Electronics spokeswoman Hae Won Choi: "We do not purchase tin directly from the Congo."

The reason Moloznik and others don't know whether they're buying tin sourced in Congo, according to Global Witness, a London research and advocacy group, is that most of it is smuggled out of the country and disappears into world metal markets, labeled as coming from Malaysia, Belgium, or South Africa. Experts estimate that the mines around Walikale alone produced about 3% of the world's tin ore in 2004 and that most of it was smuggled into Rwanda.

That country, a report by Global Witness said, exported five times as much tin as it produced yet recorded no legal imports. Most of Rwanda's exports were sent to Malaysia, other African countries, and Britain, according to export documents obtained by Global Witness, but those countries reported no significant imports of Rwandan tin ore. All of which means that for the rest of the world, Congolese tin simply does not exist.

Congo contains some of the world's richest deposits of gold, diamonds, copper, and other minerals. But its wealth has long been a curse for its war-torn villages, washed over by waves of greedy gunmen who looted the mines and exploited miners during nearly a decade of conflict.

Invasions by Uganda and Rwanda, fueled by hunger for Congo's minerals, sparked back-to-back wars, sucked in armies from six neighboring nations, and killed nearly four million people.

A United Nations mission is in Congo to shepherd the nation toward democracy and peace, but it doesn't have a mandate to police mineral exploitation. "This is a dirty business involving high-ranking officials, politicians, and the interests of member states," says a UN official who investigates illegal resource exploitation in Congo and asked not to be named. "We won't have action until it is no longer politically correct to ignore the situation."

Congo's Minister for Mines, Ingele Ifoto, deplores the bleeding of his country's wealth but says that only pressure from abroad can bring change to his lawless country. "As long as there's global demand, the smugglers will find a way to supply it," Ifoto says. "Our borders are too vast to be guarded by us."

But boycotts or political pressure on Rwanda or Uganda are unlikely anytime soon. "The DRC needs to work with its neighbors to protect its own resources," U.S. assistant secretary of state for African affairs Jendayi Frazer told FORTUNE on a recent visit to Kinshasa.

Multinational corporations like Cookson say they oppose illegally sourced minerals, and some like Samsung say they impose strict conditions on suppliers and contractors. But for now, miners like Kasereka continue to sweat and risk their lives in their mineral-cursed forest to keep the electronics industry humming.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.