US ‘conflict minerals’ law likely to cause price hike

6 September 2010

6 September 2010 | Angeline Albert

US legislation that came into force this summer could prompt price rises on the cost of some minerals as supplies become squeezed.

The Financial Stability Act requires companies listed on the US stock exchange to report whether they buy minerals from the Democratic Republic of Congo (DRC) or its nine neighbouring countries. These include Uganda, Rwanda, Burundi, Tanzania, Zambia, Angola, Republic of Congo, Sudan and Central African Republic.

Deposits sourced from the eastern region of the country are known as “conflict minerals” because the DRC government and rebel groups control the mines and illicitly trade these natural resources to finance civil war. Companies will have to submit an annual report to the US Securities & Exchange Commission (SEC) disclosing whether their products contain tantalum, tin, tungsten or gold sourced from the DRC or adjoining countries. Those that do will be subjected to independent audits.

Australian resource firm Globe Metals & Mining (GM&M) said the law will cause a supply squeeze and result in higher prices for purchasers. The DRC supplies about 15 per cent of the world’s tantalum, and GM&M said the change is likely to squeeze tantalum supplies and increase the price of tantalum oxide, which is used in electronic goods such as mobile phones.

“The conflict minerals provisions have major implications for the tantalum industry and are likely to further constrain the already tight supply of raw materials throughout the entire supply chain,” it said.

GM&M said the safest course of action for major consumer electronics brands such as Nokia that use these types of raw materials in its products would be to not source tantalum from the Congo area.

Nokia said in a statement: “Although Nokia is not involved in the purchase of minerals, we ban the use of conflict metals and demand that our suppliers abstain from the use of metals originating from conflict areas. All of our key suppliers are required to map their supply chains for the metals in their components back down to smelter and then to source.”

Since 2001 Nokia has asked for written assurance from its tantalum suppliers that the raw material does not originate from illegal mines in DRC. It now expects similar assurances from its tungsten and tin solder suppliers.

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