DRC turmoil disrupts critical minerals supply

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DUDU RAMELA: Let’s tell you more about the city of more than two million people in the eastern parts of the Democratic Republic of Congo [DRC]. It is under siege. Goma has come under the hold of M23 rebels, who are allegedly backed by Rwanda.

Since their takeover, civilians have been displaced as they evacuate. Private military contractors and Congolese soldiers have abandoned arms and fled.

The eastern part of the DRC, where this is happening, is rich with minerals that make, for instance, the phone that may be in your hand right now, the electric vehicle you are driving, or the gold chain on your neck – to mention but a few examples. Dr Nils Backeberg is the founder and director of Project Blue [market intelligence subscription service]. He joins us to take a look at the supply chain of minerals in the midst of the conflict.

Thank you very much, Doc, for your time this evening. If you speak to anyone from the DRC, they will tell you they’ve known no peace from the days of [King] Leopold II to date. Help us first to understand how businesses thrive in conflict areas like this one.

Dr NILS BACKEBERG: Hi. Thank you very much for having me here. First, to dig into the DRC and businesses thriving here, let’s focus in on sort of the raw material supplies landscape, so the leveraged geological heritage.

So, much like South Africa’s heritage in gold and diamonds, chrome and manganese, the DRC is rich in a variety of raw materials, as you’ve mentioned.

Primarily when we think about the DRC, we know about the copper-cobalt belt – the copper belt between Lubumbashi and Kolwezi.

But in the conflict area towards the east, it’s the conflict minerals known as the three TGs.

These are things like tin, tantalum and tungsten – and gold as you pointed out – going into a variety of electronics and important parts of the landscape. Well, fundamentally the DRC and artisanal mining.

So we’re talking here of a lot of small-scale mining, though there are some exceptions to large mines, tin being an example where one of the largest mines globally is based. The Bisie Tin Mine accounts for a significant global proportion.

But a lot of this artisanal material finds its way out between the DRC and the Rwandan border and goes across into China and Asia to be converted into its metal form and processed into technology applications.

So really it’s the demand for these electronic systems that requires it. And the DRC is what we sometimes call a swing production; depending on market conditions, when there’s ample supply, supply drops down and that reacts to prices. But then when demand is good this material does start to get sourced quite rapidly and fills a gap in demand. So maybe just pause there as a quick introduction to the situation.

DUDU RAMELA: Thank you so much for that context. Because the situation in the Democratic Republic of Congo has been going on for aeons, how will the supply chain be disrupted, if at all – or will it be business unusual as usual?

Dr NILS BACKEBERG: I think it may be worth touching on the typical commodities that people think about when they hear ‘DRC’.

Starting with copper – as mentioned, this is in the southern parts of the country in the copper belt – [it is] an interesting landscape itself with regard to East versus West geopolitics, and the Lobito corridor taking material to Angola to the West via either trucks to Durban or the Tazara railway out to China.

Fundamentally the supply chain there does not seem to be at risk with the current issues in the country, though geopolitically we could see other sort of indirect impacts onto those supply chains if other actions are taken by governments. So the main market’s not expected to be significantly impacted there. You mentioned electric vehicles and everyone’s quite curious about the DRC’s role in lithium.

Now, lithium is not a major source out of the DRC. Again, artisanal material, but that is coming out of these what are called ‘pegmatite type’ deposits. These are crucial for your tin, tantalum and tungsten types of material sitting along the whole sort of eastern border from north to south.

The geology varies and so does the mineralogy. The minerals for lithium become a little bit rich for early estimates further down to the south. So not a major impact globally, though material that’s coming out there has also already been scarce because lithium prices have been so low. So we don’t see an impact there.

But fundamentally, when you’re looking at tin and tantalum, for example, these will be exceptionally crucial.

Tantalum goes via that Goma border into Rwanda, and over 40% of global tantalum supply comes from those two countries and from that region.

So that will be critically impacted – though border closures, if they’re a couple weeks or so, don’t tend to have that global impact. But if it persists, we’ll definitely start to see some impacts coming out of this artisanal material. So things like tin, tantalum and tungsten seem more critical with regard to developments right now.

DUDU RAMELA: Doc, you may have mentioned it, and I’m sorry if I missed it, but what is tantalum used for?

Dr NILS BACKEBERG: No, I have not mentioned it. Tantalum is mainly used as a capacitor in circuit boards. So a hard [drive] or a motherboard or any sort of circuit boards for electronics use capacitors.

So it’s part of the electronics landscape and a crucial material. There are not many alternatives.

There are ceramic alternatives. But every [type of] electronic equipment spread across the world has probably got a piece of tantalum in it.

It’s also used in ‘semiconductors as sputtering targets’ [which] opens up the whole discussion for Taiwan and a whole novageopolitical landscape that’s again, crucial to things like AI development, which will require growing demand. Because everything is run by a computer, and electric vehicles’ demand for these electronic materials is really being stretched and stressed, these supply chains will get another look under the lens.

DUDU RAMELA: Doc, I don’t even know how to frame this question – and listeners, please be patient with me …

[With] the link between all this mining and the humanitarian cost – because millions of people have been displaced internally in the Democratic Republic of Congo and face an uncertain future – who needs to do what? Who needs to do what, what needs to happen in the DRC for the flow of things to not even benefit, but for people to just have life, never mind quality of life?

Dr NILS BACKEBERG: This is probably a bigger question than I’m potentially qualified to answer. But fundamentally, as with any mining district, [these] rural areas are exceptionally important for the local economics. If that value goes away there’s a loss of value for countries that they go into.

So what needs to change is policy, correct support formalising the supply chain so that it’s not criminalised.

These are issues we see in South Africa, as well, issues which are being discussed with our own gold and chrome supply chains.

So yes, it’s a governmental level conversation, and then also international. We’ve got different acts coming in that are supporting investments in critical materials.

Critical materials are now becoming good buzzwords with regard to new technologies, and it’s about access to supply and understanding those supply chains and risks to supply.

The DRC has always been considered a high-risk supply [area] with regard to conflict minerals, but how do you improve that? You invest in the infrastructure and support it, rather than rip it away because, as you mentioned, from a humanitarian perspective you’re taking more away than just conflict minerals. There are also livelihoods involved.

So maybe just to touch on a few points there, I don’t think it’s a simple conversation. It’s not as simple as cutting off mine supply, because it has other implications.

DUDU RAMELA: I really thank you – I know it’s outside of your scope – for helping us at least find some answers where that is concerned.

But I do wonder if you can help us with this then. How long can we continue to mine in the DRC, and how sustainable is what is happening? How sustainable is it?

Dr NILS BACKEBERG: The sustainability question, again, is from a risk of supply.

If it’s considered a conflict mineral, there are things in place that will look to replace cobalt, because of its risk of supply as was deemed by battery manufacturers and their end users.

The auto makers are being asked: ‘Where’s your material coming from? Can you confirm that that material is conflict-free?’

So there’s pressure from that. And what have we seen? We’ve actually seen battery technologies evolve and thrift out – that is, replace some of the cobalt in its formulation.

Now cobalt stops lithium-ion batteries from exploding. There’s a reason why it’s there. So not a simple thing, and this is why chemical engineering is a very well sought after degree at this point in time. There’s lots of work to be done to understand different battery technologies.

Yes, there are some alternatives that can be looked at, but fundamentally for things like copper the DRC is going to be here to stay. Obviously in terms of copper you’ve got large companies invested in this. You’ve got Glencore there, C-MOC China, Molycorp. So all of the major economies are based there.

But then for things like tin and tantalum, some consolidation is needed to support the local mining.

There are alternatives. Tantalum can also be sourced from lithium byproducts coming out of Australia, and we’ve seen Western consumers in the US and EU look to Australia and both North and South America for their lithium controls, whereas China is still investing quite heavily in Africa and supporting that local economy – obviously its demand far outweighing that of Europe and the USA, so that is really the major market.

Again, quite a broad question. One can go back to the philosophical, which is what one should do. But if you’re just looking at the facts and figures, the tantalum out of the DRC is an important part, and it’s going to be difficult to substitute that by going to other places like Australia, where costs are higher – and again, it opens another cost conversation. So it needs investment and it needs support on a much higher level.

DUDU RAMELA: Doc, to your point on alternatives, I was reading an article about one of the world’s biggest jewellery makers, and they have chosen the route of going lab-grown in terms of their diamonds. So are there alternatives like that, for instance, lab-grown minerals? Is there such a thing?

Dr NILS BACKEBERG: We’ve grown diamonds – when I say ‘we’, that’s a royal ‘we’. I’ve done it myself. But diamonds have been grown in a lab, and you can create synthetic materials that are replacing – you’re talking about composites.

Look at aircraft. They are using super alloys and heavy metal materials, with parts being replaced by composite materials – fibreglass, plastics, all sorts of innovative ways to do things.

But for certain other applications that is less simple to do. If you’re talking jewellery, what is the driving demand market? Well, it’s fashion. So is a diamond a diamond? A diamond – whether it’s synthetic as in lab-grown, or natural created by Mother Earth deep underground – is a marketing opportunity between De Beers and competitors making synthetic diamonds.

So those will be different. Jewellery is a different market in the sense that it’s a fashion. The fashion industry has completely different demand drivers.

But when you’re talking technologies, tantalum is also crucial in certain parts of aircraft, and you are creating these super-alloys that need these metals to allow aircraft engines to operate at certain temperatures. Without them air travel would have to change again.

So some things are harder to substitute, but there are some smart chemical engineers out there and they’re definitely trying to do that as much as possible.

DUDU RAMELA: Doc, thank you very much for your contribution this evening. Dr Nils Backeberg is founder and director of Project Blue.

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