Last Friday the Associated Press reported the US State Department met with industry leaders to “discuss ways to ensure their products do not contain minerals illicitly mined in the eastern Democratic Republic of Congo, or DRC.” According to the press account, the specific metals targeted include: tungsten, tin, tantalum and gold. We have covered the issue of “conflict minerals in previous posts.
So we thought it might make sense to break down each of these metals in a bit more detail to identify the severity of the issue for US manufacturers. We relied on USGS surveys for each of the relevant metals. The first metal, tungsten, used primarily in electrical applications remains critical to manufacturers dealing with incandescent light bulb filaments, X-ray tubes and super alloys used in military applications. US imports for tungsten come overwhelmingly from China (>80%) followed by “other countries, Russia, Canada, Austria and Bolivia. Though eight out of ten of the world’s largest deposits exist in China and Russia, some tungsten from the DRC may enter the US. Tin, used in a variety of applications from cans and containers to electrical to construction to transportation comes primarily from China, Indonesia, Peru and Bolivia. Based on our review of USGS data, we believe less than 1% of the US tin supply comes from the DRC.
Since the electronics industry represents one of the largest end users for some of these metals, the industry has formed a trade association to align policies and education to improve working conditions and environmental stewardship throughout the electronics supply chain. The trade association specifically addresses tungsten, tin, tantalum and gold.
Gold used in the US, despite having multiple countries of origin primarily comes from Canada (30%), Peru (29%), and Chile (9%) also comes from “other countries (16%) according to the USGS. One critical issue in identifying “blood minerals if you will, involves understanding the raw material source all the way through the integrated supply chain. If a capacitor comes from China, does the end user OEM know where the raw material comes from? We’d argue, typically not, hence the attempt by the State Department to work with industry to identify mechanisms for creating better visibility into raw material supply.
The last and final metal and likely the most controversial, involves tantalum. Tantalum is primarily used for powder and wire in capacitors and according to Commerce Resources (an exploration and development company for tantalum, niobium and other rare earth metals according to their website) suggests the annual growth rate of tantalum is in the 8-12% range though other reports suggest the growth rate looks more like 7%. Regardless, material today comes from China, Brazil, Canada and likely some from the DRC but perhaps not directly.
We applaud the State Department’s move toward working with industry to identify solutions to end the use of conflict minerals. But unless/until Congress, the Administration and environmentalists wake up to the fact that supply constraints are real, and we need viable sources of US and/or “friendly regime supply, I fear conflict minerals will still make their way into our electronics goods supply chains.