Malaysia Smelting, Rwandan Company Are Main Buyers of Congo Tin

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By Michael J. Kavanagh

March 25 (Bloomberg) -- Malaysia and Rwanda have become the primary destinations for the Democratic Republic of Congo’s tin ore, amid efforts in the east of the country to prevent the nation’s mineral wealth from enriching armed groups.

Last year, under pressure from the United Nations and advocacy groups who said the tin-ore trade was fueling conflict in eastern Congo, at least two companies stopped sourcing minerals in the region. Their withdrawal redrew the supply lines from Congo’s forests to the world’s tin smelters.

Malaysia Smelting Corp., the world’s third-biggest tin producer, is now the largest buyer of cassiterite from eastern Congo, followed by Minerals Supply Africa, or MSA, a Rwandan company founded in 2008 by U.K. businessman David Bensusan, according to Congolese Mines Ministry statistics.

Congo is Africa’s largest producer of cassiterite, accounting for 6 percent of global output. In the mid 1990s, fighting in the aftermath of the Rwandan genocide spread into eastern Congo, eventually engulfing the entire country in a series of wars that killed at least 4 million people. Clashes continue in the eastern North and South Kivu provinces, where armed groups and some members of Congo’s army profit from exploiting and taxing minerals, according to the government.

In the first two months of 2010, “Malaysia and Rwanda have dramatically surpassed Belgium, which was the principal, primary importer,” of tin ore, or cassiterite, from North Kivu last year, the ministry said in a statement on March 22.

Malaysian and Rwandan companies accounted for 61 percent of registered exports from North Kivu in January and February, while Belgian imports fell to 21 percent of the total, compared with 48 percent for the whole of 2009.

Smuggling

MSA expects to do as much as $70 million in business from Congo and Rwanda in 2010, up from $20 million last year, Bensusan said in an interview in Gisenyi, Rwanda, on March 16. MSA sells all its cassiterite to MSC, he said.

In December, the UN accused Bensusan of smuggling cassiterite through Rwanda, a charge he denies.

Malaysia Smelting spokesman Chua Cheong Yong confirmed that the company is buying cassiterite from Congo, and is working with ITRI, the tin industry group, on a pilot project to trace their minerals.

“We are members of the DRC working group and very much part of the due diligence process,” he said by phone from Penang in western Malaysia on March 25.

Anyone who buys minerals from illegal armed groups in Congo may face sanctions under a 2005 UN resolution that was renewed in 2009. Last year, both Traxys SA and Amalgamated Metals Corp. stopped work in the region, saying they couldn’t track their minerals.

Damaged Market

International attention on Congo’s trade in cassiterite, commonly used as a solder in electronics, has damaged the market, president of the North Kivu Association of Mineral Exporters, John Kanyoni, said.

“The manufacturers of mobile phones and computers are so demanding about traceability and if they don’t have it they will not buy,” Kanyoni said in an interview in Goma, the capital of North Kivu, on March 16.

The ITRI plan is one of several Congo’s Mines Ministry is coordinating to help restore confidence in the trade in cassiterite, gold, wolframite and coltan.

“We are going to identify every part of the supply chain until exportation,” Congolese Mines Minister Martin Kabwelulu said in an interview on March 22 in Kinshasa, the national capital. One of five pilot “trading centers” will begin operations as early as May to restrict the flow of so-called conflict minerals into the legal mineral supply, he said.

Trading Centers

The first of the trading centers, which are being developed by the ministry and the UN, will centralize trade from Congo’s largest cassiterite mine, Bisie, and implement ITRI’s tracking program, Paul Yenga Mabolia, the ministry representative in charge of coordinating diligence programs, said.

Bisie, which accounts for about 70 percent of North Kivu’s cassiterite production, is on a forthcoming ministry list of “clean” mines that are acceptable for traders to buy from, Mabolia said.

U.K.-based advocacy group Global Witness criticized the decision because the Congolese army controls Bisie.

The traceability programs are “not concerned about the presence of the army on mines, only armed groups, even though the army human rights records is appalling,” Global Witness’s Emilie Serralta said in an e-mailed statement on March 25. “The army’s involvement in the mineral trade is robbing the government of revenue which is sorely needed for development.”

Serralta called on companies to do their own on-the-ground investigations, something several buyers have said is asking too much.

“They’ve got to back off,” Bensusan said. “We all want to make it work right. There is a change going on, and they’ve got to allow it to continue.”

Congo’s Mines Ministry is working to demilitarize the mines and improve traceability, Mabolia said. “It’s a process,” he said. “Everybody is concentrating to get it safer and to get it better.”

To contact the reporter on this story: Michael Kavanagh in Kinshasa at mkavanagh9@bloomberg.net.

Last Updated: March 29, 2010 07:39 EDT