By Michael Montgomery-Exclusive to
Tantalum Investing News
The implementation of the Conflict Minerals Act has been a bumpy
process since the passing of the Dodd-Frank Financial Reform Act.
There has been praise from human rights groups, but resistance
from some mining and electronics companies, which have charged
that the law requires too much in too short a time frame.
Under the law, full tracking systems for compliance were to be
in place by March 31, 2011 to ensure that minerals are free of
the human rights abuses associated by rebel groups in the
Democratic Republic of Congo (
DRC
). However, the Securities and Exchange Commission has postponed
the disclosure rules until
August-December
2011. While this gives more time to create a responsible and
transparent tracing system, the postponement may only further
complicate the situation for some mining companies, workers of
legitimate operations and electronics companies.
The first issue at hand is the audit system, and more
importantly companies that performed due diligence ahead of the
postponement. There is a risk that companies may have to pay for
a second audit to be in compliance with the law. "Early adopters
may be faced with paying for audits a second time to achieve
compliance. Reputational damage is possible where companies
publicize or market the results of audits that are non-conforming
to the final rule," stated
Elm Consulting Group
. This may be a serious issue for companies when the full
implementation of the law occurs later this year.
Others in the region, such as buyers of material have largely
stopped buying 'pre-rule' materials for fears of accumulating
stockpiles that they will not be able to sell once the tracing
system is fully implemented. "This cessation of investment in the
region will only result in increasing conflict, unemployment, and
poverty - the exact outcomes the Dodd-Frank Act seeks to
prevent," stated
Amaya Gorostiaga
, an Associate for BSR Consulting. The lack of responsible
investment and cash-flow in the region could only exacerbate the
problems, and further the illegal trade of minerals by smuggling
goods through neighboring countries.
This same sentiment is being echoed by industry insiders in
the DRC. "We've been pushed into a corner by American companies.
To call for full traceability when everyone knows we haven't had
a chance to implement it is just a way to put thousands and
thousands of Africans out of their jobs," stated
John Kanyoni
, head of the Mineral Exporters Association in North Kivu
province.
The further delay of the enactment of the tracing system may
seem positive to some, as it will allow miners to continue to
work despite the lack of an audit, but the lack of buying in the
region is a de facto embargo on minerals from the region. Also,
the lack of mining in the region due to the ban on mining
activities since September of 2010, recently lifted, has reduced
payments to the iTSCi, the industry group charged with setting up
the tracing system. The lack of funding only further hinders the
process from moving forward efficiently.
The problems surrounding the implementation of the Conflict
Minerals Act are a catch-22 for the industry. The further delay
only increases smuggling, exacerbates problems for the Congolese
people, and reduces responsible and ethical investments in the
region.
Tantalum Market News
German firm H.C. Stark, makers of ceramic materials and
refractory metals, has agreed to a purchase the bulk of tantalum
and niobium from Brazilian miner, AMG Advanced Metallurgical
Group. The mine according to the Tantalum-Niobium International
Study Center puts the mines production at
300,000 pounds
of tantalum, about 20 percent of global production. Dr. Andreas
Meier stated, "Thanks to this agreement, we have secured a
continuous supple of conflict-free tantalum raw materials for our
company."
Noventa
(LON:
NVTA
) has announced it is increasing production at the mine in
Mozambique, which currently produces 600,000 lbs/y. The company
is looking to double production by 2013.
Global Advance Metals
has stated that the company will "start delivering product to
customers mid-year, at a rate of 700,000 lbs/y," according to
Matthew Hill
, for
Mining Weekly
. Global Advance Metals has said the mine is capable of producing
1.4 million lbs of tantalum at full production.
Conflict Minerals Act Delay Hurts Mining Operations
originally posted on
tantaluminvestingnews.com