As his chartered Cessna flies above the Democratic Republic of Congo’s Katanga province, Mussadiq Hamid Merican flips through the pages of his Malaysian passport, counting Congolese visas.
“Nine, 10, 11,” he laughs, while the plane passes over villages of thatched-roof huts scattered across sparsely forested savannah. “And these are multiple entry visas so it’s actually more than that.”
The pilot banks and approaches a dirt landing strip rolled in the 1980s by a now-defunct tin company. For the past four years, Merican, 34, has been flying in and out of mines like this in Congo for Malaysia Smelting Corp. (SMELT), the world’s second-largest tin producer. Merican’s company is among those trying to determine if it’s possible to mine in the country profitably — without enriching warlords.
Since the mid-1990s, when war broke out in eastern Congo in the aftermath of the genocide in neighboring Rwanda, Congolese minerals have been linked with corruption, killing and sexual violence. Rebels, unscrupulous traders and members of the army helped themselves to tin ore, of which Congo is Africa’s biggest producer, gold and columbite-tantalite, or coltan, an ore used in smartphones and laptops.
The illegal trade helped armed groups buy weapons and fund their wars. As of last month, almost 2 million people were still displaced by conflict in eastern Congo.
Top Performer
As the appetite for electronic gadgets grows, so does demand for tin, which is used as a solder in circuit boards. Chinese imports of tin concentrate tripled last year, according to St. Albans, U.K.-based industry group ITRI Ltd. Morgan Stanley in November identified tin as its top base metal to invest in in 2014.
Tin prices on the London Metals Exchange have risen 2.9 percent so far this year to $23,000 per ton in London today. That’s sent companies looking for new deposits in far-flung locations. Merican’s MSC views Congo, the world’s poorest country, as one such place.
Congo currently accounts for only 2.5 percent of global production, though “this number could easily grow to 5 percent over the next five years,” said Daniel Jones, chief executive officer of Denver, Colorado-based Pioneer Management LLC. Jones’s company is considering building a tin smelter in Katanga through a subsidiary, Ramika Sarl.
SEC Regulations
They will have to work around the legacy of the conflict period. The U.S. Congress in 2010 passed legislation requiring all companies monitored by the Securities and Exchange Commission to report whether certain metals in their products may have supported conflict in the country. This month the European Union proposed a similar plan starting next year.
For the rest of this article, click here: http://www.businessweek.com/news/2014-03-24/miners-face-congo-conflict-history-seeking-tin-without-warlords