How Conflict in the DR Congo Affects the Global Mineral Supply Chain

The DR Congo conflict, caused by friction between armed groups in the East of the country, has directly impacted the global mineral supply chain. As a key figure in global mineral exportation, businesses need to be aware of how the DR Congo conflict impacts them, what they can do, and how to turn to alternative suppliers to avoid disruptions.

We’ll explore the main motives behind the DR Congo conflict, explore how it impacts the global mineral supply chain, and potential solutions for businesses that have supply chain links in this area.

Source: Mineral production value in the Democratic Republic of the Congo from 2016-2020.

The minerals extracted in the DRC are vital in several industries, stretching from aerospace engineering and industrial manufacturing to electronics and defence. Due to its rich spread of minerals, the country has become a key supplier in the mineral supply chain for several tech companies and industries worldwide.

Political instability in this zone disrupts this supply chain, creating major delays, reducing the reliability of this area, and creating bottlenecks in global production.

What’s happening in North Kivu, and why is it unstable?

North Kivu, which is a region of DR Congo that borders Rwanda, is experiencing major conflict due to several armed groups operating in the area. Recent resurgences in core rebel groups, like M23 and the Mai-Mai militia, have escalated the situation. Retaliation from the Allied Democratic Forces has escalated the situation, creating more tension over territory lines and mineral resource ownership.

The Location of North Kivu inside of the DRC.

Due to the extreme wealth potential generated by these mining operations, these rebel groups all fight for control. Here is a breakdown of the key groups involved in this DR Congo conflict:

• M23: The M23, named after the March 23 Movement, is a Congolese revolutionary army that controls many of the major towns in eastern North Kivu, including Goma. The group is reportedly backed by Rwanda and is continually involved in clashes with other groups over territory and control.

• Mai-Mai: The Mai-Mai militia is an active group that exists in North Kivu and South Kivu and seeks to mobilise communities, either through political action or coercion, to join their causes. Mai-Mai isn’t actually one single group, but rather an umbrella term that describes any community-based militia group in the DRC. The particular group that’s active in Kivu and Goma has been present in both the mining conflict and local attacks in the region.

• The Allied Democratic Forces (ADF): The ADF is an ISIS-linked group that’s active in North Kivu, Beni, and Ituri. While originally from Uganda, the group has grown in size in recent years and has routinely attacked citizens to extort power over particular areas. The USA has determined this group as a terrorist organisation.

• The Congolese Military: While the Congolese military (FARDC) seems to act as a stabilising force in the region, it also has a long history of corruption and mismanagement by senior officers. The internal instability in this organisation causes friction, reducing their impact and opening the potential for the illegal trade of minerals and smuggling.

• UN Peacekeepers: The MONUSCO, or UN Peacekeepers, are a group of over 10,000 troops that are deployed across the entire globe. While the highest concentration of personnel is in countries like Bangladesh, Nepal, and India, they also have a presence in the DRC.

The main zone of conflict within North Kivu is Goma, which is a city in the eastern edge of this state. Mining operations in this area are routinely targeted by rebel groups, each wanting to take advantage of the riches they can generate.

Which minerals are most impacted by the conflict in North Kivu?

North Kivu has a concentration of major mining projects in cities like Walikale, Masisi, and Ratshuru. The mineral sources in these peripheral cities often then transit through Goma as a core segment of the mineral supply chain. As a major trading hub and transit location, each of the aforementioned groups aims to stake a claim to the area.

While mining projects can source many minerals in this area, there are four primary minerals that dominate the regional supply chain:

• Cassiterite (Tin Ore): Tin ore is mined in South Kivu, Masisi, and Walikale, all of which are subject to the groups in the DR Congo conflict. Tin is used in soldering, making it an important component in both the electronics and manufacturing industries. Its value to international mineral supply chains makes it a target for militia taxation. Roadblocks by armed groups also create disruptions that can bottleneck the supply from the DRC.

• Coltan (Tantalum Ore): Tantalum is mined in Walikale, Masisi, and Kalehe in South Kivu. As an essential component in the capacitors that go into electronic devices, places, and military defence tools, this has become an extremely high-risk mineral. Due to its value, coltan is routinely smuggled out of the country, subject to taxation by armed groups, and often blocked from leaving the zone. The precarity of this ore causes global price instability that can disrupt mineral supply chains.

• Wolframite (Tungsten Ore): Tungsten is mined in South Kivu, Maniema, and, to a lesser extent, in North Kivu. This mineral is a central component in aerospace engineering, the production of industrial tools, and electronics manufacturing. Tungsten ore is subject to disruptions due to the DR Congo conflict.

• Gold: Gold is mined in Beni, Lubero, Ituri, and South Kivu. As a high-value commodity that is traded across the globe, gold has been a central subject of militia attacks and armed shipment takeovers. Currently, over 90% of the DRC’s gold is stolen and smuggled out of the country, leaving to Uganda, Rwanda, and Burundi.

Here is a quick fact sheet on each of the core minerals:

How does the conflict disrupt mineral trade and exports?

While conflict in the DRC is not a new phenomenon, its increasing power as a global supplier of minerals has caused a surge in interest in the area over recent years. With several established groups vying for power, mineral trade and exports are disrupted in numerous ways.

Here is how the DR Congo conflict impacts mineral trade and export, both directly and indirectly:

• Taxation and Extortion: Armed groups control key zones within North Kivu, using their power over distinct parts of the region to extort mining operations. Threatened with violence and even death, operations in the area have to pay taxation, projection tariffs, or are subject to extortion. These unofficial fees can complicate the mineral supply chain.

• Road Blockades and Ambushes: As Goma is an international hub, many roads that lead into the city are controlled and regularly attacked by armed groups. Logistics companies must be prepared for these attacks, seeking extra protection or submitting to protection costs extorted by militia groups.

• Forced Labour and Human Rights Abuse: Human rights abuse has been a central concern in the zone for over a decade. Child labour, slave labour, and life-threatening working conditions are all routine in the area. Amnesty International has also reported that mining operations will regularly destroy citizens’ houses as they expand into cities, displacing tens of thousands of people.

• Smuggling and Black Market Trade: Smuggling and the capture of logistics vehicles that transport mineral deposits cause mineral supply chain disruption. The DR Congo conflict causes disruptions in exports, surges in prices, and sudden decreases in the legal export figures.

All of these conflicts disrupt mineral trade and have a direct impact on the total export of core minerals from the DRC.

Which trade routes are most at risk?

Part of the problem of mineral logistics in the DRC is that all of the major transport links that connect from mining projects to Goma and beyond are controlled by malicious actors. Some roads regularly experience roadblocks that prevent transit, while others suffer from the capture of minerals.

Here are some of the most prominent trade routes and the risks they contain:

Compliance, Regulations, and Global Impact

Companies that operate in the DRC should be aware of the need to diversify their suppliers and look for alternatives. There are also a number of compliance requisites and regulations that businesses must follow if they do engage with minerals from this area.

What are the legal risks for companies sourcing minerals from DR Congo?

Due to the turbulent nature of the mineral trade in the DR Congo, businesses must follow a range of regulations. Here are the compliance obligations that you follow:

• Dodd-Frank Act (Section 1502 – USA): This act requires that US companies disclose any mineral sourcing from this area and the potential conflict in the zone.

• EU Conflict Minerals Regulation: The EU imposes strict regulations on minerals that companies extract from zones of conflict.

Companies should also understand that iTSCi traceability programs are less effective in the area due to the rising instability. Equally, any business that wants to use blockchain for traceability may struggle with enforcement due to corruption, fraud, and incomplete data trails.

How does the DR Congo conflict affect global prices and market volatility?

The DR Congo conflict has a direct impact on global prices and market volatility, mainly due to its high percentage of exports of the global supply of certain minerals. For example, exporting nearly 68% of the world’s cobalt makes it a major supplier, with fluctuations in exportation having global consequences.

Here are some of the main impacts of the DR Congo conflict on the mineral market:

• Supply Chain Disruption: Any disruption in the mineral supply chain can spike the prices of minerals like coltan and tin as trade and export decline.

• Black Market Growth: When exportation is blocked by malicious groups, there is a rise in black market trade and smuggling that impacts global trade.

• New Sourcing: Due to the regularity of DR Congo conflict, businesses may shift sourcing to other regions like South America and Australia. This would change global shipping routes significantly.

Future Outlook and Possible Solutions

While the DR Congo conflict is unlikely to resolve itself, there are actions that businesses can take to protect themselves and ensure the continuity of their mineral supply chain. 

What are the short-term risks for businesses and investors?

Here are the main short-term risks that businesses and investors in the mineral supply chain should be aware of:

• Increased Security Concerns: Both mineral transporters and suppliers should be aware of increased uncertainty in the region.

• Rising Compliance Risks: As due diligence becomes more complicated, compliance risks when operating in the zone will increase.

• Increased Company Scrutiny: Especially due to the ethical considerations of operating out of these zones, businesses may receive higher levels of scrutiny if they continue DRC partnerships.

How can companies adapt to these risks?

Preemptive action can help to reduce the risk of operating in the DRC and improve the strength of a company’s mineral supply chain. Here is how your business can prepare and attempt to mitigate potential disruptions:

• Enhance Supply Chain Due Diligence: Ensure ethical sourcing with more precise investigative processes.

• Use Verified Certification Programs: If available, look for proof that minerals are sustainable, exploitation-free, and regulated.

• Explore Alternative Suppliers: Look for alternative partners ahead of time to establish alternative links.

• Support Responsible Mining Initiatives: Where possible, supply conflict-free mineral sourcing.

For more information, read our Situation Reports.

Conclusions & Key Takeaways

Conflict in North Kivu is severely damaging global mineral supply chains. Core minerals like coltan, cassiterite, and gold are greatly impacted, causing delays and interrupting the global supply chain for businesses across the globe. In light of rising concerns about trade routes, ethics, and the feasibility of compliance, businesses should prepare alternative strategies to ensure continuity.

Conduct an enhanced due diligence and responsible sourcing report with Prewave to discover how you can improve your supply chain and mitigate potential disruptions. Get in contact today to future-proof your supply chain.