Coltan in the DRC: video games and gorillas

The interactions of supply, demand and equilibrium prices seem innocent and basic enough, especially when they interact on a well constructed, colorful graph. But what are the consequences of the concepts? What can happen when demand rises suddenly or supply drops sharply? In most basic economic classes, we calculate a shortage. One such example was during the 2000 Christmas shopping season. The new PlayStation 2 gaming system had been released and was a must-have for many American adolescents. Parents panicked when they found stores indefinitely sold-out. This shortage, while marking a sharp increase in the number of irritated children on Christmas morning, had serious consequences elsewhere in the world.
The much-anticipated release of the PS2 was hampered by a world shortage of columbite-tantalite, or coltan. Coltan is a heat resistant metal that regulates voltage and stores energy in high performance electronics such as cell phones, computers, night vision goggles and video game consoles.

Eighty percent of the world's coltan reserves are located in the Democratic Republic of the Congo in Central Africa. The DRC is home to more than 60 million people and is about one third the size of the United States. Much of the country is covered in jungle, which is home to rare gorillas and okapis. The DRC's modern history is complicated and bloody, beginning with King Leopold's violent exploitation of rubber during colonialism through to independence and close four decades of on-and-off civil war. The basis for conflict is partially due to ethnic tensions and neighboring countries- the genocide in Rwanda has had serious ripple effects in the Congolese northeast. But there is no doubt that conflict is fueled by the country's massive natural wealth. The DRC has substantial stores of copper, cobalt, uranium (the bombs dropped in Japan were made from Congolese uranium), zinc, gold and tin. Mining rights in the war-torn country are often handed out in less than legitimate negotiations with politically instable leaders. The environment and existing human populations are rarely taken into consideration and the result has been widespread deforestation, environmental degradation, and millions of Congolese either killed or displaced and neighboring countries facing similar consequences. In 1998, The US Secretary of State, Madeleine Albright called the conflict originating in the DRC "the first African world war", as it involves six neighboring countries and more than five million dead- many of preventable disease and starvation associated with war. The United Nations released a report based on a six-month investigation that concluded the war “has become mainly about access, control and trade” and the high price of coltan “created a 'win-win' situation for all belligerents” who trade alliances depending on business interests and who can garner the best weapons.

These side effects are particularly harmful when there is a rush for a particular mineral. Per our example, in January 2000, coltan fetched approximately $40/pound on the world market. The North American release of the PS2 in October, and November release in Europe and Australia, created a frenzy with record breaking demand. As a result, the price of coltan rose dramatically. In December 2000, the BBC reported the price as being $380/pound.

The rise in international demand led to a surge of violence as rival militias invaded mining regions. Local men rushed into the jungle along with militias, prostitution and disease. However, what drew the most media attention was not the plight of human populations, but of gorillas. Without a strong national policing force, miners invaded pristine national parks, destroying the jungle as they went and shooting wildlife for food. In Kahuzi-Biega National Park, for example, about 10,000 miners rushed the forest in an attempt to capitalize on the high demand for coltan, and killed approximately 7,000 eastern lowland gorillas in the process. A report by a coalition of environmental groups said that without action, this gorilla “''will become the first great ape to be driven to extinction -- a victim of war, human greed and high technology.''

In the end, it was not individual actors who lead to the abandonment of coltan mines, but the world economic slowdown of 2001 as demand for electronics and other consumer goods fell. In July 2001, the price of coltan was down to $100/pound according to some sources and as low as approximately $20/pound according to others. Additionally, companies scurried to avoid bad publicity as photos of dead gorillas and environmental squalor surfaced, threatening the traditionally “green” image of many high-tech companies. Nokia and Motorola are amongst those to takea public stand against Central African coltan, along with a number of suppliers and processors. As a result 80% of the world's coltan supply now comes from Australia.

But in the end, it is still the Congolese people who suffer. Few opportunities exist for making a livlihood in a country where diseases like sleeping sickness and ebola plague people existing on an average of $0.20 a day. Regardless of environmental or social costs, any bump in the price of coltan or other minerals causes a rush to the jungles. And really, with almost non-existent international support, what would we expect parents, husbands and older siblings to do when their loved ones are hungry and sick? Embargos on Central African minerals is a short-term solution to one aspect of a multi-faceted, decades old conflict- a bandage, if you will, on a terminal cancer patient. That being said, it remains important to understand that there are sometimes serious consequences associated with our basic supply and demand graphs- that goods and services often have a multi-national supply chain, within which massive human rights offenses, environmental disaster and overall destruction exist.

BBC News: Congo's Coltan Rush
High-Tech Genocide
NY Times: The Dirt in the New Machine
World Rainforest Movement
NY Times: A Black Mud From Africa Helps Power the New Economy