Disclosure requirements for mining and energy companies included in the newly enacted U.S. financial reform law should become a global standard for corporate transparency, the Obama administration said on Friday, but an Australian resources company focusing on Africa warned that it is likely to squeeze tantalum supplies and increase prices.
“The United States is committed to working with other countries to ensure the implementation of similar disclosure requirements in other financial markets and will make this a priority in the year ahead,” the White House press secretary said in a statement.
Administration officials noted that the reform law signed by President Barack Obama on Wednesday included what was described as “a landmark provision” requiring energy and mining companies registered with the U.S. Securities and Exchange Commission to disclose how much they pay to foreign countries and the U.S. government for oil, gas and minerals.
They called the provision “an essential tool” for promoting transparency in the oil and mineral sectors. “The legislation will immediately shed light on billons in payments between multinational corporations and governments, giving citizens the information they need to monitor companies and to hold governments accountable,” the press secretary’s statement said.
“It will shine a sustained light on the relationship between corporations and governments in the oil and mineral sectors, and make impossible the kind of back-room dealings that cost taxpayers in lost royalties,” the statement continued.
Activists campaigning for restrictions on “conflict minerals” and “dirty deals” for resource extraction with other governments claimed victory following the signing and called the law a “major success” and an “incredible victory.”
The legislation requires the Securities and Exchange Commission to within nine months write regulations implementing public disclosure of payments to the U.S. or foreign governments for commercial development of oil, natural gas and minerals.
Other provisions requiring that manufacturers using “conflict minerals” from the Democratic Republic of Congo and neighboring countries will also be required to report to the SEC on their supply chains and be subjected to independent audits were cited by Globe Metals & Mining Ltd., West Perth, Western Australia, in warning Monday that the new law is likely to raise tantalum oxide prices.
“The ‘conflict minerals’ provisions have major implications for the tantalum industry and are likely to further constrain the already tight supply of raw material throughout the entire supply chain,” the company said in a six-page market update, noting that the law would require American companies to submit annual reports to the SEC on use of tantalum, tin, tungsten and gold sourcing.
The restriction is aimed mainly at identifying metals sourced from conflict areas in the Democratic Republic of Congo and adjoining countries. The company said that it was likely that the safest and easiest course for major consumer electronics brands like Apple, Intel, Sony, Nokia and Research in Motion would be to not source tantalum from the Congo area.
Executives noted that in recent years the DRC has supplied about 15% of the world’s tantalum while approximately another 40% of the world’s raw material production has been closed by the world’s financial crisis in recent years. Wars in the eastern Congo over the past decade have been financed in part by the region’s easily-mined, rich artisanal deposits of coltan used for tantalum and niobium production, casserite producing tin, wolframite producing tungsten and gold.
Globe is currently developing a niobium, uranium, tantalum and zircon project outside the region with restrictions under the act. That project, in central Malawi, is scheduled to begin production in 2013 at a rate of 3,000 tonnes per year of niobium metal with output of tantalum as a by-product.
Executives noted that other emerging tantalum projects with primary or co-production of the metal outside of the Congo region include a Commerce Resources Corp. project in Blue River, British Columbia; a Crevier Minerals/MDN Inc. project in Anita, Quebec; and a Gippsland Ltd. project in Abu Dabbab, Egypt.
“This bill offers a ray of hope to people in the DRC and around the world who suffer violence and human rights abuse at the hands of armed groups,” said Jennifer Krill, executive director of Washington-based Earthworks, a member of the Publish What You Pay campaign that promotes extractive industry transparency.
“This is a law that is going to affect virtually the entire U.S. manufacturing sector,” said Rick Goss, vice president of environment at the Information Technology Industry Council.
Ron Gilerman, managing director at A&R Merchants, which trades tantalum and other exotic metals, said the prices out of Brazil were at $80 per pound (on July 19th). He said another 50% increase in prices across the board in 2011 is in the offing.
Editor’s Note: One common theme throughout is that rare earth materials and metals are becoming more volatile in terms of price and availability.
Additional Resources: (1) Tantalum Capacitors: World Markets, Technologies & Opportunities: 2010-2015 ISBN # 1-893211-11-8 (© April 2010) (2) TANTALUM: Global Market Outlook: 2008-2013 ISBN # 0-929717-81-3 (2008)