A Bottom-Up Business Model for Coltan In The Congo

A national coltan competitive cluster in the Democratic Republic of Congo (DRC) is a formal, large-scale framework through which an inclusive, localized economic system can emerge. It can be designed to benefit key stakeholders, including artisanal miners, communities, government, large companies, and consumers. However, this business ecosystem takes years to implement. On the other hand, there are alternative business models that can evolve to a full coltan competitive cluster but begin to operate within a year or two. One of these alternative business models focuses on informal miners and purchase counters.

There already exists a chain of artisanal miners in the DRC, who extract coltan manually. Many of these miners are ill-equipped, ill-trained and exploited whether they extract coltan that ends up on the open or black market. This is a scenario that in no way leads to sustainable livelihoods and communities.

However, it can be transformed to a doable business model for the entire coltan value chain, using this grassroots, informal supply chain. Imagine trading posts of long ago where miners and trappers brought the fruit of their labor to trade for supplies and coin. In the modern context, we can use purchase counters as "trading posts" with a new twist. The miners are already selling, or trading, the extracted coltan to someone. Why not set up government-approved purchase counters that purchase the coltan directly from miners?

This straightforward business model can usher in many different improvements to distribute benefits throughout the coltan value chain. Strategic mineral resources can be applied to the benefit of the broader Congolese population as recommended in the report, "A Comprehensive Approach to Congo’s Conflict Minerals" by the Enough Project. The DRC government can allocate a certain number of strategic mineral deposits that provide opportunities for informal miners to use manual extraction methods to procure coltan.

Working with the private sector and civil society, the DRC government can identify existing, artisanal miners to help them transform their livelihoods from survival to sustainable. The government would license the miners to extract the coltan in these areas, as well as provide a means to track the coltan from the source to the purchase counters then to the world markets.

The purchase counter facilities fill a larger role, including a means for the miners to purchase better equipment, receive training and support, and obtain microfinance to help them transition from informal enterprises to formal enterprises. Also, the miners are able to sell the coltan at a fair market price.

This business model also helps the local community develop economically and socially through spin-off opportunities. For example, as the miners and the communities bring in income, they will look for more products and services to support their way of living in sectors like housing, health, education and telecommunications. Locals can also develop community enterprises owned by miners and community members to leverage the resources and assets acquired through the coltan business.

This is also an opportunity to positively respond to the world’s pressure for change in the coltan sector. With major companies like Nokia and Cabot having policies to only purchase coltan from verified sources and a bill like the Congo Conflict Minerals Act of 2009 being introduced to the United States Congress, without significant change it will become increasingly difficult for coltan from the DRC to be sold on the world market. Proper practices can be incorporated into the business model to address issues within the global value chain.

This business model can also augment the implementation of DRC’s poverty reduction strategy, which was formulated in 2006. The DRC government has the opportunity to develop a consistent tax base, which will contribute to its ongoing sustainability. In alternative ownership models, the government, communities, and domestic and international private sector firms can own parts of these key strategic mineral resources. This provides the DRC government, as well as communities, additional streams of revenue to apply towards social development.

As an evolving business model, it can transition from purchase counters to include formal mining operations, processing facilities, and manufacturing firms. Eventually, it transforms into a full competitive cluster. To leverage the business model, apply it to other minerals like gold.

There are sufficient strengths in the global coltan value chain to implement within a year. However, the approach for success requires inclusiveness, win-win scenarios for key stakeholders, trust, transparency, accountability, and a people-orientation. The remaining challenge is not the possibility of implementation, but the people, including organizations, dedicated and open to implementing a business model of this nature.