By Melissa Pistilli - Exclusive to Tin Investing News

^[1]

Rising tin prices are causing disruptions in the flow from Congo

The Association of Exporters of Minerals of North Kivu is expecting a decision tomorrow ^[2] from the Mines Ministry and Finance Ministry of the Democratic Republic of Congo, on the recent increases in traders' tax liabilities.

On June 23 this year, the DR Congo's custom agency, Ofida ^[3], raised the reference price on which it levies a 11 per cent 'export tax' on tin ore, from $4 to $14 per kilogram. Reacting to this, exporters in North Kivu, responsible for 75 per cent of the country's tin shipments, halted exports.

DR Congo is Africa's largest tin producer and accounts for 4 per cent of the world supply. According to the U.K. Department for International Development ^[4], the nation exported 16,870 tons of tin ore in 2006. DR Congo's main export point is Goma, the provincial capital of North Kivu. Nearly two dozen cassiterite (the primary tin ore mined in the area) and coltan processing and exporting companies operate out of the city. The demand for such minerals is fueled by the electronics industry.

Since the strike, nearly 2,500 tonnes ^[3] of ore of an estimated value of about $30 million has accumulated in Goma's warehouses. Traders have run out of room to stock anymore incoming mineral shipments.

Last week, the stand-off between the North Kivu's mineral traders and the customs officials worsened, and traders were forced to curtail operations and lay off employees. "Today, we have decided to shut all our operations and place our workers on technical leave until we can restart...if we can restart," said John Kanyoni ^[3], President of the Association of Exporters of Minerals in North Kivu.

So far, the disruption in the tin trade has cost 10,000 small-scale miners and traders their livelihoods. Close to 1,000 employees at 28 trading houses, informed Kanyoni, are also at risk of losing income if the dispute is not resolved soon.

Yesterday, exporters met with representatives of several government organizations with taxing rights including the Customs and Excise Department, Congolese Office of Control, the Center for Expertise, Evaluation and Certification, and the Technical Cell for Mining Coordination and Planning. Kanyoni says the Association of Exporters offered to pay 5 per cent  ^[2]on the London Metal Exchange tin price, up from its previous offer of 3.75 per cent. "We also want a formula to get the goods out quickly," said Kanyoni.

Democratic Republic of Congo is "blessed and cursed"

The DR Congo, where elections were held in 2006 after a gap of over forty years, is a nation "blessed and cursed" with abundant natural resources (gold, diamonds, copper, cobalt, tin). Blessed, said The National's Matt Brown ^[5], because the deposits give the country "potential to become one of the wealthiest in the developing world". Cursed since the same natural resources have helped to fuel Congo's deadly civil war.

Despite its potential for wealth, the nation is one of the world's poorest countries with many Congolese surviving on less than $1 a day. Today, the DR Congo's mineral resources, including tin ore deposits, are under the control of foreign companies and rebel groups. Those mines in rebel-held regions, according to a Global Witness report, help supply the militias with guns.

Although the war officially ended in 2003, the government and several North Kivu militias signed a peace agreement only in January this year to curtail violence in North Kivu's cassiterite mining sector. The current export tax hike, says Kanyoni, could throw a wrench in the peace process.