By Melissa Pistilli - Exclusive to Tin Investing News

The Congolese Government has been unsuccessful in its attempts to clean up the tin sector in North and South Kivu.

In January of this year, the authorities had signed a ceasefire agreement ^[1] with the National Congress for the Defence of the People (CNDP) headed by Tutsi General Laurent Nkunda and a dozen other militias.

The Tutsi group's rebellion is at the center of a conflict that has festered throughout the region despite an official end to the 1998-2003 war. The peace process has struggled through constant ceasefire violations and fruitless attempts to integrate rebels into the army.

Since 2006, more than 800,000 ^[2] people in North Kivu have been forced out of their homes by the fighting. It is estimated that 5.4 million people have been killed since the war began in 1998. According to U.N. peacekeepers, the hostilities now threaten to boil over into war after the heaviest clashes in months. The army and the rebel group have fought some intense battles this last week over the country's mineral wealth.

Fighting between Nkunda's rebels and the Congolese army broke out again on Wednesday with both sides pointing fingers at each other. "The situation has indeed become more unstable. That is a worry," said Alan Doss ^[2], head of the 17,000-troop strong U.N. peacekeeping mission in Congo.

Congo Government closes Uganda border crossing

Congolese authorities have closed and abandoned a border post in Bunagana that connects the North Kivu province with Uganda. Since last year, Nkunda has had control over the post, which is a main source of revenue for the CNDP.

"It's a border post; a customs post that has continued to generate the necessary means and resources that have permitted Laurent Nkunda to continue this unjust war," said Serephin Ngwej ^[1], government special envoy for the Great Lakes region. Ngwej also said that the closure is meant to stop the flow of illegal arms shipments across the border.

Analysts, however, are worried that such a move will leave the border crossing unmanned, and further under the control of Nkunda, along with revenues from North Kivu's tin ore exports. "Whether it is realistic to assume that the government's announcement will stop, or significantly reduce, the trade via Bunagana remains to be seen," said Nicholas Garrett ^[1], a mining expert at London-based Resource Consulting Services Ltd.

As have many armed groups in Congo over the past decade, Nkunda and the CNDP have profited greatly from mining operations and have used the mineral trade to finance illegal weapons purchases. North and South Kivu account for approximately 80 per cent of Congo's tin ore. Traders export the majority through the Bunagana post in order to avoid the hefty costs of moving shipments through Rwanda.

Congo exports still held up

Cassiterite tin ore dealers in the North Kivu province of the Democratic Republic of Congo announced last week that an agreement between them and the government had brought the nearly two-month long export strike to an end. Export shipments were set to resume this Monday, but have been put on hold, once again.

Late last month, the mining and finance ministers signed a decree to fix the export tax on tin ore mined in North and South Kivu at 5 per cent of the London Metals Exchange (LME) market price. This new tax system takes considers fluctuations in the international market price and allows exporters to deduct treatment charges, including insurance and transport fees.

Exporters said were yet to resume activities because Ofida, the national customs agency, was trying to tax ore using out of date prices. "There is not a single kilo that has moved ... They have sent out figures from the beginning of August when the LME (price) was almost US$23.5 per kg, which is very high," said John Kanyoni ^[3], President of the Association of Exporters of Minerals in North Kivu.

The reference price should change on weekly basis based on the previous week's average LME price. Stanislas Kisanga ^[3], Ofida Provincial Director said they had resolved the issue but had yet to inform exporters. "I have just received the new reference prices by email. So there is no longer a problem. We are going to apply them now," Kisanga said.

Exports should resume this week as traders seek to unload the 2,500 tonnes of ore that piled up in the province's capital, Goma, during the strike. Buyers had stopped purchasing ore in early August once warehouse space ran out, but purchases have resumed. "We are buying again already, but in small volumes. By the end of this week or the beginning of next, we should have the chance to buy more volume," said Kanyoni.