Global Peddlers Trade with Venezuelan Coltan

It is one of the so-called "rare earth elements" and a strategic material for high-tech industry. It abounds in the south of Venezuela, next to the border with Colombia. And although the Venezuelan government announced in 2009 measures for the military control of the deposits, since then, international smuggling routes have flourished, in which drug trafficking and informal traders participate. In a climate of mystery, now the Venezuelan coltan also threatens to become a source of geopolitical conflicts.
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Hidden
among so many ads posted on the web, the first links of a smuggling chain that
starts in deposits in the Venezuelan states of Amazonas and Bolívar appear on
the Internet, it sustains a submerged economy -with actors of drug trafficking
in the distribution- in bordering countries like Colombia and Brazil, and after
laundering it through traders in antipodes like South Korea, it ends in the
electronic brains of videogame consoles, cell phones and guided
missiles.
What
merchandise has given rise to this convoluted semi-covered trade route? It is
the coltan, the blue gold of the 21st century, required for various
strategic industries due to the conductivity and heat resistance properties of
its components, columbite and tantalite.
For
Venezuelans, coltan went from being an unknown famous or a science fiction
denomination, to a nearby reality thanks to an announcement by President Hugo
Chávez. "Now a strategic mineral called coltan has appeared and we have taken
the area militarily because they were smuggling it to Colombia," the president
said on October 15, 2009. His order reached all the media but it seems that it
did not have a determining effect, based on the following journalistic
investigation jointly developed throughout a year by reporters of El Universal
newspaper of Caracas, the site Armando.info, also of Venezuela, Noticias Uno of
Bogotá, with the support of the International Consortium of Investigative
Journalists (ICIJ) of Washington DC.
Exposed
on the web, on sites such as Tradeboss.com, is the offer of the Venezuelan
mineral —coltan mostly, but also gold and aluminum, among others— by Korea TPC
Development of Venezuela. It guarantees dispatches to any part of the world and
confidentiality. "Through our fully automated trade platform, customers can
directly interact per each shipment while maintaining control of their order in
an anonymous and conflict-free environment."
Korea
TPC Development of Venezuela was registered in the First Mercantile Register of
the city of Valencia, state of Carabobo, on July 29, 2010, nine months after
President Chávez ordered the military control of coltan deposits in the
Orinoquia. According to the register, the company, with a capital of 23 million
dollars, would be engaged in the "construction of bioenergy and gas plants, as
well as the manufacture of diesel-based facilities".
Today,
however, its principal offices with declared address in hotels like Gran Meliá
Caracas and Caracas Palace, simply do not exist. Its trail is also lost in other
addresses in the areas of Altamira and Los Cortijos, in
Caracas.
However,
from Seoul, capital of South Korea, Yang Ha Young recognizes that his name and
his company correspond to the same company in Valencia that offers minerals on
the Internet. After several attempts to contact him, he declared that he was
scammed by Venezuelan partner Moisés González in a series of businesses that, he
assumes, now involves him with the purchase and sale of
coltan.
"The
warning has nothing to do with me," he says. "I was the victim of my partner and
I have not been able to communicate with him since he deceived me." Although an
attempt was made to contact González, he never answered the telephone calls to
the number he published on the Internet adds; not even the neighbors of the
addresses he declared under his name know anything about
him.
In
the opinion of the Korean businessman, everything is part of a misunderstanding.
On the other side of the world, from an office in the Garak-Dong neighborhood,
he admits that he spent a season in Venezuela waiting for contracts that PDVSA
and other state companies never awarded to him. The misunderstanding, if any,
anyway illustrates the dark side of a barely known trade with origins in the
foothills of the Guayana Shield, in the north of the state of Amazonas and
southeast of the state of Bolívar, where the improvised gold and diamond mines
begin to share the land with a new mineral in the neighborhood, the black
stones, the so-called blue gold or coltan, as it is best known.
The Other El Dorado
Coltan
is a combination of columbite and tantalite. Columbite contains Niobium, and
tantalite contains Tantalum, numbers 41 and 73 of Mendeleev’s Periodic Table.
Although both elements belong to the so-called rare-earth minerals, their use
has become increasingly common and indispensable for the miniaturization of
electronic equipment ranging from cell phones to missiles.
Despite
their rarity, already in the late 70s, the Ministry of Energy and Mines of
Venezuela (the then Ministry of Mines and Hydrocarbons) financed research
regarding these and other minerals of the Guiana massif, the peculiar geological
formation containing inside elements as valuable as they are scarce. But more
than 30 years later, when those pioneering experiments were just references
filed in the libraries of Corporación Venezolana de Guayana (CVG), a new wave of
miners appeared in search of raw material for new technologies. And they arrive
with voracity.
Right
in Parguaza, in the state of Bolívar, at the foothills of the Guiana massif, the
first signs of coltan fever are evident.
In
the area of Los Gallitos, from one of the deposits made out in the middle of the
savannas, the miners confirm that foreigners are the ones looking for the booty
as if it were a home service. " Colombians are the ones who move this stone
here," Flandes says plainly, without a last name or formal name, suggesting that
it is a nickname.
"They
come by motorcycle and travel again to the port of El Burro, then, they take a
boat that leaves them in less than 15 minutes in Puerto Carreño, the capital of
the department of Vichada," adds Flandes, who is the son of another miner who
accompanies him in the search for the so-called black stones. They have learned
to distinguish the difference between these mineral from other rocks that are
also found in the lands of the area; it is almost black and weighs more than a
traditional stone.
Father
and son have history extracting gold and diamonds in the region. Now, leaning
over a pile of reddish earth, they are seen with a pick and a shovel extracting
coltan around Parguaza, a corner of the state of Bolívar that begins to appear
on the radar of large companies in the technology sector. In that area, and at
least in other four points more known by the locals, when the military lower
their guard, they go in waves of up to 30 miners to find the blue
gold.
There,
where the stone mountains rise above the until-recently virgin jungle, a new
activity sprang up. "People are in this because they are in need and there is no
work," explains Camilo, another of the many miners in the
area.
Everyone
remembers well that a group of foreign businessmen appeared more than a year ago
in the place with offers of growth. They spoke of new times, of benefits for
those who backed with their signatures a request to the government to legalize
the extraction of coltan. Everything was in words to the wind. They did not even
give printed business cards. "They told the people that there were going to be
houses and work sources, but they did not come back," says
Flanders.
Several
of the landowners in the area add that Colombians, Australians and even Koreans
came knocking at their doors with a coltan project under their arms. They
offered millions in cash in exchange for their property deeds. In Venezuela,
anyway, extracting coltan is a crime.
Any mining activity has been banned in Amazonas since 1989. Only in Bolívar the mining development company of the Amazon (Demina) obtained a concession in 2001 to explore and exploit coltan, among other minerals, but now faces the case in courts, after the Government rescinded in 2010 the only license that the State had granted
Extracting,
storing or transporting black stones became a crime thereafter. The judicial
records reveal that the National Guard seized almost two tons (1800 kilos) of
coltan between 2009 and 2011 to seven people, including women and men,
indigenous people, Colombian citizens and minors.
Although
several of the accused have been released, most of the cases remain open. The
National Guard has confiscated the ore inside wrappings, bags of fique and white
stockings, along with picks, surucas (screen), shovels, machetes and some pairs
of boots.
A
local organization, the Foundation for the Development of Science and Technology
in the state of Amazonas (Fundacite Amazonas) revealed in a 2009 report that the
National Guard had 46,800 kilograms of columbite-tantalite confiscated from a
Colombian citizen and that in the checkpoint of Pozón de Babilla were machines
seized by the military near the area where the illegal extraction occurred.
Fundacite, attached to the Ministry of Science, Technology and Innovation, found
evidence that the miners had the advice of specialists with knowledge on methods
of studying soils.
Black Route to Blue Gold
The
confidentiality assurance that Korea TPC Development of Venezuela offers on the
web is neither excessive nor rare in this business. In fact, coltan is handled
outside the law, without invoices or customs records, and virtually in the
anonymity of shell companies, e.g. Global Impact USA and Hawk Enterprises. Only
the first one has legal registration in the state of Florida, USA, but both
refer to the same telephone numbers of a contact in Venezuela, in this case it
is Aribel Ojeda, who prefers not to mention the ore business.
That
shadow marketing is also transnational. If the ore is extracted in Venezuela, it
soon crosses the borders that in this area usually correspond to geographical
features. Between Venezuela and Colombia that feature is the course of the
Orinoco River. In its basin, in the middle of the jungle, there are more streams
than roads. Coltan peddlers only need 15 minutes by boat to take the goods to a
safe harbor. Through El Burro and Puerto Páez, merchants cross the Orinoco to
reach Puerto Carreño, in Colombia. Further south, but in the same state of
Amazonas, another favorite route connects San Fernando de Atabapo in Venezuela
with Puerto Inírida in Colombia.
Coltan
is an open secret in the south of the country. But like everything informal that
develops in secrecy, it is open to scams and business control by de facto powers
that already handle other illicit traffics. There are many cases of
intermediaries who have received cassiterite for coltan. There are also versions
that, under the protection of discretion, grant a share in the business to
anonymous military officials. Meanwhile, the local church of Puerto
Ayacucho, has not been inhibited
from pointing out in the September-December 2010 edition of its magazine La
Iglesia en Amazonas that "the Armed Forces do not exercise proper control and
the miners evade those controls in various ways, being accomplices in multiple
cases of the damage caused to the environment, which is mostly
irreparable."
However,
on the other side of the border, in Colombia, there is evidence that a black
market of valuable metals and rare-earth minerals is growing in areas where
historically the Government has exercised weak control. Since 2010, its security
entities have seized over 83 tons (166 thousand pounds) of tantalum and tungsten
in an area of the department of Guainía.
"What
we have found are sophisticated drug trafficking organizations that are
increasingly involved with the trafficking of minerals from Puinawai Park and
Venezuela," says the military commander of the area in Colombia, Marine Colonel
Alfredo de Videro
Further
south, the temptation of coltan also permeates the Brazilian border. Not in
vain, most mineral refiners in the hemisphere are in that country. They have to
go through there almost by obligation to become an input fit for industrial
use.
"I would say that Colombia and Brazil have a great deal of business," concludes the governor of the state of Amazonas, Liborio Guarulla, who believes that the national government is an accomplice of the black market for not establishing mechanisms to legalize the exploitation of the mineral. "In those countries, this activity is formalized or at least it is not illegal.”
In
Brazil, experts in mining laws, like lawyer Sergio Rocha Brito Marques, have
urged politicians and manufacturing companies in the country to strengthen
controls on mining. To them, inadequate and obsolete laws have allowed the
growth of a black market north of the country's Amazonian provinces. They warn
that the result is a chaos in the mining of their country in the border area
with Colombia and Venezuela, where there are no clues about the global prices of
the mineral and the buyers do not ask for coltan certificates of origin (a
practice that a good part of the international industry has been adopting as a
standard, under strong pressure from NGOs and multilateral organizations).
The Alarms Triggered
There
is good reason for it. "Venezuela could emerge as a big problem because it
represents another source of conflicting coltan, coming from an area where there
is no regulation, no transparency and no security for the people working in the
mines," warns Aaron Hall from Washington, on behalf of the NGO Enough
Project.
The
ghosts of Africa haunt any analysis on the subject. Although the conflicts
already existed, coltan propped up the tribal struggles of Congo, Uganda and
Rwanda. Blood-stained coltan (like diamonds) became a phrase made from
humanitarian campaigns and film scripts. But in the Venezuelan case, that
trailer and the flirtations of the national government with China and, above
all, Iran, announce a horror film of geopolitical
dimensions.
"We
have decided to work with the Iranian brothers in the exploration of mines," the
then Minister of Basic Industries and Mining, José Salamat Khan, said in 2011.
Apart from the announcement, since 2009, Iran has been cooperating with
Venezuela in conducting studies of mineral soils to prepare the Venezuelan
mining map, according to the page of the National Geoscience Database of
Iran.
The
matter is not indifferent to the US authorities. Venezuelan officials, like
former Minister Khan, in 2010, maintained relationships with Iranian shipping
company Sadra Shipping, which claims on its website to have a branch in Caracas.
Sadra is a subsidiary of company Khatam al-Anbiya, subject to sanctions by the
US Department of the Treasury for its participation in the Iranian nuclear
program.
The
Venezuelan case, however, is far from the examples of Central Africa, a vein
from which a fifth of the global supply of coltan is extracted, and a region
plagued by endemic political instability.
Another
Venezuelan advantage that experts celebrate is that although reaching one of the
most intricate mines in the south of the country can take up to a week by boat
and on foot, many of the black stones are loose in the form of
nuggets.
As
in a large part of the commodities world trade, extractors have a small part of
the business. The most fortunate Venezuelan miners have found rocks of 15 kilos.
On average, up to 200 bolivars (around 46 dollars at the official rate) are paid
per kilo; this, after a negotiation process to fix the price. In the formal
market, the payment is higher. The price went from 45 dollars per kilo in 1990
to a record high of 700 dollars in 2000, when the multinational Sony had to
postpone the launch of the second version of PlayStation because of the scarce
offer of coltan back then in the market.
There
is not yet a public index of prices. The secret that involves the purchase and
sale of the mineral generates price variations that produce spikes and drops in
supplies. Everything depends on a negotiation process. "Niobium and tantalum
materials are not openly traded," warns the US Geological Institute (USGS).
"Purchase contracts are confidential between buyer and
seller."
The
cloudiness in the Venezuelan coltan market is a symptom of a problem that
—according to researcher Raimund Bleischwitz of the Institute for Climate,
Environment and Energy of Wuppertal in Germany— Chávez’s government must face.
The black market will grow and increase its danger as the government delays the
generation of mining laws and transparency.
"Manufacturers
do not want to deal with bandits," says Bleischwitz. "Central Africa is a
problem because there are no strong governments with which to negotiate a stable
market and transparency. That is where Venezuela's strong central government has
the potential to do it right and establish order in the coltan market, instead
of a black market."
With reports from Ricardo Sandoval Palos in the United States of America, Ignacio Gómez in Colombia, Marcelo Soares in Brazil, and Nari Kim in South Korea
Related
contents
Also
read on the website of the International Consortium of Investigative Journalists
(ICIJ):
"Venezuela emerges as a new source of 'conflict' minerals"
"Colombia's
black-market coltan tied to drug traffickers, paramilitaries"
Also
read on the website of El Espectador:
"Amenaza
en el Puinawai" (Threat in
Puinawai)