A report by Bloomberg links the sale of rare earth elements used in manufacturing smartphones to a terrorist rebel group in Colombia, indicting companies such as Apple (AAPL), Hewlett-Packard Co. (HPQ), Samsung (SSNLF) and more for indirectly funding terrorism.
The article examines how the companies buy parts from a middle-man firm that purchases from a company importing the source minerals from Colombian territory controlled by the Revolutionary Armed Forces of Colombia (FARC). The rebel army has been fighting with the government for decades and is blamed for scores of murders and attacks.
Because both metals in question — tantalum and tungsten — are so rare (used in everything from auto parts to computers) companies must search worldwide for supplies. China holds the most reserves and keeps tight control over them, so companies must search elsewhere.
One such illegal and unsanctioned tungsten mine in Colombia operates in FARC territory and sales from the mines go back into their hands. All companies deny knowledge of where the money eventually ends up or who controlled the mine.
The article explains:
Companies that have bought parts from a supply chain that included tungsten ore from Colombia say they had been unaware of any possible links to the FARC before they were contacted by Bloomberg Markets. Apple, BIC, BMW, Ferrari, Samsung and Volkswagen (VLKAY) say they’re opening investigations to secure their supply lines.
The rare-earth elements are expected to become critically scarce by 2015, underscoring just how difficult finding them has become. And when buying from supplies, often it’s difficult to know what or who is at the end of the line. From the National Counterterrorism Center:
FARC tactics include bombings, murder, mortar attacks, kidnapping, extortion, and hijacking, as well as guerrilla and conventional military action against Colombian political, military, and economic targets. The FARC has well-documented ties to a range of drug trafficking activities including taxation, cultivation, and distribution.