It’s a sweltering day in March, and Javier Garcia slogs through the dense undergrowth in a remote stretch of the Amazon jungle in southeastern Colombia.
He and a friend have hiked all day toward their goal, a mining site more than 60 miles from the nearest town, hacking through the thorny brush with machetes.
Finally, the two arrive at a small clearing pocked with shallow holes gouged into the sandy red ground. A torrential rain starts to fall. Garcia, 30 and a Puinawai Indian, squats by a stream, takes a shovel out of his pack and scoops dirt into a sifter made from a rusty screen. Like gold prospectors, the men swish watery red mud around a flat wooden pan until pebbles containing a metal called tantalum appear.
“It’s hard work but worth it,” Garcia says. Amazon Indians such as Garcia, who inhabit a Denmark-size region along the borders with Venezuela and Brazil, have for decades made a living exploring the rain forest for valuable rocks that contain tantalum and tungsten, both of which are used to manufacture smartphones and other mobile devices.
While the Indians do the digging, they rely on another, more powerful group to get the ore to market: the Revolutionary Armed Forces of Colombia, known as the FARC. The rebel army uses the cash it makes from selling metals to finance one of the world’s longest-running guerrilla wars, the Colombian National Police say.
Garcia says he has mined metals during the past year for the FARC. “People all over the world seem to want these little stones,” he says.
He’s got that right. Tungsten, in particular, is in high demand.
The dark, heat-resistant and super-hard metal is inside the engines of some of the most popular cars in the world. It’s used for screens on computers, phones, tablets and televisions. It helps mobile phones vibrate when they ring. Semiconductor makers use it to provide insulation between microscopic layers of circuitry.
The FARC, in addition to charging Indians such as Garcia for the right to mine, operates a tungsten mine known as Cerro Tigre, or Tiger Hill. Garcia says he worked there in 2012, earning enough in a week to last several months at home.
Tiger Hill rises above the rain forest in an area ruled by armed FARC fighters more than 137 miles from the nearest road, town or police station. On top is the mine, where hundreds of people toil in 15 acres of muddy pits, according to the National Police.
The mine is illegal in three ways: It’s inside a forest preserve. It’s banned by Colombian law because it’s on an Indian reservation. And it’s run by the FARC, which is classified by Colombia, the United States and the European Union as a terrorist organization.
“It’s completely illegal, but we haven’t been able to stop it yet,” says Col. Luis Montenegro, a National Police commander. “We don’t control any territory out there; FARC controls it.”
The mine can produce more than 16 tons of wolframite, a rock containing tungsten, in a week, police say. That’s enough to make tungsten parts for hundreds of thousands of LCD screens, smartphones, semiconductors, car parts and pens.
While Tiger Hill is illegal, it’s the only known tungsten mine in Colombia, Environment Ministry officials said.
And Colombia, the third-largest economy in South America, supplied less than 1 percent of the world’s tungsten in 2012.
Although China produces the most tungsten — about 85 percent of global output — authorities there impose tight controls on the metal to assure domestic manufacturers have enough. That’s forcing companies to scour the globe for mines elsewhere.
One company that buys and processes Colombian wolframite, or tungsten ore, supplies some of the world’s leading multinationals — including the makers of BMWs, Ferraris, Porsches and Volkswagens, as well as Siemens and the producer of Bic pens, these companies say.
Since 2008, there have been 40 shipments of tungsten ore from Colombia by 14 companies, according to government export documents. Although none of the records from these shipments say the tungsten ore comes from FARC-run Tiger Hill, Colombian authorities are convinced that it does. Cesar Melendez, the Environment Ministry’s director whose jurisdiction includes much of Colombia’s Amazon region, says the shippers are hiding the tungsten ore’s true origins. “They falsify the source of illegal metals,” Melendez says. “This is how they launder tungsten.”
Buyers negotiate with FARC guards to purchase loads of the ore, according to national and regional police commanders, government officials who oversee mining and interviews with people involved with those transactions.
Workers then transport the ore in boats in a week-long journey — braving treacherous rapids and police patrols — from the mine to muddy river landings near San Jose del Guaviare, a city on the edge of the Amazon. Once near San Jose, smugglers load sacks of the rocks on trucks headed for Bogota and later for the Caribbean port of Santa Marta.
One of the biggest buyers of Colombian tungsten ore has been a U.S. unit of Plansee, an Austrian metals processor, according to export records filed with Colombia’s tax agency. In 2012, two Colombian minerals companies, Geo Copper and Minerak, sold seven loads of tungsten ore totaling more than 100 tons to Plansee’s U.S. subsidiary, Global Tungsten & Powders, export records show.
The filings say the Colombian companies shipped the tungsten ore — valued at $1.8 million — to Global Tungsten’s plant in Towanda, Pa., which makes refined powder, wires and chemicals.
On July 2, five days after a Bloomberg Markets reporter asked Plansee about the FARC origins of its Colombian tungsten ore, Global Tungsten & Powders issued a news release saying it would stop buying tungsten ore from Colombia.
“The tungsten minerals from Colombia may have been mined illegally,” the statement said. “Armed groups may be exerting influence over the tungsten mining sites and/or transportation routes.”
Multinational companies that buy parts from a supply chain tainted by Colombian tungsten ore have publicly sworn off the purchase of minerals from another conflict-ridden country, Congo, in Central Africa. As part of the 2010 Dodd-Frank law, the Securities and Exchange Commission will require publicly traded companies to follow U.N. guidelines and disclose by May 31, 2014, whether they’re buying gold, tin, tungsten or tantalum from mines that finance war in Central Africa.
There are no such rules for minerals that fund the conflict in Colombia. The FARC is a Marxist group that has taken control of remote mountainous and jungle regions of Colombia and wants to overthrow the elected government.
The rebels say they seek to impose a Cuban-style communist state, break up rural land holdings and expropriate private industry. The FARC has waged a 50-year war, funding itself with cocaine trafficking, extortion, kidnapping and mining, the National Police say. The war has killed 257,000 people and, according to the United Nations, displaced 3.7 million.
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 say they’re opening investigations to secure their supply lines.
“Apple is committed to using conflict-free minerals,” spokeswoman Kristin Huguet says. “And we are one of the first electronics companies to map our supply chain for conflict minerals.”
Mining revenue has helped ease the FARC’s loss of control over much of the cocaine trade in Colombia since a U.S.-backed military offensive began in 2002. That effort has cut the FARC’s strength to about 8,000 troops from 18,000, the Colombian government says.
The FARC has been routed from some cocaine-producing regions, depriving it of funds, Colombian President Juan Manuel Santos says. “They finance themselves more and more with illegal mining,” Santos told Bloomberg News in December.
Santos, 62, a Harvard University- and London School of Economics-trained economist, took advantage of the FARC’s military defeats to start peace talks in October, two years into his presidency. Government officials and FARC commanders negotiating in Havana have six major items on their agenda, including land use in FARC territory.
The FARC’s mining shows how illegal forces continue to wield economic power in one of the most attractive destinations for investors in the developing world. Foreign investment and natural-resource exports have helped Colombia’s gross domestic product almost quadruple from 2002 through the end of 2012 to $366 billion, according to the International Monetary Fund.
In May, the Colombian national prosecutor’s environmental crimes unit opened an investigation into companies that may be buying tungsten ore from Tiger Hill. “We are taking this very, very seriously,” says Gloria Arias, a prosecutor. “This clearly seems to suggest how a terrorist group can launder minerals.”
One Colombian company that has exported tungsten ore is Geo Copper, export records show. Geo Copper chief Edgar Rengifo, who describes himself as a self-taught mining entrepreneur, helped create the company in August 2010.
Minerak, the other Global Tungsten & Powders supplier in Colombia, was 50 percent owned by Geo Copper when it was started in 2011. Rengifo says the tungsten ore the two companies export comes not from Tiger Hill but from a licensed mine that Geo Copper co-owns, called Caney de los Cristales. “Caney is the only mine where you can export in this country,” Rengifo says. “The only legal title.”
The Caney mine is licensed to produce black sands, defined as materials that can contain minerals such as tantalum, titanium iron oxide and tungsten.
Although Caney is licensed to produce tungsten ore, no exports are thought to come from the site. The National Police, the army and the Environment Ministry say Geo Copper’s tungsten ore actually comes from the FARC’s mine.
“All of that came from Tiger Hill because there is nowhere else producing that metal,” says Melendez, the environmental official. “And all of it is illegal.”
In late January 2010, Rafael Alberto Rodriguez, an owner of the Caney mine, invited National University of Colombia professor Thomas Cramer to evaluate its potential. Cramer sent geology students to the mine site to collect samples.
“We didn’t find any sign of tungsten there,” Cramer says. The underlying rock in the area is called gabbro, which doesn’t contain tungsten, he says.
Col. Javier Alvarez, a National Police commander, says aerial photographs and investigations show no signs of a major mining operation there. “I can tell you there’s nothing there,” Alvarez says.
The FARC, founded in 1964, is one of the world’s longest-surviving guerrilla forces. By the early 2000s, the FARC controlled swaths of Colombia’s lower Andes Mountains, jungles and central plains.
FARC spokesman Jesus Emilio Carvajalino didn’t return repeated requests to comment for this article.
One FARC stronghold is Guainia, the province where Tiger Hill is located. Montenegro, the National Police commander in Guainia, says the reason the government hasn’t been able to stop illegal mining is that Tiger Hill is in such a dangerous and difficult-to-traverse region.
The mine is guarded by 170 elite FARC troops, Montenegro says. The police have been limited to monitoring Tiger Hill by air and gathering information from miners and FARC deserters. Since 2010, the police have seized 29.7 tons of minerals suspected of coming from Tiger Hill.
Andres Lopez, an evangelical Christian minister who lives in Zamuro, a Curripaco Indian village, says he has been to Tiger Hill. He says he abided by the FARC’s work rules, including giving the group a cut of every kilogram of tungsten ore he mined. “The guerrillas are in charge of everything, even on our land,” says Lopez, 55.
On a steamy day in March, Sergio Varon, a leader of a miners association, and three other men heave a 26-foot boat along the rocky shore of the Inirida River.
They’re headed to Tiger Hill.
Varon, 26, says the men will have to haul the boat and everything in it — fuel, food and a 143-pound outboard motor — around six more patches of rough water before they get there. He says he has been to Tiger Hill before at the behest of a man working for Geo Copper, the exporter that says it has made no purchases from the FARC-controlled mine.
In 2011, Raul Linares, then working for Rengifo, the Geo Copper chief executive, sent Varon on a trip to buy tungsten ore, Linares says. Varon and three other men got to Tiger Hill on April 4, 2011, Varon says. Photos from the trip show denuded jungle and miners sitting in gaping, water-filled holes, panning for metals.
Linares says they negotiated a deal with the FARC soldiers overseeing the mine. Linares says he agreed to pay $3.14 per kilogram of tungsten ore to the miners who FARC had authorized to sell. Receipts from April 2011 chronicle 30 ore purchases, totaling 52.3 million pesos.
After buying the ore, the men had to smuggle it out of the jungle. “We wanted a new route because police were seizing lots of minerals along the river,” Linares says. Once the miners made it out, another crew took the rocks by boat and truck to a Geo Copper warehouse in Bogota, more than 600 miles from the jungle, Linares says.
Rengifo says he didn’t hire Linares to buy tungsten ore from the FARC — Linares’s job was to negotiate with Indian leaders to set up a tin mine on their reservation.
Linares says Rengifo did ask him to help establish a tin mine. He says his job also was to buy tungsten ore for Geo Copper at Tiger Hill. “Of course it comes from the FARC mine,” says Linares, 53, speaking at his home in Puerto Inirida, the city closest to Tiger Hill. Bags of tungsten ore are piled in the corner, and a fan rattles away, scattering moldy papers that document work Linares did for Rengifo’s companies. “I know because it was my job to help them get tungsten.”
Rengifo, 46, says his company buys tungsten ore from the non-FARC Caney mine, which Geo Copper co-owns. Sitting in his office in Cali, he says he didn’t falsify the source of the tungsten ore he has exported. “If we were using a front,” he says, “we would export more because people offer me minerals every day.”
One place where smugglers load tungsten ore onto trucks bound for Bogota is a muddy landing on Big Creek called Julio Cruz in Guaviare province.
Eduardo Lopez, a porter at the landing, says he helped move onto trucks 22 tons of tungsten ore that arrived in April. The boat captain told him the rocks came from Tiger Hill, says Lopez, 32. He says the truck drivers had papers saying that the ore had been legally mined.
“Those stones come in all the time,” Lopez says. “They come from the FARC mine.”
Plansee, the Austrian company that buys tungsten ore from Geo Copper, supplies leading European automakers. BMW, Ferrari, Porsche and Volkswagen say they buy engine crankshaft parts made of tungsten from Plansee.
Siemens, Europe’s largest engineering firm, says it buys tungsten parts used in X-ray machines from Plansee. Spokesman Matthias Kraemer declined to comment.
BMW spokesman Frank Wienstroth says his company works to avoid buying from tainted suppliers. “These few grams out of the billions of tons of raw materials passing through the BMW supply chain are of no practical relevance,” he says.
Stefano Lai, spokesman for Maranello, Italy-based Ferrari, confirmed that his company buys parts made with tungsten from Plansee and had no further comment. Volkswagen and its Porsche unit don’t tolerate conflict minerals, VW spokesman Christoph Adomat says.
“We take all information concerning possible infringements very seriously,” he says. “Plansee is a company that supplies Volkswagen with small quantities of tungsten components such as wires for welding or balancing weights.”
SociétéBic spokeswoman Priscille Reneaume says the penmaker buys tungsten carbide pellets for ballpoint pens from Plansee unit Ceratizit. Reneaume says Bic will investigate its supply chain and stop buying material from conflict minerals.
Privately held Plansee says on its Web site that it makes sputtering targets, which are microscopic layers of metals used in screens for smartphones, computers and televisions. “Wherever you go and touch any devices, you have a relatively high chance that somewhere or somehow Plansee is involved,” Plansee spokesman Denes Szechenyi says. He declines to name any of the company’s customers.
One link between Plansee and global technology supply lines is AU Optronics, Taiwan’s second-largest maker of liquid-crystal displays. AUO buys sputtering targets from Plansee and sells screens to Apple, Hewlett-Packard and Samsung, according to company documents.
Plansee told AUO in a letter that it sells the Taiwanese company products made with molybdenum, which isn’t a conflict mineral, instead of tungsten. Plansee wrote the letter on the same day Bloomberg Markets asked the company about its Colombian ore purchases.
AUO spokeswoman Katie Chen says the company trusts that Plansee sold it no parts made with tungsten. “We have declared to our suppliers that we do not accept illegally mined minerals from conflict regions,” Chen says.
But AUO’s supply chain is tainted because it does business with a company that buys minerals from a conflict zone, says Peter Rosenblum, a human rights and international law professor at Bard College.
“A company’s supply chain is contaminated when it is profiting from conflict minerals,” he says. “You wouldn’t do business with a company that is known to be engaged in corrupt practices.”
Apple started an investigation after being informed of Bloomberg Markets’ findings and before Global Tungsten & Powders announced it would stop buying from Colombia, Huguet says.
Samsung has opened its own investigation, spokeswoman Eunhee Lee says. “Samsung strongly supports the ban on conflict minerals,” Lee says.
AUO’s annual report lists Samsung as one of its five biggest customers. In the past year, Hewlett-Packard bought screens from AUO for its All-In-One Business PC, its Web site says. “HP continues to work closely with its suppliers to improve their social and environmental performance,” spokeswoman Kelli Schlegel says.
Back in Colombia’s Guainia province, miners dig for tungsten ore on FARC-controlled land. The minerals they extract from the red earth help feed the world’s voracious appetite for luxury cars, smartphones and computers.
Raul Linares, a miner in the Colombian Amazon, says illegal activity thrives because no one outside the nation has bothered to notice. “The FARC and these companies have built an incredibly profitable business,” Linares says. “And the world is buying it.”
The full version of this Bloomberg Markets article appears in its September issue.