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No capacity for capacitors: How world issues impact product development and supplier selection

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I have recently been talking to people in small and mid-size businesses about their goals for this year and the challenges they face. New product development is on many companies’ list of goals, but blocking it—the supply of parts. I expected to hear about delays from suppliers or contract manufacturers (CMs) who reduced capacity during the downturn and are now trying to balance their hiring efforts with returning business. (And I did hear some of those stories.) What surprised me was not that part supply was delaying products, but that the decreased supply is often caused not only by problems like the worldwide economic crisis, but also by global issues like political turmoil in Africa.

I heard about product launches being delayed because of a capacitor—specifically a tantalum capacitor. Tantalum capacitors are common in high-tech devices because of their high reliability, small package size and high maximum operating temperatures. Prices and lead times for these parts are increasing because of a drop in the availability of the element tantalum.

The 2008 closing of an Australian tantalum mine, which contributed more than a third of world tantalum production, was a major cause of that decrease. Those facilities shut down when the market price for tantalum was too low and mining the material was no longer profitable. Although this has happened before, and prices are high enough now that Australian production is expected to restart soon, in the meantime manufacturers are left with a difficult choice.

Tantalum mines are also located in Africa, in a part of Congo that has been politically unstable for a long time. At a minimum, the supply of tantalum from this region is unreliable due to war. Worse, to get raw tantalum from Congo, capacitor companies must do business with brutal militias who do horrible things to women, children and each other.

Minerals like tantalum are being called “conflict minerals” and being compared to the “blood diamonds” mined in other parts of the continent. In a recent blog post and New York Times op-ed piece Nicholas Kristof calls for companies making electronic gadgets to demand that their capacitor manufacturers not only state that they use conflict-free materials, but also provide proof of it. Groups like Run for Congo Women and the Enough Project (with its Raise Hope for Congo campaign) are working to r

Awareness of the Congolese conflict minerals has reached Washington, D.C. An amendment to the financial reform bill currently in front of Congress calls for companies to disclose any materials in their products that originated in Congo or adjoining countries. If that bill gets signed into law, it will surely help. But will it be enough?

And what about other minerals and other regions? A recently published study shows that war-torn Afghanistan is rich in elements important for manufacturing, including lithium, a primary component for new battery technologies. How will this discovery impact Afghanistan? Tantalum and other key elements for electronics manufacturing could have helped improve the life and living conditions of the Congolese people instead of continuing to promote and perpetuate war. Can the elements found in Afghanistan be used to help bring stability and wealth to the region and not cause further violence?

As end users start demanding conflict-free contents in their devices, manufacturers will want to think hard about the choices they make as they design and source their next product.

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