Of Blood and Gold: How Canadian Mining Companies Loot the Congo

Posted: August 21, 2011 in News

In January of this year the Banro mining company of Canada called on investors to raise hundreds of millions of dollars to help them mine one of Africa’s “last great” gold deposits. The deposits are located in the Democratic Republic of the Congo’s (DRC) province of South Kivu, a region that actually has been spared from the brunt of the long-lasting resource war.

Banro predicts it could mine some 2.6 million ounces of gold over 15 years out of their South Kivu mines. After expenses and paying taxes Banro believes such a haul can generate a net-profit of nearly $600 million US dollars over the 15 years, averaging $40 million per year, if gold stays around $850 per ounce.

Just a few weeks before Banro’s call for mining capital, the United Nations Development Programme released updated statistics for its Human Development Index (HDI). The index tabulates statistics that are critical to revealing a nation’s well-being. The HDI measures life expectancy, standard of living, literacy rate and the number of school-aged children being educated. Out of 179 countries measured the DRC ranks 177th; a ranking for a country with a population of over 65 million.

Life expectancy in the DRC is 46 years. Only 33 percent of the school-aged children are enrolled in some type of school. While the GDP hovers around $300 US dollars, per person, per year. On the other hand in Canada the life expectancy is 80 years. A good education is guaranteed as 99 percent of all school-aged children are in school. And for most adults their yearly average earnings could be around $37,000.

But even with all the disparity Banro will figure out a way to avoid paying their fair-share of taxes to the Congolese, says Jamie Kneen of MiningWatch Canada, a mining industry watch-dog group. “Banro will find ways to get around showing full-profit,” said Kneen. “They will find seventeen different ways to avoid paying the Congolese tax man.”

Kneen has good reason to chastise Banro. Earlier this decade, the UN charged Banro with pillaging minerals from eastern DRC.

What’s more, Banro “wholly-owns” the South Kivu gold mines, says Kneen. “The government owns the resources but the project is owned by Banro. They have to pay taxes and royalties but they can do whatever with the profits.” Banro won 100 percent ownership after suing the DRC government for essentially losing control of the mines during the decade-long war.

According to CorpWatch.org, 60 percent of all the world’s mining companies come from this progressive and multi-cultural nation – mining companies that generate $50 billion a year for Canada. But the irony is, says Kneen, many work outside Canada. In the 1990s they went global, he says, escaping newly enacted and tougher environmental regulations. Environmentally speaking, taking your operation overseas saves your own country from dealing with the mess: 20 tons of waste rock, for instance, comes from the creation of one gold wedding ring.

Canadian mining companies have now spread themselves across the globe, making mining-agreements or concessions with many underdeveloped nations. These days, says Kneen, “the Toronto Stock Exchange is the number one (generator) for mining capital in the world.”

On its web site Banro prides itself “by increasing and developing its significant gold assets in a socially and environmentally responsible manner”. One of its foundations working in South Kivu recently built two high-schools, completed a potable water delivery system serving 18,000 people, built 100 km of roads and shipped in health supplies. On the flip side, China promised to build roads, highways, universities, schools and health centers as part of a $9 billion deal to access Congo minerals.

“Banro will have enough money coming in to do some regional development in South Kivo, which is pretty remote,” says Kneen.

Perhaps hearing the calls for more infrastructure, on February 25th Banro promised another $1 million for Congo projects, adding that they’ll pay more taxes on potential profits.

Nevertheless, in an effort to reassure investors over the region’s off-again, on-again wars – caused mostly by the plundering of Congo minerals by rebels, mining multi-nationals and DRC’s neighboring countries, such as Rwanda and Uganda – Banro has publicly said South Kivu’s lack of infrastructure is actually a good thing.

“There’s very little transportation infrastructure between where the fighting is and where (Banro’s mines are)” said Martin Jones, Banro’s vice-president of corporate development in a February issue of The Northern Miner, a trade-association magazine. The fighting, he claimed, is 200 kilometers or more away and “is unlikely to spread (and) the issues that are being fought over…have limited impact on people in the rest of the Congo.” Keep in mind this is a conflict where the UN says 45,000 women were raped in 2005, and in some cases as reported by the Independent, deliberately wounded in sexual organs by firearms.

The Banro deal in the DRC is the future of Canadian mining in central Africa. To offer some context, here is some past history of several Canadian mining companies in central Africa:

In October of 2004, Anvil Mining, the leading copper producer in the DRC, had to shut down production at their Dikulushi Mine when a so-called “rebellion” took place in a nearby village – a rebellion of “ten to twelve” villagers that had nothing to do with mining, said Kneen. Congolese Armed Forces (FARDC), of the DRC government, proceeded to seize the town, says Kneen, then went door-to-door “raping and pillaging”. Between 70 to 100 civilians were killed including women and children. Kneen said the Congo forces had Anvil’s “full cooperation”. Anvil claimed the Congo forces basically put a gun to their chest. Anvil nevertheless offered up trucks and logistics, says Kneen, trucks that transported troops and dead civilians. In the aftermath, the Canadian government essentially looked the other way. “They refused to investigate because there’s no legal mechanism in place,” says Kneen.

Anvil is supposed to adhere to OECD guidelines for multi-national corporations, a voluntary set of moral standards for working in another country established by the think-tank the Organization for Economic Co-operation and Development, based in France. But the Canadian government – like many Western governments – do not enforce OECD guidelines.

Canada’s Barrick Gold is the world’s largest producer of gold. In a 2005 Human Rights Watch report entitled The Curse of Gold, Barrick Gold and other mining companies are accused of making mining agreements in 2002 with two eastern DRC militias that had control of the mines. Both militias were also in the midst of murdering hundreds of civilians. In return for the gold mines, the militias were given housing and trucks, among other appeasements. Incredibly, as highlighted by independent journalist and Congo-expert Keith Harmon Snow, Barrick’s current and past advisors and directors include former US president George H.W. Bush, former Prime Minister of Canada Brian Mulroney, Vernon Jordan, a close friend to Bill Clinton, and one-time Tennessee senator Howard Baker. Snow says Barrick and one its partners, Anglo-Ashanti, even sent in lawyers to help represent leaders of the militias after some were apprehended by the DRC government.

In 2001 the UN released their “Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of the Congo”. Out of the 29 mining multi-nationals the report accuses of stealing resources out of the DRC, eight are from Canada. They are American Mineral Fields, First Quantum, Hrambee Mining, International Panorama Resources, Kinross Gold, Melkior Resources, Tenke and Banro.

Analysts suggest the resource wars in the DRC are partially fueled by the fact that Western multi-nationals – with the help of host governments – are able to invade an underdeveloped nation, and take its wealth right out from under the feet of the general population. And in this case, the DRC could certainly use all the profits to benefit its own development. With that in mind, any Western mining project in the DRC should be looked upon with caution and skepticism.

***

John Lasker is a freelance journalist from central Ohio. Photo by Julien Harneis


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