Der Traum der Goldgräber

Am Goldbergbau in Burkina Faso verdienen vor allem Minenbetreiber und große Handelshäuser. Die Bergleute dürfen dafür schuften – aber sie hoffen beharrlich auf den großen Fund.

Feiner grauer Staub durchsetzt die Luft in Alga. Wie Mehl legt er sich über Gebäude, Maschinen und Tausende von Menschen, die auf der Suche nach Gold einen Stollen nach dem anderen in den harten Fels treiben. Seit mindestens drei Jahrzehnten werde hier nach Gold gesucht, erzählt Elia Sawadogo, dessen Cousin einen der Schächte finanziert. Der richtige Boom kam vor ein paar Jahren, als ein großes Vorkommen des Edelmetalls gefunden wurde. „Jeden Tag kommen 40 neue Goldgräber“, sagt Sawadogo.

Read more on Weltsichten.

Can gold save Sudan’s economy (and regime)?

The Sudan has many problems, among them several civil wars and a host of unstable neighbours. But the biggest issue, especially from the perspective of the authoritarian government under president Omar al Bashir, may be the tanking economy.

The trouble began in earnest when South Sudan reached its independence, taking a large share of Sudan’s oil reserves with it. Later, the countries almost went into a full-blown war over the transport fees that Sudan levies on the sole pipeline leading out of the South Sudanese oil fields and Khartoum had to reduce these rates as a result.

The consequences were bitter for Sudan: the country lost more than half of its government income and two-thirds of its foreign exchange earning exports. This contributed to a massive inflation of over 30 percent since 2012. The dire fiscal situation led to deep cuts in government spending, especially concerning fuel subsidies. As a result, the country experienced the biggest anti-regime protests since the last coup d’État more than twenty years ago.

Trying to turn the situation around, the Sudanese government started to look at its considerable and gravely underdeveloped gold reserves. Encouraged by rising gold prices on the world market after the financial crisis in 2008, Khartoum decided to make gold the new oil.

This hope that gold can save the Sudanese economy and by extension the regime in Khartoum still persists:

The government is now consulting with international companies and contractors in an attempt to fill the hole left by lost oil revenues with gold exports.

Sudan’s Ministry of Minerals, which oversees all mining activity and licensing, has contracted BGS International, a company spun-off from the British Geological Survey, to help restructure its own state surveying organisation, the Geological Research Authority of Sudan (GRAS). […]

Gold is already rising in prominence in Sudan’s economic profile. In 2008 the sector represented just 1 percent of exports with a value of $112m, but this year gold will total more than $2bn in earnings, or over 40 percent of all exports. By contrast the value of oil exports has fallen to just more than 20 percent of its 2008 peak. [Gold: a glimmer of hope for Sudan’s economy – This is Africa]

But, especially compared to oil, gold has several disadvantages.

Artisanal mining and smuggling

As This is Africa rightly points out in the article linked above, a large part of the gold mining going on in Sudan happens in the informal, artisanal sector. Small-scale mining activities are hard to regulate and control, especially because many of them are located in areas which are contested between by armed groups.

As a result, the government has only limited direct income from the production and trade of the precious metal. A drive to bring more foreign investors and large-scale, formal mining operators into the country could change that, but this will take years. Meanwhile, hundreds of millions of dollars worth of gold are produced without any government interaction and much of this is probably exported informally as well.

What is gold worth, anyway?

Even if the government is able to channel a substantial part of the gold revenues into official channels, there remains the question how big the resulting pie will be that the regime hopes to distribute to quell dissent and strengthen its support base.

At the time of South Sudan’s independence, the price of gold was near it’s all-time high of 1,900 Dollars per troy ounce. It reached these record heights as a result of the financial crisis of 2008, when private and institutional investors started looking at gold as an alternative to the volatile stocks market. Gold continued to trade at record levels throughout 2012, but went into free fall in 2013, losing more than 35 percent of its value. Today, a troy ounce trades at slightly above 1,200 Dollars.

This poses two problems for Sudan: Firstly, international mining companies are already looking at cost-cutting measures. Mines that were opened or expanded in recent years are getting closed or are experiencing lay-offs in Ghana and Burkina Faso. A continued fall of world market prices for gold will greatly reduce the likelihood that mining companies will invest in Sudan. Secondly, with gold now representing 40 percent of Sudan’s export value, the direct economic impact of falling gold prices for the country is immense.

Out of the frying pan into the fire

With betting on gold after its oil revenues plummeted, the regime in Khartoum may have made a big mistake. Almost certainly, it will not be able to realise the hopes it had for expanding the business with the precious metal in the near term. With oil production in South Sudan (and the corresponding transport fees) threatened by burgeoning civil war there, president Omar al Bashir will likely be pressured to enact further austerity measures. If the pattern of the last year holds, this will lead to further protests, seriously testing his hold on power.

Conflict minerals in the Congo: a look at the new GoE report

The United Nations Group of Experts on the Democratic Republic of the Congo is maybe the authority on anything conflict related in the central African country. Tasked with briefing the Security Council twice a year on all developments related to the extensive sanctions against various actors in the DRC, their reports offer a wealth of information on everything from conflict financing to outside intervention. The upcoming report has now been leaked to African Arguments. This blog post explores the information it offers regarding the use of resources in the context of conflict in eastern DRC and elsewhere in the country.

Conflict minerals are important aspects of every GoE report, the current one being no exception. In the second paragraph of the executive summary, the GoE states that

Many armed groups in eastern DRC have derived funding from the production and trade of natural resources. […] The Group estimates that 98 percent of the gold produced in DRC is smuggled out of the country, and that nearly all of the gold traded in Uganda – the main transit country for Congolese gold – is illegally exported from DRC. […] While initiatives by OECD and ICGLR have advanced the validation of mining sites and improved adherence to conflict – free and child labor – free international standards, armed groups and the FARDC [Congolese army] continue to control many mining sites and to profit from mining and the minerals trade.

The limits of the concept of “Conflict Minerals”

It should be noted that the GoE never speaks of “Conflict Minerals” itself. The term is the invention of advocacy groups* and its implication that the occurence of minerals can prolong or even cause conflict and violence is contested.

A critical perspective on the concept of conflict minerals is supported in some parts of the GoE report. For example the group notes that the M23 – the most prolific armed group in eastern Congo during the year of 2013 – didn’t derive any income from direct involvement in the minerals trade (§32). Rather, the M23 concentrated on levying taxes on property and transport (which of course may have included mineral transports). The territory controlled by the M23 had no major mineral deposits, despite being the site of major violence and fighting during the eventual defeat of the M23 at the hands of the FARDC and U.N. troops.

This is not to say that resources, including minerals, are unimportant factors in the development of conflicts and violence. But their relevance clearly depends on the local context and this should be reflected in advocacy work and policy.

Dirty Gold

Coltan may be the best known conflict mineral from eastern Congo, but presently gold may be more important when it comes to the financing of armed groups. The GoE puts the sum lost in taxes due to smuggling of the precious metal and the corresponding profits for armed groups in the millions of Dollars – of the estimated 10,000 kg of gold mined in the DRC per year, only 180,76 kg is declared to government authorities (§170). Some of the most violent attacks by armed groups described in the report were targeting gold mining sites (for example §65).

For some armed groups, like the Rwandan FDLR and Raia Mutomboki, their involvement in gold mining and trade is their main mode of financing (§95, 168). The  limited traceability and high mobility of the mineral has resulted in an extended trade networks that reaches from small scale mining operations in eastern Congo to the Ugandan capital Kampala and onwards to Dubai in the United Arab Emirates (§198).

Gold mining is of course also an important source of income for many artisan miners who have little choice in who is benefiting from the downstream trade. With regard to this group, the myriad ways the GoE lists that are employed by gold traders to fraud their way to a larger share of the profits are highly interesting ($177ff).

That armed groups and criminal actors are able to profit from the gold trade is attributed by the GoE mainly to the reluctance of the Ugandan and Congolese governments to engage in a effective regulation of the sector. Existing laws are not enforced and known actors are allowed to act openly in eastern Congo and Uganda alike.

The three Ts

Tin, tungsten and tantalum (which can be found in the mineral coltan) are the best known conflict resources produced in the Congo. They occur mainly in the provinces of North Kivu, South Kivu and northern Katanga. Their production and trade is one of the most profitable sectors of the economy in eastern Congo and a large part of the production is smuggled out of the country via Rwanda (§200).

At several points in the report the GoE indicates the involvement of Rwandan authorities in the smuggling activities (for example §204). Smuggled ore from the DRC is tagged in comptoires in Rwanda, which hides it true origin and dramatically increases its selling price (§200). This should make clear that any certification mechanism based on “tagging and bagging” can not rely on measures solely controlled by the Rwandan government.

The lure of ivory

Showing that the use of resources to finance conflict is highly opportunistic, at least one armed group switched from poaching for ivory to attacks on gold mines, according to the GoE (§65).

Nonetheless, at least 310 elephants (and likely many more, §225) were poached in 2012 and 2013. Poaching is often done by locals in close cooperation with corrupt members of the security forces (§229). South Sudanese nationals are also heavily involved in poaching activities in Congo’s Garamba national park.

The main transit country for ivory from Congo is Uganda, its destination are usually markets in eastern Asia.

Oil: the new kid on Congo’s conflict block

Like many other countries straggling Africa’s enormous rift valley, the DRC is hoping that this geological formation may feature crude oil deposits. Uganda is already preparing to start production, while the DRC is still in the early stages of exploration. These activities are controversial mainly because of the environmental threat they pose, but the GoE also mentions some connections between the exploration activities and armed groups in eastern Congo.

Parts of exploration Block III, owned by French company Total, are for example in the area of operation of the FRPI, an armed group responsible for considerable displacement among the local population. The report (§59) mentions that Total has demanded from the government to resolve the security issues posed by the presence of the armed group, but the company declined to discuss how the situation has been reflected its social and environmental assessment of its exploration activities.

Recommendations

The GoE recommends that companies

Conduct due diligence in minerals purchase in the Great Lakes region, in addition to investing in traceability schemes.

This is mainly in accordance to the demands of many advocacy organisations. In addition, the various governments are asked by the GoE to strengthen their laws, the application of these laws and their cooperation to limit the smuggling of natural resources from the DR Congo.

My take on the information on resources in the context of conflict provided by the report is that activities of policy makers and advocacy organisations should focus on realising the potential associated with natural resources in the Congo. While minerals and other resources can be used to finance conflict and in some cases their presence contribute to specific acts of violence, they also provide much needed economic opportunities for many people in the DRC.

To achieve this goal, governments in the region as well as in Europe and America need to enforce stronger regulations regarding the circumstances under which these resources are produced and traded. Transparency is key here and companies should be forced to provide information about the conditions under which their raw materials were produced to consumers.

What are your thoughts on the report?

*According to google, “conflict minerals” were first mentioned online in 2009

 

Rich Links: land grabbing in Tanzania, Amnesty blames Shell for oil spills

As always, the best reads from around the internet on resource politics in Africa:

Land grabbing in Tanzania

High hopes meet reality for Tanzanian farmers and land owners:

I just gave my land because we were convinced by a politician that it would make us rich. I knew I would get money for the land, and also get a well-paying job when the [investment] company began operations. Now they didn’t do anything and they sold our land to another company we didn’t even know,

Analysis: The poisoned chalice of Tanzania’s land deals (IRIN)

Monsanto’s push for Africa

Monsanto, a U.S. company best known for its controversial genetically modified crops, is currently targeting African markets:

It gets problematic in the future, because the farmer has to continue to buy seeds from Monsanto instead of returning to the age-old way of growing maize, which is saving and reusing seeds.

Monsanto Brings Agro-Slavery to Africa (@lissnup)

Does Uganda benefit from its natural resources?

At the moment, the answer seems to be no and this needs to change:

Onesmus Mugyenyi, a policy analyst with the Advocates Coalition for Development and Environment, a local policy research and advocacy think tank, explained that Uganda’s poverty levels were closely related to its failure to sustainably exploit its natural resources.

Uganda: Country Needs to Exploit Its Own Mineral Riches (IPS/allAfrica)

Swiss company in trouble over handling Congolese conflict gold

Non-profit TRIAL has sued Swiss smelting company Argor-Haraeus for allegedly entering into business with Congolese warlords and conflict profiteers:

According to TRIAL, the gold in question was illegally mined by FNI and then sold in Uganda by a Congolese middleman, Kisoni Kambale, who trades in gold and owns an air transport company.

Congo-Kinshasa: NGO Files Complaint Against Swiss Company Over ‘Pillaged’ Gold (Deutsche Welle/allAfrica)

Amnesty International challenges Shell on oil spills in Nigeria

The international human rights organisation is not happy with the corporation:

Shell has claimed that… oil spill investigations are sound when they are not, that sites are cleaned up when they are not, and that the company is transparent when, in reality, it maintains very tight control over every piece of information – deciding what to disclose and what to withhold.

Advocacy Group Tackles Oil Companies Over Spills (allAfrica)

Amnesty International – ‘Shell Must Come Clean On Niger Delta Oil Spills’ (Deutsche Welle/allAfrica)

Shell’s False Claims On Niger Delta Oil Spills Exposed (Amnesty International)

Other stuff:

Rich Links: Copper in Zambia, Gold in Darfur and more

As always, the best reads from around the ‘net:

Zambian copper project results in many disputes

An excellent article looks at the many controversies surrounding the Sentinel copper project in Zambia. Owner First Quantum Minerals is embroiled in land disputes, competing interpretation of mining and compensation law, as well as a governmental approach swaying between support and condemnation. Think Africa Press

A rare look at illegal oil refineries in Nigeria

The British Guardian provides insights into illegal refineries in the Niger Delta, where stolen crude oil is converted into Diesel under incredibly dangerous conditions for workers, communities and environment (including video). The Guardian

Detailed look at the future of East African oil

Many issues and challenges mentioned in this piece will sound familiar to observers of the East African oil business, but the article offers a nice and in-depth summary. Voice of America

Angola ends tax exemption of oil companies

The government has gazetted a law that applies consumption tax rates ranging from 5 to 10 per cent on activities of companies working in the oil sector. These were so far completely exempt from the tax that reaches rates of up to 30 per cent on luxury goods. This is Africa | Mining Review

Gold and violence in Darfur

A look at how government-supported gold mining activities contribute to increasing violence and a change of conflict dynamics in Darfur. The Guardian

Other stuff

  • Study forecasts continuing stagnation of the South African mining sector: African Mining Brief
  • The European Parliament has accepted a new Fishery treaty with Mauritania: Jeune Afrique
  • Uganda is looking to import Coal from Mozambique to develop local iron ore reserves: AllAfrica/New Vision
  • The European Union has lifted sanctions against Zimbabwe, allowing for diamond exports from its controversial Marange mine to resume: Mining Review
  • Thousands of people demonstrated against French mining giant Areva in the town of Arli, Niger: Jeune Afrique
  • Mozambique plans to finish its new natural gas legislation at the end of this year: Mining Review
  • Namibia plans to start exporting large quantities of cattle on the hoof to neighbour Angola: AllAfrica/New Era

Rich Links: Sudan fuel price protests and Congo’s oil law

The most important developments and most interesting reads around resource politics in Africa from around the internet:

End of fuel subsidy sparks violent protests in Sudan

In an attempt to limit government spending, the Sudanese fuel subsidy was cut in a surprise move, sending fuel prices at the pump sky-high. Prices almost doubled overnight, from $2.83 to $4.71. Protests erupted in the capital Khartoum and around the country, leading to at least 29 deaths. The demonstrations were said to be the largest of President Al Bashir’s 24 year rule. Schools were closed and the internet connection to parts of the country is cut off. Al Jazeera

Why hasn’t Botswana diversified out of Diamonds

Interesting Analysis on the question, why Botswana despite its sound political institutions and solid economic growth has so far not managed to move away from an extraction-based economy. Why Nations Fail

Congo’s oil law

The DRC’s proposed oil law would open the door to exploration in national parks (especially Virunga) and doesn’t provide any means to ensure transparency in the allocation of contracts and revenues. Think Africa Press

Ghana’s gold production likely to drop by 18%

Due to falling world market prices, gold producers are cutting their production in Africa’s second largest exporting country. This could have severe consequences for government revenues, with oil production already well below targets. The government has won elections mainly on the promise of investing heavily in power production and other infrastructure and planned on using funds from resource extraction to deliver on these promises. Mining Review

Artisanal Gold Miners in Burkina Faso [Video]

Last month, I visited a gold mining camp in northern Burkina Faso. Here is a short video from that trip.

Around 30 families live in that location and search for gold. The work is fully manual and unbelievably hard. Temperatures here reach 40°C in the shade easily and there is not much shade to begin with.

If the miners (both men an women ply this trade) are very lucky, they find enough gold to sell for around 2,000 Franc CFA every few days. That equals about three Euros.