Modern Mining July 2016

COMMENT

DRC gold rush analysed in Global Witness report

W estern-style mining compa- nies – the type that are typi- cally listed on stock exchang- es in Australia, Canada and the UK and who issue regular quarterly and annual reports – tend to get a bad press in Africa, often being accused of extract- ing the mineral wealth of the countries they op- erate in without giving much in return. Having visited many mines around Africa, I don’t personally place much credence in these allegations. In my experience, the mines owned by these companies have generally been properly planned, designed and engineered, are operated according to the best safety and environmental standards, and pay significant amounts of money to their host countries in the form of taxes and royalties. Moreover, most will have well-paid, well-trained workforces drawn mainly from local communities. Compare this with the alternatives – either unrestrained artisanal mining or mining by shadowy unlisted companies, either based in Africa or offshore, who lack accountability and who operate with a total disregard for local communities and the environment. The points I make above are well illustrated in the rich goldfields of the eastern Congo in the area to the west and south-west of Bukavu, where, on the one hand, one has Canada’s Banro Corporation operating two well-run mines – Twangiza and Namoya – and, on the other, a gold rush on the Ulindi River (which started in 2013 but has now tapered off) whose beneficiaries have included, according to inter- national NGO Global Witness, “armed groups and a predatory Chinese-owned company, Kun Hou Mining, rather than the local population.” Global Witness has just released a report on the Ulindi River gold rush – which it says generated more than a tonne of gold per year worth about US$38 million – entitled River of Gold and sub-titled How the state lost out on an eastern Congo gold boom, while armed groups, a foreign mining company and pro- vincial authorities pocketed millions . Global Witness, of course, is not – generally speaking – a friend of the mining industry but its reports are invariably well researched and written, and this latest report is no exception. The full report, which is available for down- load on the Global Witness website, runs to 32 pages (and also, incidentally, includes some very interesting photos). Space constraints don’t allow me to go into the details of its alle- gations but the nub of them is contained in a

short executive summary which takes just a few minutes to read. According to Global Witness, its research revealed that Kun Hou Mining paid US$4 000 to Raia Mutomboki armed groups – ‘Raia Mutomboki’ apparently means ‘angered citi- zens’ in Swahili – operating along the banks of the Ulindi and also gave them two AK-47 assault rifles in order to secure access to rich gold deposits on the river bed. “Kun Hou Mining ran four semi-industrial river dredging machines along the Ulindi in the boom,” says Global Witness. “Members of the same armed groups also earned up to $25 000 per month by regularly taxing the workers on locally-made dredgers who were doing the dangerous job of manually sucking up gold from the river bed. Up to 150 of these manually operated dredgers worked along the river at the height of the rush. South Kivu officials charged with oversight of the province’s artisanal gold sector appeared to defend Kun Hou Mining rather than enforce Congolese law and hold the company accountable for its illegal activity.” Needless to say, much – probably most – of the gold from the Ulindi boom has left the DRC illegally and Global Witness notes that South Kivu’s provincial accounts for 2014 and 2015 show no evidence of any gold rush in the area. The NGO also says that the town which was at the epicentre of the rush, Shabunda, has been left in the same state as it was before the rush started. It describes it as a “deprived enclave with no roads, running water or electricity and its people suffering grinding poverty.” Compare what has happened on the Ulindi River with Banro’s activities. The company’s two mines produced a record combined 49 673 ounces of gold in the second quarter of this year. The company, of course, pays all the taxes and royalties that it should and almost 92 % of its roughly 1 500 employees in the DRC are Congolese citizens. In addition, it operates the Banro Foundation which is its vehicle for long-term community development. The Foundation was founded in 2005 – long before either Twangiza or Namoya were established – and since then has invested more than US$5,5 million in more than 70 projects. In June this year, it won – for the sec- ond time – a major award at the DRC Mining Industry Awards for its social investment programmes. So there you have it – the two faces of min- ing in Africa. I know which I prefer! Arthur Tassell

“Members of the same armed groups also earned up to $25 000 per month by regularly taxing the workers on locally-made dredgers who were doing the dangerous job of manually sucking up gold from the river bed.”

July 2016  MODERN MINING  3