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Canada’s Digging for Gold, Mining Corruption

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One of Africa’s Poorest and Most Embattled Countries is Prey to Canadian Mining Companies Searching for the Last Great Gold mine

by John Lasker

PHOTO: This gold is from a day’s work at Kaniola mine in South Kivu.  Photo credit: Sasha Lezhenev
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CANADIAN DIMENSION — The war in Congo is fueled by a thriving gold trade today, with armed groups controlling mines and earning an estimated $50 million last year from selling gold and minerals.
Democratic Republic of the Congo, showing the province of South Kivu.
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In the heart of Africa, did a Canadian mining company cut a deal with an infamous and violent African militia that played a major role in the Rwandan genocide of 1994? According to one expert of the militia, known as the “FDLR,” or the Forces démocratiques de libération du Rwanda, the mining company has no other choice if it wants to safely dig up billions-of-dollars worth of gold for themselves and their investors.

The mining company with the fever for African gold is the Banro corporation of Toronto. It owns four mines relatively close to each other in the eastern regions of the Democratic Republic of the Congo (DRC). Specifically, the mines are located in the eastern DRC province of South Kivu, a rugged landscape of jungles, volcanoes, and millions of poor Congolese. Still in an exploratory stage, Banro believes that 10 million ounces could be extracted, and if gold stays around US$950 oz., that’s roughly $10 billion.

Now Banro is trying to raise hundreds of millions of dollars via the Toronto Stock Exchange so they can begin mining this bonanza, calling it Africa’s last great gold deposit. Banro also boasts about the tax-breaks they’ve been given by a country the UN states is ranked 177th out of 179 on its Human Development Index, which measures life expectancy, annual GDP (in the case of the Congolese, $300 a year), literacy rate, and number of school-aged children being educated.

Banro’s Third World adventure is a familiar quest Canadian mining companies have undertaken during the last 20 years. Increasingly restricted by newly enacted environmental legislation in its own home¬land, a Canadian mining company leaves for a nation where the environmental laws are weak and the politician’s cheap. Funding for Banro’s African dig flows easily from the Toronto Stock Exchange. And like a lot of foreign labour, it is also dirt cheap in the eastern DRC—- where artisanal miners gladly work for just a few dollars a day.

According to CorpWatch.org, 60 percent of all the world’s mining companies are based in Canada, generating $50 billion a year for Canadians. “The Toronto Stock Exchange is the number one (generator) for mining capital in the world,” says Jamie Kneen of MiningWatch Canada, an Ottawa-based mining industry watch-dog group. Taking your operation overseas also saves your country from dealing with the mess: 20 tonnes of waste rock comes from the creation of one gold wedding ring.

But the story of Banro in the Congo has a twist. A risk actually, that some believe could turn into another African nightmare for all involved. The eastern regions of the DRC have been stricken by a decade-long “resource war” — a moniker that former Prime Minister Tony Blair and the UN has used to describe the conflict that has laid siege to the eastern DRC. This resource war has cooled of late, but the threads of peace and stability in the eastern DRC have always proven to be fragile. Thus the possibility of another western-based mining company taking billions of dollars right out from under the feet of the Congolese could create a spark that re-ignites this war.

In the late 1990s, so strong was the lure of eastern DRC gold, casserite, and coltan, that neighbouring countries of Uganda and Rwanda invaded with proxy militias and their own armies. In 2000, the Rwandan military and connected politicians, for instance, made $250 million moving coltan out of eastern DRC to Western-based mining companies and metal traders who then sold the resources to companies that manufactured parts for the likes of Sony and Motorola. Coltan, when processed becomes the powder tantalum, which is used in the making of capacitors — capacitors needed to make cell phones, video game consoles, and computers so valuable to western personal technology.

This conflict, waged in part so the West can have its personal electronics, cost the lives of three to five million Congolese and other Africans, according to many NGOs.

In the Neighbourhood

While Banro’s mines are not directly in the heart of where this resource war was waged the fiercest, their mines are awfully close. Indeed, one of the biggest players in the resource war was the FDLR, which owes its existence to illegal mining. According to FDLR-expert Hans Romkema, director of Conflict and Transition Consultancies of the Netherlands, each of Banro’s four mines are just a few miles from territory control¬led by the militia, which is an estimated 6,000 strong. Romkema has monitored the militia in-country on several expeditions. He says the FDLR, for the most part, is the only military and political force near Banro’s mines — a force that exploits natural resources, controls trade, collects taxes, and dominates the local population. The FDLR is composed of Rwandan Hutus who escaped into the neighbouring eastern forests of the DRC after the 1994 Rwandan genocide and alleged to have played a major role in murdering 800,000 Tutsis and moderate Hutus. The FDLR aims to overthrow the current Rwandan government, but several FDLR leaders use the movement to protect themselves because they are wanted by the U.S. government and the International Criminal Tribune for crimes committed in 1994.

Romkema reported in 2007 that some Congolese civilians are undergoing military training so the FDLR can indoctrinate them as “Interahamwe” — those who committed genocide. Romkema believes Banro’s mines are too big and no militia “will have the guts to take control over one of those mines.” Thus no Canadian troops or any western-based private army will ever have to be flown into central Africa — hopefully. Over the past 12 months, Congolese and Rwandan government troops, along with UN Peace-keeping forces (there to enforce a peace treaty), have conducted numerous operations to oust the FDLR once and for all. The FDLR are clearly agitated, some fleeing toward Banro’s mines, reported the UN.

“There are widespread reports … of atrocities including accusations of murder, rape, and torture, on the part of the FDLR rebels,” said UN spokesperson Ron Redmond to the newswire Agence France-Press late last summer. Last May, the FDLR struck back, attacking a village in South Kivu killing 60 civilians and 30 government troops, according to the UN. On its website, the FDLR has denied any involvement.

The risk seems too great for any mining company to take the chance, but to hedge their bets, Banro may have no choice but to play “by the rules” of the eastern DRC, Romkema says. Meaning they will have to bribe or make some type of off-the-books agreement with both the Congolese government and whatever militia controls the territory their mine is located in, he says.

“In my view, Banro cannot work, neither in their (mines) without having had some contacts with the FDLR,” says Romkema. “Those contacts can have occurred through an intermediary. But somebody must have passed the message to leave the miners alone.”

Banro’s Martin Jones, a spokesperson from Toronto, refutes Romkema’s claim. “He’s not going to find any FDLR in the neighbourhood,” he said referring to the forests 20 to 40 miles south west of Bukavu, the capital of South Kivu, where one of Banro’s mines are. Three years ago an FDLR column passed nearby without incident, which prompts Jones to say the militia is not the concern the NGOs make them out to be.

Exposing the Mine

Nevertheless, the presence of another Canadian mining company near the killing fields of a past conflict waged so the West can have its technological toys raises a potent question: Can Banro reverse the deadly trend of resource-driven wars in Africa by putting millions back into a community which is also heavily employed by Banro?

Jones says Banro is not just interested in Congolese gold. They’ve invested into the area by building several schools, roads, and a potable water system for a region in desperate need of such infrastructure. They also said they will spend $13 million to relocate a small village of 750 Congolese, while also finding work for 800 Congolese miners who are digging “illegally,” as Banro says, near the same mine.

Romkema says if Banro operates in the same way other Western mining companies have in the past in the Congo — illegally and secretly moving resources out of the country and bribing corrupt DRC officials — “They’ll help to maintain the illegal networks that have characterized the DRC for so long and that entirely destroyed the Congolese State.” The FDLR has been part of illegal networks for many years, networks that usually end at Western-based metal brokers, such as Britain’s Afrimex, Bangkok’s Thaisacro, and Belgium’s Trademet, as uncovered earlier this year by Global Witness, a British-based NGO.

Calling out the Companies

When U.S. Secretary of State Hillary Clinton travelled through the Democratic Republic of the Congo (DRC) this summer, she railed against the sexual violence that has victimized Congolese women. She also lambasted corrupt DRC officials, calling for more government transparency and accountability. But something was inexplicably missing in her Congo roundtables, even though Congolese journalists tried to prod her about the issue. There was hardly any atonement for the Western-based mining companies and metal brokers who have helped fuel the DRC resource war of the last ten years.

“The future of Africa is up to the Africans. The future, ultimately, of the Congolese people is up to the Congolese people,” she said to journalists.

Someday that may hold to be true. But without question, the recent past of the Congolese was partially dictated by Western-based mining companies and metal brokers. A significant number of them are Canadian, as revealed by a 2001 UN investigation titled “The illegal Exploitation of Natural Resources and Other Forms of Wealth of the DRC.” One of the Canadian companies named in the report was Banro while others included First Quantum Minerals and Tenke Mining Corporation, both based in Vancouver. Simply put, these Canadian mining companies and metal brokers are accused of stealing resources from a nation, its people and government, which were overwhelmed by war.

Plundering resources from a nation in the grip of war is in violation of 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 — are not bound to enforce OECD guidelines.

“The U.S. government was one of the most determined to quash the UN Panel’s reports but this is also true of Canada, the UK and Belgium,” says Tricia Feeney, executive director of the London-based Rights and Accountability in Development or RAID. “All (companies) were exonerated. The UN Panel said the cases had been resolved.”

Just because the UN laid down, says Feeney, doesn’t mean the companies are innocent. “Essentially the UN was forced to drop the case but as they explained (in their reports), ‘resolved’ didn’t mean that the initial allegations were unsubstantiated,” she says. “The (U.S. and Canadian) companies have tried to hide behind the technicality of ‘resolved’ but the UN itself made clear that this classification didn’t mean that the companies had not behaved in the way described in the UN reports.”

Which way will the Canadian government look?

In Ottawa, the Department of Foreign Affairs and International Trade Canada keeps watch on homeland mining companies working overseas. Spokesperson Laura Dalby stated in an email they are closely monitoring Banro’s four mines using trade commissioners based in the DRC capital of Kinshasa. “Canada encourages and expects Banro Corporation to respect all laws and international standards, to operate responsibly, transparently, in full consultation with the DRC government and the local community in which they are conducting their operations,” she wrote.

What’s more, Banro continues to receive “full cooperation and support” from the DRC’s central and provincial governments, she stated. The department is hoping Banro finds a way to boost the eastern DRC out of its war-torn malaise.

“We hope to see positive outcomes as a result of Banro Corporation’s investments and Corporate Social Responsibility activities in the DRC. This is meant to drive forward the country’s industrialization and create new and income-earning opportunities for the fast-growing population,” she wrote.

Just four years ago, however, MiningWatch’s Jamie Kneen said the Canadian government essentially looked the other way following a massacre in which a Canadian mining company played arole. 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 “10 to 12” 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 DRC forces had Anvil’s “full cooperation.” Anvil claimed the DRC 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 “refused to investigate because there’s no legal mechanism in place,” says Kneen.

In 2002, Toronto’s Barrick Gold, Canada’s biggest gold miner, was accused by NGOs of making mining agreements with two eastern DRC militias, which at the time were in the midst of murdering hundreds of civilians. In return for the mines, the militias were given housing and trucks, among other appeasements. When some of the rebels were apprehended by government forces, Barrick paid for their lawyers. In December of 2008, a Barrick Gold mine in Tanzania was overrun by hundreds of angry locals, ceasing production. Millions of dollars of damages was reported.

“If the people are not improving their lives as a result of the gold exploitation, it will be easy for rebel groups to recruit amongst the region’s youngsters,” Romkema says of Banro. “I never had the impression that the population (near Banro’s mines) is benefiting anything from the exploitation (or mining) of minerals.”

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Written by thecanadianheadlines

December 26, 2009 at 11:01 pm

One Response

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  1. Great article thanks for posting it.

    paulmacca

    December 27, 2009 at 2:49 pm


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