December 2008

Vested interests and complex networks behind the DRC fighting
This is not an ethnic conflict

By Delphine Abadie, Alain Deneault and William Sacher

Last month, General Laurent Nkunda, the rebel leader in North Kivu, put aside his usual ethnic rhetoric to demand the renegotiation of all the contracts signed between the DRC government and Chinese companies. There is nothing ethnic about the fighting currently ravaging Kivu; like the earlier wars of 1996- 97 and 1998-2003, this conflict has to do with the way in which vested interests are exploiting the immense natural resources of the eastern DRC.

The DRC is rich in rare minerals and is believed to possess 60% of known global reserves of coltan, 10% of copper, 30-40% of cobalt, 10% of niobium and 30% of diamonds (in the Kasai region alone), as well as some of the world’s potentially most significant gold reserves.

International environmental regulations now require the use of tin, rather than lead, to solder electronic printed circuits. The most important tin ore is cassiterite, and its exploitation is supplanting coltan in North and South Kivu, where other attractions include gold and the methane found in abundance beneath Lake Kivu, on the DRC’s border with Rwanda.

The small independent miners who extract all these minerals are just the first link in an illegal trade from which various local businessmen, mercenaries, truckers and casual customs collectors take their cut. But the real beneficiaries are the western brokers at the end of the supply chain. And inevitably there is a flourishing trade in weapons, flowing in the opposite direction.

It is hard to establish which of the foreign companies active in the region are doing best out of the militarised looting of the DRC. Most of them operate behind the cover of subsidiaries and take advantage of tax shelters where banking secrecy shields them from investigation. The South African company Metal Processing Congo (MPC) has long played a leading role in this contraband trade (1). And foreign companies seem unconcerned that competition between them stirs up conflicts between factions on the ground.

During the second Congo war (1998 - 2003), the MPC competed with the Canadian Banro Corporation for gold and tin deposits controlled by the Kivu Mining Company (Sominki) (2), which was itself fighting with the forces of the country’s president, Laurent-Désiré Kabila. Dominic Johnson and Aloys Tegera write: “At least three parties are contesting the same mining interests, and each relies upon a different political ally: that is the situation inherited from the transitional government that held power in Kinshasa in 2003. Two years later there is no sign of resolution.

On the contrary, the conflict in the mining regions has continued” (3).

Further north, Uganda has forged a series of contradictory alliances on the ground. During the two previous wars it contributed significantly to the political destabilisation of the north-eastern DRC, “while continuing to profit from [the region’s] natural resources” (4).

Another Canadian company, Barrick Gold, supported by the South African AngloGold Ashanti, took over the main mining concessions during the first Congo war. In Ituri, where the vast Kilo-Moto goldfields are situated, the Canadian company Heritage Oil owns an oil concession that extends into Uganda. Since last month, armed confrontations between pro-Uganda rebels from the Lord’s Resistance Army and DRC government forces have driven out humanitarian workers.

The situation is further complicated by the presence, in the south-eastern province of Katanga, of the Chinese companies China Railway Group, Sinohydro and China Eximbank. Last April, Chinese investors beat off intense competition and paid Gécamines, the DRC’s state-owned mining company, $9bn for an interest in a series of mining projects worth $80bn. The controversial agreement has been attacked as unconstitutional, too advantageous to the Chinese, a risk to public debt, and for its lack of transparency. But Gécamines’ Canadian head, Paul Fortin, obstinately defends it.
Foreign interests now exercise crucial direct and indirect control over the DRC’s natural resources, either through concessions or agencies. The various armed groups and neighbouring states act as surrogates giving the foreign companies access to resources or securing concessions on their behalf. Yet many journalists continue to talk about the region’s “ethnic wars” without ever examining the economic stakes.

When the fighting prevents them from exploiting their concessions, the mining companies can rely upon the crisis to encourage speculation in their shares on the financial markets. Since the present troubles began in 1996, shares in these companies, especially those most involved in prospecting, have risen with every public announcement. First Quantum Minerals, Katanga Mining (formerly Balloch Resources) and the Lundin Group all made staggering profits after signing one-sided contracts during the 1990s. The economic journalist Nestor Kisenga has described their treatment of the DRC as “like picking up a crude painting in a flea market for peanuts, then selling it to a gallery for its real value as a masterpiece” (5).

Most of this speculative activity is carried out on the Toronto stock exchange. About 60% of the world’s mining companies – not all necessarily Canadian – are quoted there. Canadian law affords the industry significant tax breaks, incentives for investors in the mining sector, lax controls on insider trading, and no serious requirement for companies to explain how they came by their profits. Between 2001 and September 2004, the Toronto stock exchange’s TSX Venture index – which favours mineral prospecting companies – showed that the value of share transactions rose from $800m to $4.4bn (6).

The government is prepared to support the Canadian mining industry’s foreign activities at any cost. It claims to be protecting the public interest on the grounds that the nation’s savings (pension and growth funds) are pegged to the industry. Despite many serious allegations of crimes and abuses in the Great Lakes region, Canada has conducted no recent political or legal investigation into the activities of any mining company. The country has turned itself into a legal haven for the industry.

Over the past few years, the World Bank has encouraged producer states to introduce mining codes that favour private companies. The stated aim is to allow international competition to breathe life into these debt-ridden economies. But dizzying levels of consumption in the developed world are the real motive behind the race for resources – and the wars that ensue. International institutions’ pious calls for good governance and for business to live up to its “social responsibilities” seem entirely inappropriate.

Delphine Abadie, Alain Deneault and William Sacher are members of the collective Ressources d’Afrique and authors of Noir Canada: Pillage, corruption et criminalité en Afrique, Écosociété, Montréal, 2008

(1) “Under-Mining Peace: The Explosive Trade in Cassiterite in Eastern DRC”, Global Witness, Washington, 2005.
(2) The Congolese government and Banro are majority shareholders (respectively 28% and 36%) in Sominki.
(3) Dominic Johnson and Aloys Tegera, Digging Deeper: How the DR Congo’s mining policy is failing the country, Pole Institute, Goma (RDC), 2005.
(4) International Crisis Group, “Congo Crisis: Military intervention in Ituri”, Africa Report, no 64, Nairobi, New York, Brussels, June 2003.
(5) “Mines: des milliards de boni pour le ‘quatrième pillage’”, Congolité, 25 July 2006.
(6) Fodé-Moussa Keita, Les sociétés minières canadiennes d’exploration et de développement du secteur de l’or: les impacts de leurs activités en Afrique de l’Ouest, University of Quebec dissertation, Montreal, 2007.


Dr. Babacar Camara
Associate Professor
Chief Program Advisor
Black World Studies/Comparative Literature/French
MIAMI UNIVERSITY

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