DRC—[Mining Sector]

PLS, CYS, FIR

Justification for SCS
The mining sector in the DRC combines the attributes of political actors as it involves state actors such as the neighboring countries Rwanda and Uganda, but also has some similarities with criminal syndicates as a large proportion of the revenues are made through smuggling and laundering and other criminal activities. Finally, many different larger and smaller firms are operating in the mining sector.

Stakeholder size (number of people)
n. a.

Area of Influence
a. Geographic area
Here I am trying to give brief overview about the mining sector in the different mining provinces.
• Province Orientale
In Orientale, the main resource being mined is gold. On the one hand, there used to be individuals who were directly supporting rebel groups for mining concessions, e.g. the US Treasury and the Bank of England announced sanctions (following existing UN measures) against a major trader, Dieudonne Ozia Mazio, who allegedly provided support to arms groups in violation of the international arms embargo imposed on onwarring parities in the DRC conflict. On the other hand, Uganda plays a major role in smuggling and laundering this gold. The Pact report states that Uganda's two largest gold exporting firms, Uganda Commercial Impex and Machanga Ltd., are being designated for purchasing gold from designated Congolese gold dealers, as well as for providing direct financial support to the militias (for more details on Uganda and the gold trade see the Uganda stakeholder file).
• Province North Kivu
North Kivu is extremely rich in resources. After the price for Coltan went down in 2001, next to diamonds the focus shifted towards casserite. Butembo is a focal point for diamonds with extensive mining activity involving thousands of diamond miners, including river divers, between Butembo and Goma, around Lubero. This road is extremely insecure and many of the mines are controlled by the FDLR. Traders in Butembo were quite open about the fact that the Interahamwe come into the town to trade diamonds, noting that they are always trying to keep a low profile and do their business fast therefore they will accept low prices for their stones. Butembo is also an important town for cassiterite from the east (Mambasa) and the south (Walikale). It was also reported that significant quantities of cassiterite are being produced around the Virunga National Park.
Another important political development occurred during this study, which parallels steps taken by the government in Katanga. On 19 April 2007, the Vice-Minister of Mines, Victor Kasongo Shomary, closed the borders of both North and South Kivu, suspending all mineral exports.
• Province Katanga
In Katanga, there main minerals are gold, diamonds, and coltan. After the official end of the civil war, several industrial mines are already in production (e.g. Anvil Mining, First Quantum Minerals, Metorex, Forrest) and some massive new facilities are in construction phase (e.g. Katanga Mining, Nikanor’s DCP, Freeport McMoran? Tenke Fungurume Mine, etc). New private sector entrants into Katangan coltan include the UK company, Kasai Mining, and the South African company, Chrometco, have established a contract with an artisanal mining group near Kalemie to buy, and process, 300kg of gold per month. China is also getting increasingly involved with businessman Bill Wang overseeing JMT Mining.
One of the greatest challenges facing the sector is the endemic corruption, the involvement of the military and local authorities in the illegal trade, and the failure to enforce the rule of law. There is general agreement from most agencies asked that proportion of material passes through legal or illegal routes is around 40% ‘legal’ and 60% ‘illegal’. Still lacking bigger industrial facilities, most of the mining is done as artisanal mining. One of the most dangerous aspects of artisanal mining in the province is the nature of the illegal traders and other actors who control the work. There is strong military and political involvement in the trade, which permits blatantly illegal activity to occur without challenge. The creuseurs are easily manipulated for political or commercial purpose and agitating them against a company or the larger community is a constant and underlying threat in all efforts to regulate the trade. The disruption of vested interests presents the greatest challenge to all well-meaning interventions to create alternatives. Every digger that leaves the artisanal sector reduces the income of the negociants and traders, therefore it is not these groups’ interest that the transition occurs.
• Provinces Kasai oriental and occidental
Diamond mining in the Kasais involves some of the largest mining companies in the world (e.g. BHP Billiton, De Beers, Anglo American). With the end of the war and conditions getting less favorable than they were during the war in terms of taxes and concessions, lately there has been a rush of many firms to Zimbabwe. In September/October 2006 it was clear that traders were laundering these Zimbabwean stones through the DRC in order to get their Kimberley Process paperwork.

b. Population subsets
n. a.

Description of Organization
a. Who are the primary importers?
• Belgium: diamonds, cassiterite (tin), cobalt, wolfram (tungsten)
• UK: cassiterite (tin), cobalt, wolfram (tungsten)
• Dubai/UAE: gold
• China: coltan (tantalum),
• Rwanda: cassiterite (tin), coltan (tantalum), niobium (pyrochlor) (for more details see the Rwanda stakeholder file)
• Holland
• USA
• Malaysia: cassiterite (tin)
• Tanzania
• Israel
• Uganda: gold (for more details see the Uganda stakeholder file)

b. How does one gain influence in the group?
As an example, the Pact report states that Israeli mining tycoon Dan Gertler, an extremely loyal political and business ally of President Kabila, has been rewarded handsomely with concessions. More formidable still is China’s planned acquisition of several copper and cobalt mines in return for some $5bn of investment in Congo's infrastructure
c. What issues do they care about?
Profits.
d. What does the organizational structure look like?
i. Rule by consensus
ii. Oligarchy
iii. Dictatorship
iv. Theocracy
v. Etc.

Financial Resources (if applicable)
a. List activities that generate cash flow
b. Income from activities
c. Profitability

Military Resources (if applicable)
Private security firms are common in the DRC, hired mostly by foreign and local businesses to protect their property and keep crime at bay. Especially many mining companies hire private security services—even former combatants—to guard their sites .
a. What arms do they possess
no data.
i. What type?
ii. How much?
b. Experience level
Most private security firms are former soldiers of national armies and thus well-trained. h

Provide a short history of the stakeholder group
a. What is their origin?
Widespread use of unfair, illegal, or unclear contracts is a second critical impediment to developing the full potential of natural resources. Despite the 2003 Mining Code, drafted in collaboration with the World Bank to create a transparent and efficient permit system, uncertainties continue.1 On one hand, the origin of a contract may be difficult to trace; whereas before the civil wars, mining companies were state-owned, the effort to privatize mines after the war left the status of many mines and the legitimacy of contracts unclear. Multinational corporations holding mining contracts in DRC may not know whether the sale of the contract was made by a rebel group or a representative of the Congolese government. In other cases, contracts may be contested due to multiple layers of ownership. E.g. a productive mining site in North Kivu has been shut down, leaving 3,000 thousand Congolese unemployed, until the ownership of the mine is clarified. Moreover, unfair and illegal contracts may not contain any provisions for community reinvestment by the mining firm or return an appropriate share of revenue to the government, hindering economic development and the availability of social services.
Several initiatives are underway to disentangle the issues surrounding existing mining contracts in Congo, with a view to renegotiating contracts as fairer and less corrupt arrangements. Recently, the Congolese government, supported by many in the international community, began a review of mining contracts in March 2007. To convey transparency and credibility, the vice minister of mines, Victor Kasongo, created an inter-ministerial group to review the contracts and partnered with an outside organization in the review process. Despite this display of political will, some doubted the ability of government to efficiently undertake this exercise, given that it suffers from a funding shortage and has allowed only three months to complete the review (Indeed, one panelist noted that an international law firm took one year to conduct an independent review).
b. How have they changed?
i. Interests
ii. Level of influence
iii. Resources
iv. etc
c. What are their future goals?
At the moment, the new government initiated a review of the mining contracts and concessions that had been signed before its inauguration under the above described doubtful circumstances. Yet, according to Global Witness , the success of this process is highly doubtful because of a lack of transparency and clarity, affecting almost every aspect of the review, intense pressure exerted to question its methodology and the quality of the outcome, inadequate safeguards to protect the independence of the Commission and of the review and the limited involvement of civil society.