- Created on 15 May 2003
PARLIAMENTARY BRIEFING: Illegal Minerals and Conflict
It is one of the great ironies of the developing world that abundance of wealth, being something to fight over, may be a greater problem than scarcity. As wars have dragged on in the Great Lakes and Mano River regions of Africa there is growing evidence that strategies are aimed less at military success and more at securing the unhindered exploitation of natural resources. While the aggressor uses its neighbour’s wealth the make the war self-financing, the threatened party uses its neighbour’s governing élites on both sides seek personal gain.
The commercialism of military activity raises serious concerns as traditional exit strategies, such as the return of stability or achievement of a strategic foreign policy objective, are less relevant if the occupying army participates in commercial enterprise. If forces are self-funding, the financial constraints of deployment become marginalized. While semi-commercial criteria can create an incentive for entering a conflict, the establishment of entrepreneurial schemes by military commanders and political elites provides a strong disincentive for troop withdrawal.
Democratic Republic of Congo: A case study
The Congo has the highest concentration of minerals in Africa and they are of extremely high quality. The Congo holds 8% of the world’s diamond reserves and vast amounts of gold. Many other minerals (e.g. coltan, uranium, copper, and cobalt) are needed by high tec industries in order for them to survive. There will always be a market for Congolese minerals and much of the history of the country has been centred on who has access to them. Tragically, to date very little of the natural wealth has been used for the benefit of the 45 million population.
The DRC is currently divided into three parts:
1. The government of President Joseph Kabila, based in Kinshasa, controls the South West and Central provinces. Mubuji Mayi has diamonds, Katanga - cobalt and copper. Exploitation is characterised by contracts drawn up with the central government.
2. Eastern Congo, the Kivus and Orientale province, are controlled by the RCD Goma has tin casserite, coltan, and some diamonds. Characterised by direct mining of minerals by Rwanda
. 3. North Congo is controlled by the FLC. This area contains timber, coffee, gold and coltan. It is characterised by trading contracts between the FLC leader, Jean-Pierre Bemba, and other individuals.
Armies involved in the conflict
In 1996 Rwanda and Uganda backed a rebellion to overthrow Zaïre’s dictator, Mobutu Sese Seko, and install Laurent Kabila. Following a deterioration of relations between the former allies, Rwanda and Uganda occupied parts of the Congo and in August 1998 backed rebel attempts to overthrow the Kabila regime. The Congolese government called on troops from Zimbabwe, Angola and Namibia to repel the attack. The Rwandan and Ugandan backed rebels were halted, but all countries involved retain troops in Congo. Since the death of Laurent Kabila in January 2001, and his replacement by the more moderate son, Joseph, a fragile ceasefire has held along the front lines.
Each country has a separate history of involvement:
Prevention of genocide was the original reason for Rwanda’s involvement in the 1996 invasion of Zaïre. The refugee camps in Goma had become a place for the genocidal army of the ex-Hutu regime, FAR and the interahamwe killers to regroup. Rwanda needed to secure its borders from incursions from these forces still bent on extermination of the Tutsi ethnic group. This remains the fundamental reason for Rwanda to remain in Congo, mineral exploitation, though rampant and amounting to plunder, is a by-product of this original aim, and a useful way of financing the war effort and enriching individuals.
Uganda entered the war because they wanted to stop movements fighting against the Kampala regime from using the Congo as a rear base for their activities. These groups are the Lords Resistance Army and the West Nile Front. They are being financed by the Sudanese regime, as Uganda supports to efforts of the Sudan People’s Liberation Army. Uganda’s balance of payment terms has benefited from re-exporting vast tons of gold, timber, diamonds, coltan, and other minerals.
Gold from Congo has been smuggled for many years through Burundi’s capital, Bujumbura. This was one way that Laurent Kabila financed his rebel movement before he allied himself with Rwanda to gain power in Kinshasa. Burundi too has a security motive for being among the rebels fighting against the government of Kinshasa, since it wants to thwart the FDD Hutu rebels who are based there.
Angola also has a security motive for entering the conflict; it needs to stop the Congo being used as a rear base for UNITA rebels. Angola has entered into formal contractual relationships with the Kinshasa government, including for supply of gasoline products to the regime through state-owned Sonangol. Sonangol also signed contracts for the joint exploration of small offshore oil deposits.
Does not have security concerns in Congo, but on entry in 1998 was keen to expand its role in Southern Africa, and also motivated by the ruling élite’s desire to obtain lucrative contracts and mining partnerships. Having signed long term contracts on Mining and Timber, Zimbabwe now looks to Congo as a major international ally and business partner. Natural Resource Exploitation
A United Nations Panel of Experts and others have observed that the fighting has direct links to foreign interests connected with the exploitation of natural resources . While claims for security are legitimate, the UN Panel and other analysts agree that security considerations do not justify the levels of troop deployment now in place. It is feared that initial tactical moves have become acquired strategic interests that nobody wants to let go of.
Further support for this view lies in the location of troops, and although numbers have reduced in some areas, deployment is increasingly concentrated along mineral rich zones. Zimbabwean troops are located in diamond, copper, cobalt and timber-rich areas of the Kasais and Katanga. Rwandan troops have concentrated in coltan, gold, timber, and diamond-rich areas in the Kivus and Maniema. Ugandan troops are located near gold, timber, diamonds, and, until recently, coltan rich areas in Ituri and N. Kivu. The trade in commodities has increased sharply since the war began, especially in areas where troop numbers are high.
1. Kinshasa Government, Angola and Zimbabwe.
US Mining companies courted Laurent Kabila from his 1996 march on Kinshasa. American Mineral Fields (AMF) immediately signed a $1bn contract to mine copper and cobalt. De Beers originally had all the trading posts for Congolese diamonds, offered to the AMF by Laurent Kabila. The AMF contract was subsequently given to Anglo-American of South Africa. Anglo-American Corporation of South Africa is the biggest supplier of gold in the world, as most of South Africa’s gold has been mined it is likely Anglo-American have exploited new sources in Congo.
Laurent Kabila also signed deals with Ridgepoint Overseas Development of the British Virgin Isles, and Barrick Gold of Canada, the second largest supplier of gold in the world. North Korea has been granted a Uranium concession in Shikolobwe. Namibia entered the war on the side of the government in 1998, and was granted concessions in exchange for their military involvement, one of which was given to the leading Russian diamond producer ARS. The Quando Company, linked to the Namibian ruling party, were given a stake in the state owned MIBA Diamond Company.
In Zimbabwe the ruling African National Union-Patriotic Front (ZANU-PF) party, along with the Zimbabwe Defence Force (ZDF) forged several large-scale financial deals involving Congolese Timber and other Natural Resources. There is also trade in manufacturing, agricultural products and transport. Commanders in the Zimbabwean army run a string of business ventures in Congo, encouraging Zimbabwean businessmen to “go to the DRC and find out what is possible .”
Osleg, or “Operation Sovereign Legitimacy,” is officially the commercial unit of the ZDF but actually is privately owned by the Zimbabwean Permanent Secretary of the Ministry of Defence, Commander of the ZDF and the Acting General Manager of the Minerals Marketing Corporation of Zimbabwe. A joint venture between Osleg and the Kinshasa based company Comiex (whose majority shareholder was former President Laurent Désiré Kabila) lead to the creation of SOCEBO – the Congolese Society for the Exploitation of Timber. Global Witness Report that this company has gained the rights to exploit 33 million hectares of Congolese forests .
The Osleg-Comiex joint venture also mines diamonds, and was apparently created with the professed goal of making the Zimbabwean deployment self-financing. But many individuals and organisations have still not been paid. The Zimbabwean Electricity Supply Authority supplied power to the Congolese Société Nationale d’Electricité without payment, and Zimbabwean Defence Industries reportedly supplied US$2.5 million for armaments and equipment delivered in 1997-8.
Angola’s National petrol company Sonangol also entered into joint ventures with the Kinshasa government during 1998. Sonangol holds 60% of Sonagol-Congo, which ran a joint oil exploration with the Congolese government. Sonagol is also the major supplier to the Congolese domestic petrol market.
2. RCD and Rwanda (Eastern Congo, the Kivus and Orientale province).
Rwandan deployment has lasted for four years and stretches far into Congo, to Kisangani (rich in diamonds), and Katanga (coltan and copper.) Despite Rwanda’s very understandable security concerns, it is questionable whether these areas of deployment represent the greatest security threats.
A UN Panel published a report in April 2001 , which alleged that Rwanda has used prisoners from its jails to mine resources in Eastern DRC. Increases in the price of coltan during 1999-2000 have meant the Rwandan army may have made up to $20m a month by coltan sales alone. The Government of Rwanda has made an official response to the report, saying that Rwanda was producing 120 tonnes of coltan per month (i.e. 1440 tons per year) and that this coltan originates from domestic production. This figure contradicts the actual UN report, which shows that official government statistics of coltan production were only 83 tonnes per year. It is unlikely any new mines would have the capacity to raise Rwanda’s annual coltan production from 83 to 1.1440 tonnes.
The UN Panel’s second report was published six months later, and focused on discrepancies between production and export figures. The Panel were unable to explain Rwanda’s steep rise in coltan exports since their involvement in Congo in 1996. Some estimates put annual profits from coltan sales at £160m .
Rwanda’s export figures of diamonds and gold have also increased sharply since the war began, although they do not have domestic reserves. Rwandan diamond exports reached 30,491 carats in 2000. Diamond exports are no longer increasing; this is thought to be due to the high tax imposed by the “Congo desk.” The Government of Rwanda argues that wartime trade is a continuation of pre-war trade, but the UN have pointed out that trade routes and commodities have changed since the war began.
3. FLC and Uganda (North Congo).
Uganda’s export figures for gold, quoted in the first UN Panel Report, far outstrip the countries production figures (0.0044 tonnes production against 10.83 tonnes export in 2000). The Government of Uganda argues this discrepancy has occurred because gold sales have been liberalised, but Ugandan troops are deployed around gold-rich areas, and the second UN Panel Report explicitly states that UPDF forces have supervised artisan miners.
Ugandan diamond exports have risen sharply since 1996 to an estimated 35,000 carats, valued at $3.8m. No exports were recorded prior to 1997. The UN’s reports also show that Ugandan commanders have been responsible for plundering gold, looting timber, exporting coffee and controlling illicit trade monopolies. Individuals close to President Museveni, including his own brother Salim Saleh, have been reported to be personally enriching themselves through the ventures.
4. European Companies.
The private sector plays a major role in continuation of the war through facilitating the exploitation, transport and marketing of Congo’s natural resources. A recent report by the International Peace Information Service examines the situation in RCD-controlled territory.
Coltan is essential for the manufacture of most electronic products. Most companies using coltan for manufacture claim they are unaware as to how and from whom it is obtained. IPIS calls for leading international corporations such as Alcatel, Compaq, Dell, IBM Ericson, Nokia and Siemens to immediately refrain from buying capacitors from Eastern Congo.
The RCD is reported to have granted a monopoly on all coltan exports on territories under their control. Belgian company Cogecom Sprl is estimated to have generated revenue of $600.000 for the RCD during December 2000. The German corporation Masingiro GmbH exported 75 tonnes of coltan to Germany via Ostend Airport between June and September 2001. The coltan was probably destined for the tantulum processing plant operated by the Bayer subsidiary H.C. Starck. There are numerous other documented examples.
Two companies based in the UK, named Western Hemisphere Capital Management and Western Hemisphere Resources are reported to be logging the Congolese rainforest and mining diamonds on behalf of the Zimbabwean government . The UN Panel names Afrimex and Ventro-Star as British companies involved in the export of Coltan.
The UN Panel of Experts on the Illegal Exploitation of Natural Resources
The UN Security Council appointed the Panel of experts after Rwandan and Ugandan troops clashed in Kisangani in May 2000, leaving 600,000 Congolese dead. During their first mandate the panel spent six months researching the role of the Congolese government’s adversaries, concluding that Presidents Yoweri Museveni of Uganda and Paul Kagame of Rwanda “are on the verge of becoming the godfathers of the illegal exploitation of natural resources and the continuation of the conflict in the Congo .”
The Panel recommended an embargo on trade by Rwanda, Burundi and Uganda, in a variety of minerals, the prosecution of those involved in economic crimes and the suspension of arms sales to rebel forces and “the states that support or assist these groups”. It also urges the World Bank to “suspend cooperation” if they fail to change their practices. The report proved to be very controversial. It was dismissed as ill informed and unbalanced by the rebel groups, who said that it reflected France’s support for Joseph Kabila, and hostility towards the Anglophone regimes in Uganda and Rwanda. The Security Council extended the mandate of the Panel and asked them to examine the role of the Kinshasa government’s allies.
The second Report was more balanced, and recognised security was an initial motivation for Rwanda and Uganda to enter Congo, while Zimbabwe came at the request. Over time the lure of natural resources became “the primary motive” for staying in many areas of the country.
Examining Zimbabwe’s involvement, the Panel concluded that the joint ventures with Kinshasa appeared to benefit Zimbabwe’s army, government officials and some Congolese, rather than the population of either country. It concluded that Rwanda, Uganda and Zimbabwe have been willing to tolerate conflicts among armed groups in Eastern Congo as an excuse to maintain their armies and to exploit resources. South Africa, Zambia and Kenya are named as transit routes for smuggling of diamonds, gold and coltan.
The Panel recommended a moratorium on trade in diamond, gold, copper, cobalt, timber and coffee originating from areas where foreign troops were present and regions under rebel control. The Security Council decided it was unenforceable. The plundering of natural resources was “condemned,” and the mandate of the panel was extended for six months. It was argued that a review of concession agreements would be better undertaken by organisations already equipped with the necessary expertise .
The British Government supports moves to introduce a certification scheme for diamonds and are interested in possible certification schemes for other precious resources. They are investigating the role of the named British registered companies.
The Kimberley Process
Tackling the illegal trade in conflict diamonds is vital to any policy to fight the major sources of conflict. The “Kimberley Process” was initiated in May 2000 by the Government of South Africa, and is an attempt to design a system that will certify that:
1. conflict diamonds do not enter the legal trading system between the point of mining and first export from a producing country.
2. diamonds are not tampered with between their despatch from a producing country and their first arrival in a country where they will be cut, polished or traded. 3. countries that cut, polish and trade in rough diamonds have adequate controls and procedures to ensure that conflict diamonds cannot enter their trade.
Following a UN General Assembly Resolution in December 2000, industry leaders proposed a “chain of warranties” to build consumer confidence. 35 governments, the diamond industry and civil society organisations have met regularly since then to attempt to devise a global certification scheme for the import of rough diamonds.
Under the proposed system, no country would allow the import of rough diamonds that were not accompanied by a recognised certificate of origin. The system will be finalised at a meeting in Ottowa March 18-20, but currently lacks enough provisions to make it effective. There is not yet agreement on the creation of a public international database on the production and trade in rough diamonds, and provisions for monitoring are feeble. There has been no consensus on international coordination, or whether the system would be WTO compatible.
Antwerp and London are two of the world’s biggest markets for rough stones, and the British government has been instrumental in pushing this initiative forward, so far with little success. The need is urgent - without a certification system the legitimate diamond industry will face growing consumer outrage.
An estimated $300-$500 million worth of diamonds is being used every year by rebel armies to buy weapons and fight wars in Africa. The issue of conflict diamonds has been public knowledge for more than three years, but massive volumes of diamonds still reach the trading centres of Antwerp, Tel Aviv, Bombay and New York from countries with virtually no diamonds of their own: Gambia, Côte d’Ivoire, Rwanda, Uganda and Congo-Brazzaville.
In the Congo serious concerns remain about the humanitarian impact of the war and of the mining of radioactive substances. 2.5 million people are estimated to have died as a result of the war, and countless human right abuses have been committed . War and neglect created, and now exacerbate one of the worst the humanitarian crises in the world. An estimated 18 million Congolese people lack access to any form of public services. There are two million displaced people and 340,000 refugees in neighbouring countries .
Heritiers de la Justice, a Congolese human rights organisation, recently issued a statement warning of serious health risks for women and babies involved in Coltan exploitation. Coltan is radioactive - increasing numbers of babies are being born with bone deficiencies and women involved in the manual pounding of coltan report chest pain and respiratory problems .
Preliminary investigations by the British Ape Alliance have found that the source of coltan can be identified by spectrographic analysis (a standard procedure in the trading of coltan.) It is therefore possible that illegal coltan could be identified and a system of labelling established.
The commercialism of military intervention in Congo has created vested interests that benefit from the status quo. A ceasefire along the front lines has held since the death of Laurent Kabila in January 2001, yet there has been slow progress in troop withdrawals and agreement on a representative system of government of the country. Foreign armies, and rebel groups benefit from the continued status quo.
The largely invisible parties to the conflict are the international companies, which seek permission to mine the minerals. The sad irony is that the Congo is so huge that if a liberal, free economic union existed in the Great Lakes region, the neighbouring countries would still be the natural ports for the export of Congolese resources. The main difference would be the freedom of the Congolese people to get involved in business ventures and further their own development.
The All Party Parliamentary Group is deeply concerned about war profiteering in the Congo. Individuals, companies and governments are making huge financial gains from the mineral trade. There is no little evidence that the exploitation is funding core social services or boosting the local economy. Illegal exploitation is simply fuelling the conflict.
The UK Government
· must continue with high-level political engagement in the peace process and continue supporting initiatives for the demobilisation of armed groups in the East.
· needs to take an evenhanded approach with all parties involved in illegal exploitation.
· should respond publicly to the findings of the UN Reports.
· could play a more active role by investigating British companies said to be involved.
The International Community
· should back up the Kimberly Process to certificate diamonds with sufficient monitoring, including a public international database on production and trade of rough diamonds.
· must examine the viability of introducing certification schemes for other natural resources.
· needs to create a monitoring body to record the trade of commodities originating from the Congo or neighbouring countries.
· should give further consideration to the UN Panel’s suggestions for a plan to rebuild Congo’s state institutions and to hold an international conference on tackling the problems of the Great Lakes region, including the issue of mineral exploitation.
· the IMF and World back should evaluate their assistance to countries known to be involved in illegal exploitation.
· countries involved or directly involved in the conflict – in particular transit countries – should review their national legislation and investigate any allegations of illicit trafficking.
· companies and governments must adhere to the OECD guidelines on multi-national companies.
· In the long term, the UN should formulate a new protocol to govern the production, trade and consumption of natural resources originating from conflict areas. This protocol could subsequently form the basis of an international law on the issue.