Global Policy Forum

D.R. Congo Reviews Mining Contracts Signed


By Aaron Ernst*

World Politics Review
May 8, 2008

In the late 1990s and early 2000s, a curious export phenomenon occurred in the countries of Rwanda, Uganda and Burundi. In spite of the fact that none of these countries had major domestic mining operations, their exports of copper, gold, diamonds and coltan jumped drastically. Not coincidentally, these were the exact same minerals found in abundance in the neighboring Democratic Republic of the Congo (DRC), and the jump in mineral exports coincided perfectly with the invasion of DRC by these three countries. While each country justified its invasion based on security concerns, the United Nations found that the battlefields were most commonly centered around areas that held large stocks of valuable minerals.

In a 2002 report, the U.N. alleged that many foreign mining companies, eager to exploit the lack of a strong central government in Kinshasa and avoid paying fair market value and taxes on the minerals they extracted, signed contracts with commanders from the invading countries as well as with then-President Laurent Kabila, who was struggling to cling to power in the face of the international onslaught. These contracts almost universally favored the mining companies.

"In terms of value to the country, about 60 to 80 percent of the contracts had language that allowed the companies to avoid an obligation to actually ensure that it does what it says it will do," said Peter Rosenblum, law professor at Columbia University and an expert on DRC mining contracts. The contracts, he said, often undervalued the worth of the minerals being taken from the country in order to avoid paying taxes on the wealth that was extracted.

Even after Kabila was deposed and replaced by his son, current DRC president Joseph Kabila, many of these lop-sided contracts remained in force. That is, until May of last year. In a move that sent ripples through the DRC mining community, the government announced that 63 mining contracts, many of them signed during the civil war of the late '90s, would be reviewed by a special ministerial committee.

While certain NGOs and portions of the international community saw the announcement as the beginning of a much-needed process to shed light on and bring accountability to an industry that has fueled much of the conflict in the DRC, other NGOs and members of the mining community have been more skeptical. Some have argued that the contract renegotiation is nothing more than a ruse by members of the government to transfer mineral riches from the pockets of foreign mining companies to the pockets of well-connected businessmen in Kabila's government.

"The process is very much open to corruption, particularly when you look at the history of mining in the DRC," said Carina Tertsakian, spokeswoman for the U.K.-based group Global Witness, an NGO that highlights the role of natural resources in fueling conflict. "Even though this is a new government that was elected in 2006, many of the same people in the transitional government were the ones who were involved with negotiating these contracts in the first place," she said. Global Witness is particularly concerned about the lack of transparency in the review process, as well as the fact that new contracts are already being negotiated even before the review is completed, including a multibillion dollar deal with China whose details remain cloudy.

It is a criticism that frustrates Karin Ryan, director of the human rights program at the Carter Center, an organization that has been providing the DRC government technical support with the review process. "The assumption is that the money from the contracts is either going to go to corrupt fat cats, or to the mining companies that deserve it," said Ryan. So far, however, the government has come through on all the promises that the Carter Center made a condition of its involvement in the process, she said.

The government published the contracts being reviewed, included civil society in its ministerial commission, and used various NGO reports in the review, including the independent review sponsored by the Carter Center. "There are obviously people in the government who are legitimately trying to do the right thing, and that should be noted," she said. "We should assume that the government has the right intentions and don't demoralize them and the people by saying that the process is corrupt. It's so dishonest."

Last month, the DRC government fulfilled yet another promise to the Carter Center and published the results of the review online. The contracts were divided into three categories: contracts certified without renegotiation; contracts requiring renegotiation; and contracts considered so illegal that they were declared null and void. No contracts fit into the first category, most fell into the second category, and a dozen or so were dismissed outright.

The mining companies have been tight-lipped about their reaction to the review process. Several emails sent to Anvil Mining Corporation, a Canadian mining company whose 90 percent stake in a copper mine has been called into question, went unanswered. In a phone interview from South Africa, Alan Fine, public affairs manager for Gold Ashanti said that they are taking a wait-and-see approach. He declined to answer specific questions about the content of the review. "We received communication from the government about six weeks ago setting out their wishes," he said. "We do not want to go into further detail at this stage while we are involved in the renegotiation process."

The government has been similarly quiet. "It is hard to get anyone in the government to talk about what is really going on," said a Congolese reporter who requested anonymity due to the sensitive nature of the mining review. "As soon as you request an interview, the date of the interview is somehow never set," he said. "It's very difficult to know what is really going on."

With the government's demands laid out, the focus has now turned towards the renegotiation process. In a statement on their Web site, Global Witness tentatively praised the publishing of the results of the contract review, but cautioned that they would be watching closely to ensure that the actual renegotiation of the contracts was done transparently as well.

Ryan from the Carter Center agrees and takes it one step further. "It doesn't end at renegotiation. The process is about holding everyone responsible and determining whether the contracts benefit the people in the long term." She fears the potential conflict that could result should the contract review process fail. "War has flourished in the east part of the country because of the government's lack of strong movement to assert authority," she said. "We are just trying to encourage forward movement."

About the Author: Aaron Ernst is a freelance journalist and a graduate student at Columbia University's School of International and Public Affairs in New York.

More Information on the UN Security Council
More Information on the Democratic Republic of Congo
More Information on Minerals in Conflict
More Information on the Dark Side of Natural Resources
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