Rushand Ruin - ReliefWeb

A Report by Global Witness. September 2004

Recommendations pages 1-2

Rush andRuin

The DevastatingMineral Trade in

Southern Katanga, DRC

Rush and Ruin—The Devastating Mineral Trade in Southern Katanga, DRC

The international donor community should:

● Develop innovative immediate and long-term solutions to ensure that the continuedmisuse of natural resources in the DRC is ended. Existing donor aid shouldmainstream natural resource governance into policies on trade, development,humanitarian and security issues.

● Require that companies investing in the DRC’s natural extractive sectors publishwhat they pay to the DRC government, including a break down of all fees,exploitation and exporting licensing agreements, and monies paid under jointventure agreements.

● As a condition of non-humanitarian assistance, require of the DRC governmentpublic disclosure of all government revenues from natural resource extractive sectorsto ensure donor aid is used effectively and that all revenues are being usedaccountably.

● Work with the World Bank and the IMF to coordinate policies on natural resourcemanagement to address the lack of capacity in the Ministry of Mines and customsoffices to gather reliable information on the extraction and trade in minerals.

● Further work with the World Bank and the IMF to ensure that full systems andfinancial audits of the Ministry of Mines, Cadastre Minier and Ministry of Financeare carried out by the DRC government as a condition of non-humanitarianassistance.

● Develop an integrated strategy to address problems faced by artisanal miners in theDRC. An International Labour Organisation’s 2004 study into working conditions inKatanga’s mines could form part of a comprehensive programme ending childlabour and dangerous working conditions. The strategy should also include workingwith local groups to form artisanal miner cooperatives.

Recommendations

Mbanza-NgunguBoma

Tshikapa

KahembaMwene-Ditu

Aketi

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Bolobo

Faradje

Kamina

Kikwit Kongolo

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Likasi

LodjaKole

Lubao

LusamboBena

Mweka

Watsa

Kenge Bulungu

Lisala

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Punia

Kabalo

Kapanga

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Butembo

MobaKabamba

Moliro

Sakania

Dilolo Kasenga

Pweto

BasokoBasankusu

Kabinda

Inongo

Gbadolite

Gemena

Imese

Zongo

Libenge Businga

Bondo

Buta

Bumba

Kolwezi

Kibombo

Kasongo

Uvira

Makobola

Kilembwe

Ubundu

YangambiEkoli

Bunia

Beni

Ituri

Isiro

Manono

BangassouJuba

Gulu

KaseseJinja

Butare

KigomaTabora

Sumbawanga

Mbeya

Ndola

SolweziLuena

Saurimo

Lobito

N'zeto

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Liranga

Kalemie

Mpala

Kipushi

Pointe-Noire

Ilebo

Ikela

Bukavu

Goma

Kindu

Matadi

Mbandaka

Kananga

Kisangani

Mbuji-Mayi

Bandundu

Lubumbashi

Bangui

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Luanda

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The World Bank should:

● Make non-humanitarian aid conditional on the DRC government commissioning afull independent and internationally verifiable systems and finance audits of allexisting mining contracts and also of the Ministry of Mines, Cadastre Minier, theMinistry of Finance and associated departments both in Kinshasa and Katanga.The World Bank should work with the IMF to ensure the DRC government carriesout these audits and that results are made public and are used to inform donor policyon improving resource governance and mining sector capacity building as soon aspossible.

● Proceed with commitments to develop alternative employment opportunities for ex-Gécamines workers and other unemployed people in Katanga.

● Explore options to revive mineral processing capacity within Gécamines and othercompanies in order to prevent losses to the Congolese economy through theexportation of raw material.

The International Monetary Fund should:

● Apply its current “best practice” to promote transparency of resource revenues inCongo-Brazzaville to the DRC.

● Incorporate revenue transparency into the IMF’s safeguard policies for lending toresource-revenue-dependent developing countries.

● Collaborate with the World Bank to require the carrying out of systems and financialaudits of the Ministry of Mines and Cadastre Minier, and in addition, require thecarrying out of an external systems and financial audit of the Ministry of Finance aspart of the set of structural performance criteria the DRC government mustimplement under the IMF country assistance programme.

● Further require that the transitional government proceed with customs sector(OFIDA) reform to ensure taxes on exported ores are collected in accordance withthe Mining Code.

The transitional government should:

● Cooperate fully with the international donor community to reform the miningsector, build institutional and enforcement capacity within the Ministry of Mines andthe customs office (OFIDA) to enforce the Mining Code.

● Ensure that the export of heterogenite is accurately recorded, assayed and thentaxed according to prevailing international mineral prices.

● Ensure statistics published by the Central Bank on state revenues earned through theexploitation, trade and export of minerals in the DRC are accurate and that statisticsrepresent minerals extracted and processed by private companies as well asGécamines.

● Firmly commit to making anti-corruption, transparency and accountability priorityareas by publishing the results of systems and finance audits of the Ministry ofMines, Cadastre Minier and Ministry of Finance.

● Maintain and publish a full register of all mining licences, agreements and awardsissued under the new Mining Code by the Cadastre Minier; as well as periodicpublication of all revenues earned through the issuing of mining licences andpermits, joint venture and other agreements, as well as revenues earned through thecollection of taxes under the Mining Code.

● Ensure that all revenues generated through natural resource extraction byconstituent members of the government are directly channelled through theMinistry of Finance and Central Bank.

The United Nations should:

● Work with the World Bank, other donors, and local and international developmentNGOs to develop alternative sources of employment in Katanga for artisanalminers. For example, the UN and other donors could assist in the development andimprovement of infrastructure and encourage a return to community agriculturalproduction in some of the poorest mining areas in Katanga.


Contents

Recommendations

Abbreviations

Executive Summary

Introduction

The economic and political strategic importance of Katanga

Historical background

Katangan secessionist movement

The decline of the mining sector and rising resentment

Katanga in national context: are current political conditions a deterrent against investment?

Reforms

Spoiler elements

MONUC

Katanga’s security situation

Concerns for investors

Mining in Katanga – an overview of the heterogenite trade

Artisanal Mining

Trading houses

Lack of processing of ore

No oversight: no statistics

DRC’s Customs Office (L’Office des Douanes et Accises – OFIDA)

Assaying issues

Transportation

Summary

Case-study on artisanal mining: Shinkolobwe mine

(Non-)Application of the Mining Code

The Role of the DRC Government

Directorate of Mines responsibilities

Artisanal Mining

Shinkolobwe

Minerals sale and export

Provisions detrimental to local economies

Summary

Local impact of the heterogenite trade

Poverty, unemployment and the paradox of plenty at a micro-level

Ex-Gécamines workers

Environmental effects

Where does it all go? International trade statistics

China

South Africa

Zambia

Tanzania

Donor policy in DRC

World Bank

International Monetary Fund

Bilateral Aid

Conclusion

Citations

Interviews

References

Rush and RuinThe Devastating Mineral Trade in Southern Katanga, DRC


Executive Summary

THIS REPORT EXPOSES the dynamics of the rush toexploit cobalt and copper in Katanga (south-easternDemocratic Republic of Congo (DRC)), and how the illicittrade in these minerals is contributing to the ruin of theDRC’s economy, the environment and the livelihoods of

thousands of Congolese people. There is currently a “cobalt rush” occurringin Katanga caused by record-high international cobalt prices but there islittle indication this dramatic rise in trade has had any benefit to the DRCeconomy or the Katangan province.

The DRC is now slowly emerging from a devastating conflict, and itsfragile transitional government is tasked with bringing the country throughto elections in - as well as implementing desperately needed fiscal andinstitutional reforms. During a time that the international donor communityis providing billions of dollars in aid that partly assists the improvement ofrevenue collection and public expenditure management in the DRC, thestate is losing vast quantities of revenues due to an appalling lack of controlover the mining sector. A lack of transparency in mining revenuemanagement coupled with a vast capacity deficit in key governmentinstitutions renders determining the precise loss to the DRC economyimpossible.

Discrepancies between official figures are illustrative: in March theCentral Bank of Congo reported the DRC produced tonnes of cobaltmetal. In the same month, the DRC’s customs office reported , tonnesof cobalt metal was exported – a difference of over , tonnes. Thisdiscrepancy raises serious questions about where mining revenues are goingand how trade and production is being recorded. Given that industryexperts estimate that the DRC processes a maximum , to , tonnesof cobalt metal per year, the figure of , tonnes is wholly inaccurate.Thesituation is made even more serious as investigations in Katanga reveal thatonly a minute fraction of trade in minerals is officially recorded: the vastmajority of trade is illicit.

The DRC has in place a new Mining Code designed to attract foreigninvestment by providing a legal framework that provides clarity andcertainty. However, the Code is yet to be applied on the ground in Katanga,leading to the mining sector being virtually uncontrolled and non-transparency to continue. Again, this is caused by a combination of anabsence of regulatory capacity and a lack of political will in Kinshasa tobring the trade under control. Current world prices for cobalt stand atUS$, per tonne, but the DRC does not have the industrial facilities orcapacity to effectively gain from record-high cobalt prices.

However, the real losers in the “cobalt rush” are artisanal miners workingunder appalling conditions in mines throughout southern Katanga.Deprived of any alternative sources of employment, young men and boyswork for as little as US$ per day gathering mineral soil by hand. They haveno protective equipment, and their activities are left completely unregulatedby local authorities.

The report also cautions that the current status of mining in Katanga isnot simply an economic and social problem. The rush to extract and exportvaluable minerals from Katangan mines, and the lack of distribution ofbenefits from this trade could also fuel a resurgence of historical secessionistsentiments.

The DRC has extraordinary natural wealth, but this wealth has neverbeen used for the benefit of the Congolese population. Mining revenuesfrom Katanga could – and should – be used to consolidate peace andpromote economic development in the DRC. The international communitymust coordinate its donor aid policies and work closely with the DRC’stransitional government to ensure that the mining sector is controlledeffectively and transparently to combat corruption and illegality. This is theonly way the DRC will be able to properly harness its own wealth to fund itseconomic, social and political rehabilitation for the benefit of all Congolesepeople.

Abbreviations ANR Agence Nationale RenseignementsASIC Alex Stewart International

CorporationChemaf Chemicals of AfricaDRC Democratic Republic of CongoEMAK Association d’Exploitants Miniers

Artisanaux du KatangaGécamines La Generale Des Carrieres et

Des MinesIAEA International Atomic Energy AgencyIEC Independent Electoral CommissionIMF International Monetary FundMONUC United Nations Organisation

Mission in the Democratic Republic ofCongo

NGO Non-Governmental Organisation OFIDA L’Office des Douanes et AccisesPPRD Parti du Peuple pour la

Reconstruction et la DémocratieRCD Rassemblement Congolais pour la

DémocratieSDC Superior Defence CouncilSOMIKA Société Minière du KatangaTNG Transitional governmentUMHK Union Minière du Haut-KatangaUN United NationsUSSR Union of Soviet Socialist Republics


Introduction

STRINGENT AND TRANSPARENTmanagement of natural resourceexploitation is crucial to the futurepeace, stability and economicdevelopment of the Democratic

Republic of Congo (DRC). The DRC is a country ofextraordinary natural wealth, but this wealth hasnever been used for the benefit of the Congolesepopulation. Currently the DRC is beginning toemerge from the effects of a conflict partly fuelled bynatural resources that has claimed the lives of over million people since . Just as natural resourceshave been central to the DRC’s recent war, resourceexploitation is also at the core of assumptions abouthow the country will fund rehabilitation andeconomic revival. In particular, the mining sector inthe DRC is seen as a potential large revenue earner.However, as this report illustrates, hopes of a mining-led economic recovery in the DRC will not berealised unless immediate action is taken to controlthe illicit trade in minerals from the south-easternprovince of Katanga.

This report focuses on the illicit trade inheterogenite – rich soil containing copper, cobalt,zinc and other minerals – from the mineral-richprovince of Katanga. This report is a follow-up toSame Old Story – A background study on natural resources in

the Democratic Republic of Congo, a report published byGlobal Witness in June . Whereas Same Old Story

examined historical patterns of resource exploitationin the DRC, this report uncovers the currentdynamics of the trade in the DRC’s cobalt, copperand related minerals.

Katanga is a province that has managed to escapesome of the ravages of armed conflict that haveengulfed eastern DRC since . Throughout theconflict, Katanga has remained under the control ofcentral government in Kinshasa –a consequence ofits high strategic economic importance to thegovernment. Katanga is incredibly rich in naturalresources: the Central African copperbelt, locatedalong the DRC/Zambia and DRC/Angola bordersin Southern Katanga, contains over one-third of theworld’s cobalt reserves, as well as significant quantitiesof copper, nickel, uranium, silver and lead. Miningrevenues from this copperbelt – the richest source ofcopper and cobalt in the world – could potentially beused to restart the Congolese economy and supportthe economic development that the DRC desperatelyneeds. The potential contribution Katanga’s mineralscan add to the wider DRC economy has recentlytaken on particular urgency, as cobalt prices havetripled since May and at the time of writingstood at US$ per pound.

Global Witness chose to analyse the dynamics oftrade in resources in Katanga as this is a provincewhere the DRC government has maintained controlsince . The province has been relativelyunaffected by the recent conflict. Katanga is an areawhere, in principle, the implementation of lawsshould be relatively straightforward. If the

government, with the assistance of its internationaldonor partners, is to put resource governance ontrack, then the mining sector in Katanga is the idealstarting point.

However, as detailed in this report, Katanga is indesperate need of practical mechanisms to overseeresource exploitation to curb the growing illicit tradein cobalt, copper and other minerals. Theinternational community must providecomprehensive support to building capacity withinthe Ministry of Mines, customs offices and otherorgans of government to implement the DRC’s newMining Code. The DRC’s international partnersshould also work to ensure that revenues generatedthrough mineral exploitation are handledtransparently and managed responsibly.

This report begins in Section by placingKatanga within the context of major political andsecurity issues facing the DRC. The wider politicalenvironment is important to consider from the pointof view of attracting foreign investment: the morestable the DRC is, the more likely foreign companieswill look to invest in Katanga. Section looks brieflyat the current political conditions in the DRC andpotential deterrents to the foreign investment that themining sector in Katanga so desperately needs.

The dynamics of the trade in heterogenite areexplained in section , which tracks the minerals frommine to export. This section also looks at weaknessesand problems faced by the DRC customs office(OFIDA), an institution currently undermining thecountry’s ability to control resource flows. Section presents a detailed case-study of one mine, theinfamous Shinkolobwe uranium mine, to illustratewhy greater control must be exerted immediately overthe mining sector in Katanga.

Section involves a comparison of the MiningCode with the situation on the ground in Katanga.Despite the fact that Katanga remained undercontrol of the central government throughout therecent conflict, enforcement of the Code on theground has been extremely slow. The report thenoverviews the local impact of heterogenite trade inKatanga in section .

The report then illustrates how patchy statisticsand an inability to control the trade mean that theDRC state is not capturing the true value of theminerals being extracted and exported. Section analyses trade statistics from countries surroundingthe DRC, South Africa and most significantly China– the destination for the majority of the DRC’sexported heterogenite. Finally, Section examinescurrent donor policy in the DRC, looking at the aidand projects currently provided by the majorinternational donors. This section highlights the lackof capacity building and initiatives to combatcorruption currently being instigated by the donorcommunity and suggests that donors must worktogether to ensure that the DRC can start to capturerevenues from natural resources more effectively andthus benefit from its huge natural resource wealth.

THIS SECTION PROVIDES anoverview of why Katanga is ofeconomic and political strategicimportance to the DRC. Thesection traces historical mineral

extraction in Katanga before discussing the Katangansecession movement. The section ends by warningthat unless Katanga’s mineral wealth is captured in away that has tangible benefits for the localpopulation, growing popular resentment could fuel aresurgence of secessionist sentiment.

Historical background

The area of south-eastern DRC now known asKatanga has long been distinct from the rest of theDRC in terms of its readily exploitable naturalwealth, as well as its distinct political history. Copperhas been mined and exported by Katanga’sinhabitants since at least the late th century. Muchof Katanga was controlled by the Lunda and Lubakingdoms from the th century until the late thcentury, when M’Siri, a Nyamwezi trader from whatis now central Tanzania, founded a kingdom in thearea. M’Siri was killed by the Belgians in .

Due to Katanga’s mineral wealth, the provincewas exploited by Belgian firms and was developedmore rapidly than the rest of the Congo from–. From to , Katanga wasadministered separately from the rest of KingLeopold’s Congo Free State by the privately ownedSpecial Committee of Katanga (Comité Spécial duKatanga). In , administration was handed over toa Vice-Governor General, but the province was stillrun separately from the rest of the Congo. Under theBelgian administrative reorganization in ,Katanga was brought under the central control ofcolonial authorities in Léopoldville (now Kinshasa).This move was resented by Katangan residents whowere proud of the province’s predominant role in theCongo’s economy, which had engendered a sense ofseparateness.

Katangan secessionist movement

Soon after the Belgian Congo became independenton June , Patrice Lumumba became PrimeMinister, with Joseph Kasavubu as Head of State.However, the newly formed Republic of Congo wassoon pulled apart by regional rivalries, oftenencouraged by Belgian interests. Katanga was themain example of this: with Belgian backing on July Moïse Tshombe declared Katanga asindependent. Three days later the UN SecurityCouncil voted to send a force to the Congo to helpestablish order. However the force was not allowed tointervene in internal affairs and thus could not actagainst the Katangan secession. Instead Lumumbaturned to the USSR for help against Katanga. On September Lumumba was dismissed as PrimeMinister by Kasavubu, and he was killed in February.

By the beginning of the Congo was disarray.The country had four quasi-independentcomponents: Col. Joseph Mobutu (later Mobutu Sese

The economic and political strategic importance of Katanga

Seko) held the west, including Kinshasa; AntoineGizenga controlled the east from Kisangani (thencalled Stanleyville); Albert Kalonji controlled SouthKasai; and Tshombe headed Katanga. Tshombe’scontrol over Katanga was aided by Belgian and otherforeign soldiers. It was the Katangan secession thatparticularly weakened the national government, theprovince being of vital economic importance to theCongo. In April , Tshombe was arrested by thecentral government, but he was freed in June afteragreeing to end the Katanga secession. However,Tshombe again proclaimed Katangan independencein July .

Soon after Tshombe’s proclamation, UN forcesattempted disarming Katangese soldiers, but byDecember UN and Katangese forces were engaged inarmed battles. Throughout , Tshombemaintained his autonomous position. However,renewed fighting against the UN in December forced Tshombe to give in. Tshombe agreed to endKatanga’s secession in January .

At the end of June , the last UN troops werewithdrawn from the country. In order to appeaseremaining secessionist factions, Kasavubu appointedTshombe Prime Minister in July . However, themove sparked large-scale rebellions and the Congowas only gradually brought under the control of thecentral government with the U.S. arms, Belgiantroops, and white mercenaries.

After the secession movement was quelled, miningin Katanga resumed providing the centralgovernment with a major source of revenue. In


Artisanal mine, Kolwezi, DRC, May .

IF FOREIGN INVESTORS are looking tochannel money into the mining sector in theDRC, then inevitably they will look forassurances that they are investing in a stablepolitical and economic environment.

Unfortunately over the past few months, signs of stabilityin the DRC have been scarce.

In June the DRC’s power-sharing governmentmarked its first anniversary, but there were no officialcelebrations. has been a tumultuous year for theDRC’s transitional government (TNG). The internationalcommunity continues to strongly support the DRC’s movetowards elections in , but preparations and theimplementation of reforms have been very slow andpunctuated by political and military crises. The transitionalgovernment has held itself together despite two attemptedcoups d’états (in March and June ), and stronginternational and regional support will be required toensure that the government remains in place untilelections. Robust assistance by the international donorcommunity, regional organisations and neighbouring statesis also essential to ensure that the DRC’s vast naturalresource wealth is controlled and transparently managedfor the DRC’s sustained peace and development.

Reforms

The TNG has been slow to implement reforms,constrained by the unwieldy power-sharing agreementthat ensures that the government has representativesdrawn from all major military and political groups.Neither the new constitution nor the planned newInvestment Code have been drawn up. However, in June President Joseph Kabila signed a law governing theIndependent Electoral Commission (IEC) tasking members with moving the DRC towards elections.

Although some efforts have been made to create thenew integrated Armed Forces of the DemocraticRepublic of Congo, progress has been slow due to a lackof funds and unwillingness on the part of former rebelsto dependably integrate – not least because they areunlikely to be adequately paid. In late June the lawgoverning the organisation of the military was finallyadopted. According to this law, the head of governmentis the supreme commander over armed forces, but mustconsult with the Superior Defence Council (SDC) beforetaking key military decisions.

The TNG appointed new provincial governors andmilitary commanders for the DRC’s military zones inMay. These appointments have been controversial. In


the government nationalized Union Miniére du HautKatanga, the Belgian firm that had controlled most ofKatanga’s mining interests, renaming the companyGécamines. Under Mobutu’s rule Katanga wasrenamed Shaba in , but the original name wasrestored in . Throughout the s furtherinsurrections were put down by Mobutu, but in thes there was again talk of secession.

The decline of the mining sector andrising resentment

The copperbelt running through Katanga andZambia contains % of the world’s cobalt reserves,and % of the world’s copper reserves. During thes and s the DRC (Zaire) was the world’sleading producer of copper and cobalt. However, asharp rise in cobalt prices in led to a drop indemand for the DRC’s cobalt. This coincided withthe rapid decline of cobalt and copper miningproduction in the DRC due to decades of patrimony,endemic corruption and under-investment in themining sector under Mobutu. In the s, cobaltprices recovered but by this time the proportion ofcobalt supplied to world markets by the DRC haddropped as buyers had already established newmarkets. Today, the DRC remains one of the world’stop producers of cobalt despite a chronic lack ofcontrols over the mining sector and the recent near-collapse of Gécamines. However, through thecollapse of processing operations in Lubumbashi,Likasi and Kolwezi the DRC has lost virtually all ofits capacity to produce cobalt ores and concentrates(cobalt metal). International governmental andcommercial assistance is necessary to re-start metal

production within the DRC.Secessionist tendencies have periodically re-

emerged in Katanga since the s. According tosome analysts, present-day secessionist moves are also“driven by the perception that mining profits are notbenefiting Katangans but rather foreign companiesand the Kinshasa powerbase.” Crucially, manyKatangans believe their problems are not beingaddressed but actively ignored by the internationalcommunity. If the United Nations and internationaldonor community is committed to peace anddevelopment in the DRC, then it is vital that Katangais not overlooked in the push towards nationalelections. If growing inequalities and rising levels ofpoverty are not addressed, then there is a chance thatpopular resentment may lead to a resurgence ofseparatist tendencies.

Katanga in national context: are current political conditions adeterrent against investment?

Courtesy of CRU Analsyis

North Kivu key senior Rassemblement Congolais pour la

Démocratie-Goma (RCD-Goma) allies retained leadingpositions, similarly indicating that RCD-Goma willcontinue to maintain a high degree of influence inEastern DRC in the lead up to elections. In Katanga,the province from which President Kabila’s family andclosest advisors originate, the appointment of a memberof the former government as governor is a strongindication of the President’s party plans to maintaincontrol over the mineral-rich province.

Spoiler elements

Political progress towards elections in DRC is also beinghampered by so-called “spoiler elements” with nothingto gain from elections. Congolese and non-Congolesespoilers manipulate already heightened political andethnic tensions in Eastern DRC to contest the territorialreunification the TNG is attempting to create. Inparticular, elements of the RCD-Goma are reported tostrongly resist moves to reunification.

The most notable recent example of the fragility ofthe security and political situation in the DRC was thecrisis in the border city of Bukavu in May and June. On May, Lieutenant Colonel Jule Mutebusitook over Bukavu with a force of several hundred menafter the new transitional government army commanderarrested one of Mutebusi’s lieutenants. Mutebusi wasthen joined by General Nkunda and his force of severalthousand armed men. Nkunda justified his actions byclaiming that the Banyamulenge community in Bukavurisked genocide. Both Mutebusi and Nkunda wereofficers in the ANC, a group supposed to be part of theunified national army. The violence caused overpredominantly Congolese Tutsi , people to fleetheir homes into neighbouring Burundi and areassurrounding Bukavu.

Under international pressure, Mutebusi and Nkundawithdrew their forces from Bukavu on June ,allowing DRC government forces to re-enter the city.However, this movement of DRC troops near Bukavusparked Rwandan accusations of the DRC amassingtroops in preparation of an invasion into Rwanda. Inturn, the DRC accused Rwanda of supporting Nkundaand Mutebusi. Rwanda also closed its border to theDRC, and under pressure from African Union andinternational actors, and tensions between the states weremomentarily dissolved. However, the situation remainstense and the TNG periodically faces political crises.

MONUC

The TNG currently appears to be incapable andinadequately equipped to control security conditionsthroughout the DRC’s territory. Equally, the UN Missionin the DRC (MONUC) has only , troops (a mere of which in Bukavu) – well short of the numberrequired to properly protect civilians and humanitarianworkers under imminent threat of violence throughout acountry three times the size of France. The UNSecretary General, Kofi Annan, recently called for theforce in the DRC to be increased to , troops.

MONUC’s failure to intervene in the capture of Bukavuled to violent protests throughout the DRC in June.

Neither MONUC, nor the Panel of Expertsmonitoring the arms embargo currently in place inDRC, have the mandate to look at the issue of hownatural resources are continuing to be exploited in a waythat provides funding and motivation for conflict. In July

, the Security Council reaffirmed the embargo, butmade no changes to the Group of Experts’ mandate.

This is so, despite natural resource control being amotivation for violence, as well as a source of funding forarms for insurgent groups.

Katanga’s security situation

Throughout recent conflict, Katanga remained relativelyunaffected by violent disturbances in Eastern DRC.However, the province appears to have become lessstable in recent months. There are warning signs ofimpending security problems in Katanga, ranging fromindustrial action and social instability in Lubumbashiand the surrounding towns where unemployment hasrocketed since the virtual collapse of Gécamines, tooutbreaks of Mayi-Mayi (a militia group active inEastern DRC) violence in Northern Katanga.

Examples of recent incidents include the Mayi-Mayiattack on the Upemba National Park in central Katangain late May . Five park rangers and several womenand children were killed in the attack. These attackshave, at times, moved dangerously close to mining areas.In February the mine operated by Anvil Mining inDikulushi came under threat from Mayi-Mayi militiaunder control of General “Chinja-Chinja,” rumoured tobe paid by a senior government official. Close attentionshould be paid to patterns of attacks and troopmovements that may threaten to create further instabilityin Katanga. This is especially important given the needto attract foreign investment in this province.

Concerns for investors

Instability, coupled with widespread corruptionthroughout the DRC, is currently a major deterrent toforeign investment the country desperately needs.Understandably, many mining companies are unwillingto take the risks involved in starting operations in theDRC. As well as the risks associated with operating in acountry with ongoing conflict in certain areas, manycompanies have been subjected to commercialuncertainty in the past by signing contracts with onegovernment, only to have their contract cancelled whenthe leader is replaced.

Political instability is also of concern to investors. In atelling example, a delegation of approximately potential investors from Belgium visited the DRC inearly . However, the delegation were disinclined tofollow-up on opportunities, deterred by the politicalinstability demonstrated by the arrest of the formerMinister of Finance, Matungulu Ngayamu, withoutapparent reason.

Many companies are reluctant to invest in a countrywhere corruption is rife and bribes are demandedfrequently by various authorities. Establishing a businessin the DRC is slow, illustrated by Adastra Minerals(formerly American Mineral Fields) experience inKolwezi. Feasibility studies for this huge copper andcobalt plant began in , but production is notexpected to begin until . Negotiations have beenslow and difficult, but eventually this US$ millioninvestment will hopefully pay off both for the companyand the poverty-stricken town of Kolwezi. However,many companies simply cannot afford to wait that longto start a project, and so turn their attention to countriesother than the DRC. While mining projects generallytake a considerable amount of time to develop, in theDRC projects take longer than most.


This section outlines the dynamics ofthe illicit trade in heterogenite –from mine to export. It begins bylooking at the artisanal miningsector, and then the operation of

trading houses that buy minerals from artisanalminers. The section then examines why the bulk ofminerals exported from Katanga are in a raw (ratherthan processed) form. The section then looks at thelack of capacity of OFIDA, the DRC’s customsoffice.

The following diagram provides a simpleillustration of the trade discussed in this section.

Figure 1:A diagram illustrating trade flows inheterogenite from Katanga

Artisanal Mining

Artisanal mining is a highly inefficient method ofextracting copper and cobalt - industrial mining is afar more effective way of extracting these ores. In, the African copperbelt was second only to theUSA in terms of mine output but the DRC’s outputhas fallen dramatically since the s with thecollapse of industrial mining in Katanga. With thisdecline of industrial mining came increased artisanalmining activity.

With the near-collapse of Gécamines in the sand the reluctance of large mining companies toinvest in Katanga, industrial mining has come to avirtual standstill. Gécamines, once a world leader inthe production of copper and cobalt, began todecline in the late s and through the s.During this period Mobutu failed to re-invest in theplant, equipment and infrastructure at Gécaminesmines. Levels of production of cobalt and copperplunged: in the DRC exported $ million ofcobalt, but in exports fell to $ million. Since, the copper and cobalt exported from the DRChas been mined artisanally on various Gécaminesconcessions around Lubumbashi, Kolwezi and Likasithat were once operated by the Congolese parastatal.

Mining in Katanga – an overview of the heterogenite trade


Congolese artisanal miners hand-picking heterogenite invarious Gecamines concessions around Lubumbashi, Likasi

and Kolwezi

Congolese négociants (middlemen) buying heterogenitedirectly from the artisanal miners

Trading Houses buying heterogenite from the négociants.Some of them are processing the ore locally, but most

exporting raw material out of the DRC

Heterogenite (and some processed copper and cobalt)shipped to China

Numerous transportcompanies transportingheterogenite (and someprocessed copper and

cobalt) by truck toJohannesburg via

Zambia

Trading Houses usingrail as a means of

transportingheterogenite (and someprocessed copper and

cobalt) to Johannesburgand Durban

Miner entering a mineshaft, Kolwezi, DRC, May .


Figure 2:A breakdown of artisanal miners utilised by three ofthe largest trading houses

Trading House Contract workers Daily workers Total

Bazano 300 2100 2500

Chemaf 100 1500 1600

SOMIKA 350 450 800

The richest ores are currently being stripped awayby handpicking (artisanal mining), thus endangeringthe future of open pit mines. Multinational miningcompanies looking to extract cobalt and copper aremore likely to be attracted to mines where easy-to-access minerals on the surface are undisturbed. Asmore surface minerals are taken by artisanal mining,the more infrastructure, equipment and investment isrequired to extract minerals from well below thesurface. This practice is known as “cherry-picking” –when the best ores are removed and the rest isrendered economically unfeasible to exploit.

Despite claims by the majority of companies inKatanga interviewed by Global Witness that they areprocessing within the DRC, there are only three orfour functioning processing furnaces in southernKatanga. Few of these companies are said to betreating the ore in Lubumbashi, Likasi and Kolwezi.Those furnaces that are said to be working are doingso on a very low basis, producing approximately or tonnes per month of processed material. Thisequates to a massive lost opportunity to add valueand create jobs in the processing of minerals withinKatanga. The province desperately needs investmentby mining companies who wish to re-start industrialmining in the area and process the ore locally.

Around , young men and boys (as young asseven) are working as artisanal miners in southernKatanga. However, the artisanal mining cannot beclassed as ‘steady employment’ as the vast majority ofthese miners work as casual daily labour, as illustratedby the employment statistics in Figure above fromthree of the largest trading houses.

Young boys are used to carry the heavy bags ofore out of the mineshafts, as they are small enough toget through the networks of passages and tunnels.The miners work in dangerous conditions, with nosafety or security measures implemented in thesemines, through lack of alternative employment orincome. Many have left school, dropped out ofuniversity or abandoned agriculture to join the‘cobalt rush.’ An artisanal miner earns anything froma few dollars per day up to US$, depending on thegrade of the ore (which can vary from % up to %,in exceptionally rich areas) and which buyer they areselling to. The miners spend around twelve hours aday digging and bagging up the ore, before selling itonto négociants who serve as middlemen between thediggers and the trading houses.

Trading houses

New trading houses have opened up over the past fewyears to cash in on the artisanal mining and highcobalt prices and there are now said to be over threehundred operating in Katanga. Until October ,trading houses were buying ore extracted fromGécamines sites without paying fees to concessionowners. However, after intense negotiations three of

the largest trading house companies operating inSouthern Katanga – Groupe Bazano (run by aLebanese, Alex Bazano), Chemicals of Africa(Chemaf; an Indian company) and Société Minièredu Katanga (SOMIKA; owned by Chug ChetangaPrakash, based in Canada) – have finally enteredinto a contract with Gécamines to operate in theseconcessions. The deals mean a / profit sharebetween the private company and Gécamines for allore extracted on these sites, providing a much neededsource of income for the bankrupt parastatal.According to a senior Gécamines official, these dealsprovide Gécamines with income of betweenUS$, and US$ million per month. However,other trading companies continue to trade inheterogenite without entering into contract withGécamines.

Trading houses are currently making huge profitsfrom the heterogenite trade. For example, if anartisanal miner is earning around US$ per tonne(for -% grade cobalt), the companies are payingthe middlemen anything between US$ andUS$ for this same tonne (depending on the exactgrade) and the price of cobalt on the world market isnow US$ per pound, making it US$, pertonne, then even allowing for high transport costs incentral Africa and the costs of processing, thesetrading houses are doing extremely well from thistrade.

Lack of processing of ore

Despite a decree being passed in January declaring that all copper and cobalt must beprocessed before leaving the DRC, the majority ofminerals leaving Katanga are being exported in theraw form as heterogenite. A senior Ministry of Minesofficial explained that the decree had been “on hold”as they could not enforce it without providing thoseinvolved in the sector with an alternative means ofincome. This means, however, that there is anenormous loss of value to the DRC economy as thereal value is being added to the minerals, throughprocessing, outside the DRC. In addition to this, itmeans that the Congolese government does notactually know the precise grade or quantity of what isbeing exported from Katanga in the raw form ofheterogenite.

No oversight: no clear statistics

There is very little official data available on theartisanal production of heterogenite in Katanga. TheMinistry of Mines has begun to publish exportcertificates on its website which is a promising sign ofsome increase in transparency. However, the site isnot comprehensive in its publication of exportcertificates – there is only a haphazard collection ofcertificates gathered over one day periods presented.

At the time of writing, there were certificates postedon the Ministry of Mines site for and December , , and February , March , April , , , and May, June and July .

A senior Ministry of Mines representative inLubumbashi was unable to provide Global Witnesswith any statistics on the scale of the trade inKatanga. At the Ministry of Mines office inKinshasa, Global Witness was told that statistics on


the export of heterogenite from Katanga are notcollected. While some information is filtering back tothe Ministry from Alex Stewart InternationalCorporation (the company appointed to assay(analyse) minerals exported from the DRC), this doesnot present a coherent picture of the quantities ofminerals being exported and Alex StewartInternational Corporation (ASIC) does not analyseall heterogenite being taken from the DRC. Instead,the Ministry of Mines advised Global Witness toapproach the customs office for statistics or to look atimport figures for China in order to get an idea ofquantities leaving the DRC.

Statistics independently gathered at Kasumbalesarevealed that for a period of seven days ( to July), official (registered) exports by road totalled, tonnes of cobalt concentrate and , tonnesof copper concentrate – amounting to around ,tonnes per month. As processing costs must be takeninto account, it is difficult to estimate the actual valueof these exports on the world market, but with cobaltprices currently at US$, per tonne, this certainlyamounts to a huge amount of money.

However, Global Witness interviews with transportworkers, mining officials and customs officials inKatanga reveal that the majority of heterogeniteleaves the DRC without being registered and isunaccompanied by assayer analysis of the grade ofminerals being exported. This unanalysed andunregistered heterogenite is exported illicitly in largequantities. As such, the above figures for one week inJuly are likely to represent only a smallproportion of the volume of cobalt and copperconcentrates being exported.

Anecdotal evidence suggests that the volume ofthe illicit trade in heterogenite is huge, and hasincreased dramatically in the past months as morecompanies have begun to take advantage of highcobalt prices. The vast majority of the cobalt andcopper output is now being extracted and handled byprivate companies as opposed to by the parastatalGécamines. As these production figures are not yetrepresented in the current national output statistics, it

is difficult to get a true sense of the trade’s scale.

Corruption in Katanga is widespread and includesdemands for bribes by the police, security services,border guards and other officials. Extensivecorruption and smuggling activities mean that hugenumbers of trucks carrying heterogenite cross theborder into Zambia at Kasumbalesa daily. A seniorMinistry of Mines official in Kinshasa told GlobalWitness that although the Ministry have been fightingagainst smuggling, the recent increase in internationalcobalt prices has made this very difficult.

Estimates of the extent of the leakage can only becompiled from literally counting the number of trainsand trucks being transported to Zambia. A Katanganmining expert, who has been based in Lubumbashifor years, calculated that approximately ,tonnes of heterogenite leaves the DRC per month,during the dry season. (Production is substantiallyreduced during the wet season, when only the oreslocated near the surface can be easily mined.) Thisfigure has also been backed up through visits to theborder made between May and July .

A well-placed source involved in the trade inKatanga suggested that some of the more over-loaded trucks of heterogenite are worth in excess of$,. On a Global Witness visit toKasumbalesa on the DRC-Zambian border, at least trucks were spotted queuing up at the border by hours, waiting to cross that evening. Onetransport company alone, SABOT, had at least large trucks of heterogenite at the border, which theywere taking to sell in Kitwe (in Zambia).

However, without knowing the mineralcomposition of the heterogenite being exportedillicitly, it is difficult to accurately determine the valueof minerals and the loss of revenue to the Congolesestate. As an example of how confused the true pictureof trade in cobalt and copper is, the following tableillustrates the huge discrepancies between trade incobalt recorded by the Central Bank of Congo,OFIDA (the customs office), and the recorded exportsof cobalt by the recipient of the bulk of the DRC’scobalt – China. (Figures are in tonnes.)

Artisanal mine, Kolwezi, DRC, May .


Month of 2004 China declared cobalt concentrate Central Bank published DRC OFIDA recorded exports of

imports from DRC50 cobalt production51 cobalt & cobalt concentrates52

January 2,219 675 14,488

February 3,738 668 7050

March 10,707 783 13,365

April 9,110 801 7882

May 8,753 219 N/a

There are glaring discrepancies between each set offigures, calling into question the methodology ofstatistical collection. This is partly due to a lack oftechnical capacity (see discussion on OFIDA, below),and also because the Central Bank does not captureproduction figures for private mines. However, it isalso an example of how opaque natural resourcemanagement may cover up a huge loss of revenue tothe DRC state.

DRC’s Customs Office (L’Office desDouanes et Accises – OFIDA)

One of the key problems facing Katanga is the lackof control over the customs authorities atKasumbalesa. Like many working within theCongolese civil service, employees of OFIDAirregularly receive low pay. In the absence of areliable salary and in need of training, the customsofficials at the border have little incentive to do theirjobs well and follow the rules. The authorities aretherefore an easy target for bribery and corruptionand are currently colluding with companies to allowthe transport of unprocessed heterogenite across theborder. Interviews with truck drivers at the borderrevealed that customs officials are allowing loads topass into Zambia with fake certificates – or without acertificate at all – so the quantity and quality of thematerial leaving the country is being grosslymisrepresented. Trucks come up from Zambia as faras “no man’s land” at Kasumbalesa (the area of landof approximately one square kilometre lying betweenthe DRC and Zambian border). These trucks arethen loaded at night and provided with false papersfor export.

Corruption and lack of capacity within OFIDAare problems clearly identified by the internationalfinancial institutions and other parts of the donorcommunity. However, until there is a concerted effortto reform OFIDA and until the officials start beingpaid a reasonable salary on a regular basis, weakborder controls at Kasumbalesa will continue toundermine the DRC’s ability to benefit from the vastresource wealth in Katanga. Any reform programmewould constitute a long term plan and could not besuccessfully implemented in isolation – otherdepartments of the government and civil servicewould also need to be reformed in order for anyprogress to be achieved. In particular, better controlwould have to be exerted over the military to preventincidents of armed forces holding up customs offices,which have occurred recently even in Kinshasa.

In May the Crown Agents, a consultancyworking on capacity-building and institutionaldevelopment, conducted a -week high-level review ofOFIDA. This review involved visits to Kinshasa,Lubumbashi and Matadi and the purpose of this visit

was to examine the key issues that would need to beaddressed in a reform programme. Weaknesses wereidentified everywhere and include a lack of capacity,over-staffing, under-management and under-valuingof goods on a phenomenal scale. According to theCrown Agents, this under-valuation is the biggestsource of revenue loss currently facing the DRC.

OFIDA have plans to move the customs office inKasumbalesa km away from its current location, inan attempt to escape the chaos of the border. Plansare also being developed to build a large warehouseat Kasumbalesa, capable of holding up to trucks,so that they could check goods entering and leavingthe country.

OFIDA provided Global Witness with the officialexport statistics from January to June butwarned that as they did not have the equipmentrequired to verify the quality and quantity of ore atthe border, the only information they have is from thecompanies themselves. According to OFIDA,misrepresentation is widespread and many of thesecompanies under-value their exports.

Assaying issues

The Congolese subsidiary of British-based AlexStewart International Corporation (ASIC), knownlocally as Alex Stewart Government Business Group,was appointed on February by Mr Ndongala(Minister of Mines) as agents of the government tocertify the quality and quantity of mineral exports.All minerals exported from the DRC are required tobe accompanied by a government-approvedcertificate issued by ASIC. While companies are freeto have their minerals analysed by other commercialassayers, it is ASIC’s role as the government’s agentsto confirm that exports correspond with exporter’sdeclarations. The majority of minerals exported fromthe DRC are transported through Zambia into SouthAfrica. A proportion of these minerals are assayed byAlex Stewart at their Johannesburg office at therequest of international mineral buyers.

One company complained to Global Witness thatit found ASIC prices for issuing certificates to behigh. The Lubumbashi office of ASIC chargesUS$ per tonne for analysis, as opposed to the US$per tonne that their Johannesburg office charges.ASIC maintain the price differential is due, amongstother things, to higher running costs in the DRC.

The high prices ASIC charge in the DRC may detercompanies and trading houses from complying withthe requirement of having minerals certified beforeexport. This suggests that the system established bythe DRC government may be failing to provide fulloversight of the trade in heterogenite.

In fact, this is borne out by claims by the ASICoffice in Johannesburg that as much as % of the

heterogenite they receive arrives without a certificatefrom their partner office in Lubumbashi, and thosecertificates that do accompany the trucks are usuallyforged. This indicates that companies are forgingthe requisite certificates themselves rather thanpaying ASIC for them in Lubumbashi.

Transportation

A number of transport companies are involved incarrying the heterogenite by truck down to Zambia(where some of the ore is processed) and then ontoJohannesburg and Durban. From South Africa, thevast majority of Congolese ore is being shipped toChina, where there is currently an enormous demandfor cobalt (see Section , Where does it all go?International trade statistics). In addition to thehundreds of trucks that are crossing the border atKasumbalesa every day, a huge amount ofheterogenite is also being transported by train fromKatanga down to South Africa. Particularly inKolwezi, around which the roads are extremely poor,the companies are increasingly dependant on railtransportation of ore. From Kolwezi train stationbetween , and , tonnes per week ofheterogenite are heading south to Johannesburg, withthe larger companies, Bazano and Chemaf,transporting between and , tons of thiseach. This of course does not include the loads thatare travelling by train from Likasi and Lubumbashi.Research conducted in July at Mokambo, therail crossing between the DRC and Zambia, revealedthat around , tonnes of heterogenite aretransported from the DRC to Zambia per month.

Box 1: Chemaf price list (current prices paid tonégociants)

Grade of ore Prices (USD)

4% $60

5% $160

6% $200

7% $450

8% $500

9% $550

10% $600

N.B. Prices provided by Associations D’Exploitants Miniers Artisanaux Du Katanga(EMAK), May 2004.

Summary

Problems of lack of oversight and control are evidentat every stage of the heterogenite trade in Katanga –from mine to point of export. If the illicit trade is tobe controlled, then the DRC government withinternational assistance must increase the capacity ofofficials in Katanga (at OFIDA or the Ministry ofMines) to implement effective controls.

The following section uses the case of thenotorious Shinkolobwe mine as a case study of howartisanal mining can go terribly wrong withoutoversight.


Truck transporting artisanal miners and heterogenite, Lubumbashi, DRC, May .


7 Case-study on artisanal mining: Shinkolobwe mineThe Shinkolobwe mine (also known as the Kasolo mine) in the Kambove territory of Katanga is perhaps the moststriking example of how the hasty extraction of heterogenite is extremely dangerous for artisanal miners.Shinkolobwe is also a stark example of why the international community and the DRC government must immediatelysupport and implement basic environmental, health, security, legal and customs controls over the trade inheterogenite in Katanga.

Shinkolobwe was the source of the uranium used in the Hiroshima and Nagasaki bombs in 1945.The mine wasflooded in 1956 by the Belgian government, and was kept under guard by the Zairian armed forces until 1997.64

Although the mine has been officially closed since 1960 when Belgian authorities filled the two major uranium shaftswith concrete, heterogenite containing uranium has been extracted from Shinkolobwe since 1998.65 Wide scaleartisanal mining continues despite the presence of the concrete.66 Under pressure from the United States to closethe mine, President Joseph Kabila announced that he had forbidden access to the mine in February 2004.67 Howevermining activities have continued unabated.

Global Witness interviews with artisanal miners working at the mine revealed that hundreds of miners now workunder the sections of the mine sealed off by concrete.68 This is so despite the presence of Agence NationaleRenseignements (ANR) and members of the Presidential Guard at the site.There are also reports that members ofthe DRC security services profit from the exploitation of minerals at this officially dormant mine, with eyewitnessaccounts of officials purchasing heterogenite from the artisanal miners at Shinkolobwe.69

The estimates of the numbers of artisanal miners working at Shinkolobwe range from 7,000 to over 13,000.70

Irrespective of the precise number of workers at the mine, all artisanal miners work under exceedingly dangerousconditions at Shinkolobwe.71 Miners, including children as young as 7, dig without any safety equipment in hand-builtdeep mineshafts – some reported to be as long as 320 feet deep.72 Some remain underground stripped to the waistfor up to 24 hours at a time.73

The danger faced by artisanal miners at the Shinkolobwe mine was proven on 9 July 2004, when two deepmineshafts at the mine collapsed.74 The collapse caused the deaths of at least 9 miners, with a further 15 survivorsmanaging to dig themselves out of the shafts. Shortly after the collapse, several envoys went to Shinkolobwe toinvestigate the mine collapse.A MONUC mission attempted to gain access to the accident site at the same time asdelegations from the President’s Office and the National Atomic Energy Agency.The MONUC mission was deniedaccess to the area where the mine collapsed by local authorities, and was instead taken to a separate area of themine.This absence of transparency surrounding the management, operation and oversight of mining operations atShinkolobwe raises questions about the DRC government’s commitment to transparency and addressing appallingworking conditions faced by artisanal miners.

As is the case with other heterogenite mines in Katanga, quantities of minerals being extracted from Shinkolobweare unknown as there is little or no analysis of the minerals taken from the mine before export. Global Witnessobtained an independent analysis of a one kilo sample of heterogenite taken from an area of Shinkolobwe minetailings – a part of the mine where extraction of minerals is legally permitted.The analysis revealed that the smallsample of tailings soil was rich in minerals: it contained 0.3% uranium, in addition to the 7.82% cobalt, 12.65% iron,2.84% copper, 1.76% nickel and traces of eleven other minerals. Analysts told Global Witness that analysis was difficultand time consuming as it was one of the most complex samples they have ever worked on.

The precise composition of the heterogenite found beneath the concrete section of Shinkolobwe is unknown.However, artisanal miners working at the site reported that they were directed by middlemen to dig from beneaththe sealed concrete section of the mine as that area contained higher-grade heterogenite (and possibly higher gradeuranium).75

In March 2004, in response to reports of illegal mining activities at Shinkolobwe, the International Atomic EnergyAgency (IAEA) described the possibility that large quantities of uranium were being mined and exported as“disturbing.”76Pursuant to a safeguards agreement and an Additional Protocol agreement signed by the DRCgovernment on 9 April 2003, the DRC is obliged to report its uranium mining activities as well as its exports ofuranium.77 After reports of illegal exploitation of natural resources and the illicit trafficking of nuclear materials, theIAEA conducted a safeguards inspection of the Shinkolobwe mine.At the time of writing, the results of the inspectionwere still being analysed by the IAEA.78

Experts working on Katanga have suggested that that uranium mined at Shinkolobwe is of a very high grade ofenrichment, and Geiger counter measurements taken at the mine indicate high levels of radioactivity.79 High levels ofradiation endanger the lives of miners and their families living and working on the Shinkolobwe site, putting them atrisk of developing cancers, sterility and causing birth defects. Further, it has been suggested that it is likely thatShinkolobwe is not the only mine in Katanga containing radioactive material.80 Despite these worrying indications thatradioactive material is being extracted and exported with a minimum of oversight from Katanga, the United States inMarch 2004 said that it did not believe there was “worrisome movement” of radioactive mineral ore fromShinkolobwe.81

Under the safeguard and Additional Protocol agreement with the IAEA, the DRC government has theresponsibility to undertake necessary safety and security measures to ensure adequate protection of nuclear andradioactive material.82 The fulfilment of this responsibility is made more urgent by the threat of nuclear and radioactivematerials being used in international terrorist attacks. Experts disagree over whether the uranium from Shinkolobwecould be used in a “dirty bomb.” However, the current abysmal lack of oversight and control of mining activities atShinkolobwe (and other mines throughout Katanga) makes natural resource governance in Katanga a pressingenvironmental and safety issue.83 Unless there is effective oversight over the mining and export of heterogenite fromDRC, activities at Shinkolobwe will continue to endanger the lives of artisanal miners, and potentially pose a securitythreat to the international community.

THE NEW MINING CODE (LawNo. / of July ) isdesigned primarily to attractdesperately needed new foreigninvestors by providing solid legal

parameters and rules governing the prospecting,exploration, processing and sale of the DRC’sminerals. The Code also sets down regulations forartisanal exploitation of minerals. This sectioncontrasts a few of the Code’s key provisions againstthe reality of mining activities and the capacity of theMinistry of Mines to enforce law in Katanga. TheWorld Bank, however, have admitted that the impactof the Mining Code on the ground in Katanga willbe limited at this stage as on-going activity is notregulated.

As Katanga remained under the control of thecentral government throughout the – conflict, theoretically it should be one of the easierprovinces in which to apply the Mining Code.However, Global Witness observed thatimplementation in Katanga has proven far harderthan perhaps anticipated by people drawing up theregulation in Washington and Kinshasa. Failures toimplement the Mining Code in the copper and cobaltsector are readily identifiable.

The Role of the DRC Government

According to Article , the State is tasked withpromoting and regulating the development of themining sector by the private sector. Under Article ,through issuing Decrees the President has the powerto declare, classify or declassify mineral substances.The Minister of Mines is given power to grantmining rights, authorize the export of unprocessedores, as well as granting approval for traders inartisanal exploited products and other powers underArticle . The main responsibility for the lack ofimplementation of the Code to date lies with theMinister of Mines, as well as the President of theDRC.

Directorate of Mines responsibilities

According to Article of the Code, the Directorateof Mines is responsible for inspecting and supervisingmining activities with regard to safety, health,transport and sale as well as other matters. GlobalWitness asked personnel at the Directorate inLubumbashi for reports and examples of inspectionsand supervisions carried out in accordance withArticle . No examples or reports were provided toGlobal Witness, nor was there any indication thatinspections have been carried out since the Codecame into force.

The Directorate is also responsible under Article for compiling and publishing statistics andinformation on the production and sale of mineproducts. Again, personnel at the Directorateinterviewed by Global Witness were unable toprovide any statistics on production.

Artisanal Mining

Under Article , only Congolese individuals “ofage” may obtain the artisanal miners’ cards. Thissuggests that children do not qualify to apply forartisanal mining rights despite the fact that currentlyhundreds of children work as artisanal miners inKatanga.

Article states that “only the holders of artisanalminers’ cards which are valid for the area concernedare authorised to extract gold, diamonds, or anyother mineral substance which can be minedartisanally.” However, the Lubumbashi Ministry ofMines admitted that not all the miners working inKatanga possessed mining cards. None of theartisanal miners interviewed by Global Witnessowned the requisite cards.

Shinkolobwe

Article states that all government officials,members of the Armed Forces, the Police and theSecurity Services are not allowed to engage inartisanal mining or trading. A number of sourceshave reported that the members of the PresidentialGuard at Shinkolobwe have been seen buyingheterogenite from the artisanal miners. Thesepersonnel are therefore involved in buying and sellingminerals in direct contravention of Article .

Articles , and cover matters related tosafety and health at mines. The MinesAdministration is tasked to issue decrees that will bedeveloped to prevent or remove the causes of dangersto public safety and health. Article stipulates thatany serious or fatal accident in a mine must beimmediately notified to the Mines Directorate andother authorities. After the collapse of theShinkolobwe mine in July , it appears that theMines Directorate and local authorities wereimmediately notified. However, the MinesAdministration has been slow to act on its expresspower to investigate any potential breaches of Codeprovisions in order to “remove dangers” atShinkolobwe.

Minerals sale and export

Under Article the Minister’s authorisation isrequired for the exportation of unprocessed ores.Authorisation can only be granted where it isimpossible to treat the substances within the DRC atan economically viable cost, and there are advantagesfor the DRC if the substance is exported. Currently,the vast majority of heterogenite minerals exportedfrom Katanga are unprocessed. Ministry of Minesofficials in the DRC confirmed to Global Witness thatthey have not tried to enforce Article , as there islittle capacity to process ores within the DRC atpresent.

(Non-)Application of the Mining Code


THE BOOMING heterogenite tradeis not benefiting the majority ofKatangans. Given that theCongolese miners are paid verylittle for their hard labour and there

is little by way of government public services,southern Katanga is not benefiting from this trade.The area has very high unemployment, virtually nopublic services and poor transport infrastructure.

Poverty, unemployment and the paradoxof plenty at a micro-level

Lubumbashi and Likasi are both deprived, but thesituation in Kolwezi is desperate. Despite beingsurrounded by numerous mines, what used to be aholiday destination in colonial times now has apopulation of , and only four shops, severelydamaged roads and extremely levels of highunemployment. Access to Kolwezi is almost entirelyrestricted to train or small plane as the roads leadingout of the town are in great need of repair. Inaddition, the area suffers from an almost complete

lack of agricultural projects or farming activities. Inmany cases people have abandoned agriculture infavour of artisanal mining. The poor infrastructure inthe province also discourages the local populationfrom engaging in agricultural activity, as the transportof goods is expensive and enormously time-consuming.

The result is a colossal contrast between thebooming heterogenite trade and an area with adesperate population. Katanga was once the “jewel inthe Congo’s crown,” but has dramaticallydeteriorated over the past ten years. The collapse ofGécamines meant a rise in unemployment in theregion, and also resulted in the closure of manyschools and hospitals originally provided by thecompany for families of employees. Schools in thearea lack funds to pay teaching staff and providenecessary equipment and the hospitals in and aroundLubumbashi are now suffering from a serious supplyshortage. A “brain drain” from the area has meantmany of the doctors and professionals from Katangahave gone elsewhere in search of employmentopportunities.


Provisions detrimental to localeconomies

The Mining Code contains provisions that may causemining activities to be detrimental to the localeconomy. For example, in order to encourageinvestment in the country, the Code under Article allows companies to import a range of goods (such asfuel, batteries and consumer goods) at preferentiallow import duties for the duration of the miningproject. Although this makes it easier for companiesto set up a business in the DRC, some have takenadvantage of this and are importing much greaterquantities than they could possibly use –they havethen started to pay suppliers in fuel. Local traders areunable to compete and are losing business.

Summary

The Mining Code is considered by most tradinghouses and companies interviewed by Global Witnessto be a positive development for the mining sector.However, all stated that implementation was veryslow and that negotiations with the Congoleseauthorities remained an on-going struggle. Manycompanies complained that the Ministry of Mineswas selectively applying the Code, choosing to

implement certain aspects of the regulation whilstignoring others, and creating add-ons that are not inthe law. For example, Groupe Bazano claimed thatthe % tax that they are required to pay, as outlinedin the Code, is demanded by so many differentdepartments and ministries that they can end uppaying up to % in taxes.

In order for the Code to achieve its primary aim ofencouraging foreign investment into the sector, agreat deal needs to be done to effectively implementthe Code’s provisions. The Mines Directorate, theMines Administration and the Ministry Mines as awhole lack the capacity to adequately implement theCode. It is absolutely essential that this enforcementdeficit be urgently addressed to ensure the value ofKatanga’s mineral wealth is captured according tolaw, and that the conditions of work for thousands ofartisanal miners are improved.

In addition to the estimated enormous losses tothe central government through the lack ofimplementation of the Mining Code, illicit trade alsohas an adverse impact on local economies. Thefollowing section looks at the adverse impact ofmining and export of heterogenite in Katanga on thelocal population and environment.

Local impact of the heterogenite trade

Shituru factory, Likasi, DRC, May .

Through lack of alternative employmentopportunities, increasing numbers of young men andboys have turned to artisanally mining heterogenite since. The miners Global Witness interviewed repeatedlyexpressed fear of working in the dangerous conditions.They are acutely aware of the risks they took on a dailybasis – they work in holes with no reinforcement andwearing no protective clothing. The miners also lack theeconomic security of working for a company and theirincome is extremely dependent on price changes. Anumber of miners complained that prices they were paidhad fallen over the past year, in spite of increasing cobaltprices on the world market. All miners interviewed feltthat they were being cheated by the middlemen andcompanies in terms of the grade they were told their orecontained, as they had no means of independentlytesting the ore they are digging. These miners said thatthey would much rather find employment in a miningcompany and thus be guaranteed some security andsafety measures, even if this meant taking a reduction inwage.

Ex-Gécamines workers

As part of the World Bank-sponsored Gécaminesrestructuring programme, , employees (around halfthe company’s workforce) have now left the company,receiving voluntary redundancy pay-offs ranging fromUS$,, up to $, for the most senior managers.However, these redundancies have proved to beextremely controversial, not least because many of theemployees had already worked for two years without paybefore the pay-offs came. The package fails toacknowledge the role that Gécamines played in Katanga– ex-employees have received lump sum pay-offs, butthey now have no social protection, as they previouslyrelied on Gécamines for education, healthcare and othersocial provisions.

Visits to various Gécamines offices and factoriesrevealed that there are still huge numbers of staffturning up to work on a daily basis even though theyhave not been paid for up to three years. Particularlystriking was the case of the Sodimico mine and factorynear Kasumbalesa where, despite the closure of the

mine in due to flooding and a lack of investment,, of the , staff originally employed still arrive atwork every day. The younger men left to seekemployment elsewhere, but the vast majority have stayedon, without pay, through lack of alternatives and in thehope that when an investor comes onboard to re-openthe project they will be able to keep their jobs.

Environmental effects

This bleak social and economic picture is compoundedby increasingly serious environmental problems. Manycivil society groups in the area complain about highlevels of pollution, as the factories that are treatingminerals locally are processing without any kind ofenvironmental controls.

There is little or no evidence of companies taking thewelfare of the local population into consideration whensetting up processing plants. This is particularly evidentin Likasi, where acid smoke is released from Shituru, aGécamines factory situated above the town. Thispollution is said to be worsened by old pipes in thefactory that are in need of repairing. The localpopulation claimed to be suffering from increasedillnesses and respiratory problems, and Global Witnessstaff experienced choking, stinging and watering eyeswhilst in the area around Shituru. A lack of controlmeans that ore from Shinkolobwe is treated in Likasi,causing concern amongst civil society groups thatradioactive materials are being treated on their doorstep.

A similar situation can be seen in Lubumbashi, wherepeople have complained about a large factory located inthe heart of the city, and fear that radioactive materialsfrom Shinkolobwe are being treated there. In additionto high pollution and dust levels in these towns, the localpopulation have expressed serious concern about waterpollution in the region. A factory processing minerals hasbeen installed on the Kipushi Road, on a site where thelocal water company are treating the water used byaround % of the population of Lubumbashi. Peoplefear their drinking water is becoming contaminated.

Local NGOs have complained to the government aboutthis issue, but no action has yet been taken to address thesituation.


Young boys sieving heterogenite, Kolwezi, DRC, May .


THIS SECTION PROVIDES a summary of the statistics for trade in the mineral and metalcommodities exported by the DRC. Global Witness has researched international tradestatistics covering the main minerals contained in heterogenite (cobalt and copper as well aszinc and nickel) to sketch a regional and global trade picture and trends for thesecommodities since . In particular, focus was placed on major recipients of the DRC’s

heterogenite: China and South Africa. Also examined were the trade statistics from the DRC’s neighbours,including countries situated along the trade routes from Katanga.

At the time of writing, trade statistics for exports and imports from DRC, Tanzania, Zambia andZimbabwe were not available for or . However, Global Witness has obtained trade statistics providedby DRC customs office (see Section , DRC’s Customs Office (L’Office des Douanes et Accises – OFIDA),page ). Trade statistics for South Africa and China for and (to date) are available, and will beexamined in this section.

China

China is clearly a leading consumer of minerals and metals (raw and processed) originating from the copperbelt. China’s imports of cobalt and copper commodities are on a rising trend, driven by demand for materialsfor rechargeable batteries used in mobile telephones.

China is the main recipient of DRC’s cobalt, and imports from the DRC have grown strongly since ,with a particular rise in . As illustrated by Table (below) the DRC is currently China’s leading supplier ofcobalt ores. These figures do not take into account the possibility that some of the cobalt ores imported byChina from South Africa or Congo (Brazzaville) may have originated from the DRC.

Where does it all go? International trade statistics

Table 1: China’s imports (by supplying country)

Commodity: HS code 2605 – “cobalt ores and concentrates”

thousand tonne 1996 1997 1998 1999 2000 2001 2002 2003

Total 5 0 3 8 16 29 41 84

Congo, Dem. Rep. 0 0 8 15 39

Congo 0 1 4 10 28

South Africa 0 0 0 2 10 5 5 6

Cuba 0 5 7 5

Australia 0 1 1 2 2

Zambia 1 1 3

United States 0 0 0 2 1 0 1

Morocco 5 2 3 3 0

Others 5 0 3 5 3 5 1 3

US$ million 1996 1997 1998 1999 2000 2001 2002 2003

Total 17 1 8 10 16 32 34 68

Congo, Dem. Rep. 0 0 4 8 24

Congo 0 5 3 7 21

South Africa 0 0 1 2 5 5 2 6

Cuba 0 9 10 10

Australia 1 2 3 5 5

Zambia 1 1 1

United States 0 0 0 2 1 0 1

Morocco 17 7 4 4 0

Others 3 7 1 2

Source: World Trade Atlas


Table 2: China imports from DRC

Commodity: HS Code 2605 – “cobalt ores and concentrates”

2002 Jan Feb March April May June July Aug Sept Oct Nov Dec Total

US$ '000 739 679 1,370 247 602 159 462 193 1,349 402 1,393 7,595

Tonne 703 1,153 2,587 658 1,301 253 1,153 635 2,680 701 2,862 14,686

2003

US$ '000 2,233 1,111 1,917 2,361 2,632 1,725 1,023 1,725 3,187 2,066 1,883 2,255 24,118

Tonne 4,786 1,932 4,002 3,405 3,992 2,892 1,494 2,785 4,330 2,656 2,418 3,940 38,632

2004

US$ '000 2,168 4,743 10,707 9,110 8,753

Tonne 2,219 3,738 6,191 5,327 4,324


Table 3: China – imports from DRC

Commodity: HS code 2603 – "copper ores and concentrates"


US$ '000 83 44 48 175

tonne 252 142 262 656

2003

US$ '000 38 183 851 575 248 405 2,300

tonne 144 363 1799 1108 424 922 4,760

2004

US$ '000 1053 32 31 137

tonne 1850 82 78 140


Table (below) illustrates the rising trend and high levels of China’s imports of cobalt ores and concentratesfrom the DRC. In China imported almost , tonnes of cobalt ores from the DRC at a c.i.f. (importvalue) of approximately $,,. In the first five months of alone China has imported almost ,tonnes, with a c.i.f value of over US$,,. This is a stark illustration of the enormous revenues thatcould potentially be captured by the DRC but which are being lost due to an appalling lack of oversight ofmining operations and revenue streams in the DRC.

As shown in Table (below) in China imported a total of tonnes of copper ore from the DRC. In imports of this commodity rose dramatically to an annual total of , tonnes in , with a noticeablerise in imports from September . In January alone, China imported , tonnes of DRC copperores and concentrates. If the current strong demand for copper continues, it is possible that China’s imports ofcobalt ores from DRC will continue to be high in .

China’s imports of “copper ores and concentrates” from Congo Brazzaville, DRC, South Africa andTanzania rose strongly in and to date in . However, together, these supplies account for only a smallproportion of China’s imports of this commodity.

Truck in Johannesburg loaded with heterogenite from the DRC, May .


Table 4: South Africa – imports from DRC

Commodity: HS code 2605 – "cobalt ores and concentrates"


US$ '000 14 12 10 67 116 5 2 2 228

tonne 508 295 191 1540 1731 124 34 34 4,457

2003

US$ '000 15 77 127 95 314

tonne 245 1805 1629 1348 5,027

2004

US$ '000 58 131 72

tonne 1028 1783 626


Table 5: South Africa – imports from DRC

Commodity: HS Code 79031000 – "zinc dust"


US$ '000 0

tonne 0

2003

US$ '000 1167 151 116 16 21 65 41 44 54 80 20 79 1,854

tonne 1842 309 169 121 103 311 207 207 249 400 90 375 4,383

2004

US$ '000 163 37 364

tonne 777 161 1328


South Africa

As outlined in section , the majority of minerals and metals extracted from Katanga’s mines are transportedsouth through Zambia and then down to South Africa. It is thus important to analyse South Africa’s declaredimports of cobalt ores and concentrates (and other minerals such as zinc found in heterogenite) from the DRC,as well as examining where these commodities may be destined beyond South Africa.

Table (below) shows a rising trend in South Africa’s imports of cobalt ores and concentrates from theDRC. In South Africa imported a total of , tonnes of the commodity from the DRC. The followingyear imports rose to ,, with a noticeable rise in imports in October . In first quarter of , importsremained high at tonnes for January and a further tonnes in February.

There is also a rising trend in South Africa’s imports of “zinc dust” from the DRC. As Table indicates, in this amounted to approximately , tonnes, with a further , tonnes being imported in the firstthree months of alone. South Africa is China’s biggest supplier of zinc dust, and it may be that some ofthis commodity originated in the DRC. Over the last three years, China’s imports of zinc dust from SouthAfrica have been substantially higher than previous years.

China is a major destination of cobalt, copper and related ores and concentrates exported by South Africa,as shown by Table overleaf. However, there are anomalies between South Africa’s declared figures for exportsin cobalt and copper to China, and China’s declared import figures for these substances. Analysis of tradeflows in cobalt ores and concentrates from South Africa to China in Table show significant differences inChina’s declared level of cobalt imported from South Africa (, tonnes in ) in comparison with SouthAfrica’s exports to China (, tonnes in ).

Conversely, analysis of trade flow in copper ores and concentrates in Table (overleaf) shows that China’simports of copper from South Africa in (, tonnes) are more than double South Africa’s declaredexports of copper to China that year (, tonnes).

South Africa also exports substantial quantities of nickel ores and concentrates, and since China hasbeen a significant destination of South Africa’s refined nickel (see table , overleaf). Japan has also been amajor recipient of South Africa’s exports in “unwrought nickel.” Again, it may be possible that some of thiscommodity exported from South Africa originated in the DRC.


Table 6:Trade flow from South Africa to China

Commodity: HS code 2605 – "cobalt ores and concentrates"

1996 1997 1998 1999 2000 2001 2002 2003

China’s imports from South Africa

US$ ’000, cif 38 147 163 2,225 9,630 4,780 4,521 6,247

tonne 234 436 518 1,810 5,350 5,314 2,223 5,571

South Africa’s exports to China

US$ ’000, fob 0 0 11 63 545 300 1,608 12,335

tonne 0 0 158 1,441 3,659 1,321 4,657 21,120

3 7 1 2


Table 7:Trade flow from South Africa to China


1996 1997 1998 1999 2000 2001 2002 2003

China's imports from South Africa

US$ '000, cif 0 0 135 9 11,569 3,661 5,164 11,114

Tonne 0 0 897 52 27,592 17,070 22,618 28,707

South Africa's exports to China

US$ '000, fob 0 0 0 2,881 0 823 220 2,488

Tonne 0 0 0 9,414 0 4,840 4,311 12,428


Table 8: South Africa’s exports

Commodity: HS code 75 – "refined nickel"

1997 1998 1999 2000 2001 2002 2003

Product:

HS code 7501 51.8 9.3 1.0 0.2 0.0 0.1 0.3

HS code 7502 14.2 11.6 16.9 31.9 17.0 22.8 47.6

HS code 7506 9.2 36.4 57.5 68.6 45.4 41.8 49.5

Others 1.9 1.4 2.0 2.3 1.2 0.7 3.3

HS code 7506 destination country: China

US$ million, fob 1.9 3.8 20.3

thousand tonne 0.3 0.5 2.5

Source: World Trade Atlas Key to HS codes:HS code 7501 Nickel mattes, nickel oxide sinters and other intermediate products of nickel metallurgyHS code 7502 Unwrought nickelHS code 7506 Plates, sheets, strip and foil of nickel alloys and non-alloy nickel (other than expanded plates sheets or strip)


Table 9: China – imports from Zambia

Commodity: HS code 8105 – "cobalt: matte, intermediate products, powders, etc."

1996 1997 1998 1999 2000 2001 2002 2003

US$ '000 744 1,368 2,070 6,518 9,959 23,828 24,619 21,091

tonne 34 89 85 229 380 1,107 1,637 1,287

HS code 81051000 – Cobalt mattes and other intermediate products of cobalt metallurgy; unwrought cobalt; powders of cobalt; cobalt waste and scrap (excluding ash and residues

containing cobalt)

US$ '000 99 238 1,626 6,406 9,959 23,828

tonne 21 55 75 224 380 1,107

HS code 81052000 – Cobalt mattes and other intermediate products of cobalt metallurgy; unwrought cobalt; cobalt powders

US$ '000 22,986 20,338

tonne 1,524 1,238

HS code 81059000 – Articles of cobalt n.e.s.

US$ '000 645 1,130 444 112 1,633 753

tonne 13 34 10 5 113 49



Commodity: HS code 74031100 – "refined copper, as cathodes"


US$ '000 6,921 5,848 1,866 14,635

tonne 3,989 3,485 1,076 8,550

2003

US$ '000 837 510 6,915 1,652 1,750 1,100 4,030 16,794

tonne 500 300 4,005 1,001 1,000 500 1,952 9,258

2004

US$ '000 10,120 1,109 2,179 4,680 4,418

tonne 4,218 462 999 1,999 1,647


Zambia

As the DRC’s neighbour and fellow copper and cobalt producer, it is important also to look at Zambia’simports and exports in heterogenite minerals in order to compare levels of exports to China in copper andcobalt ores.

Zambia’s declared imports of cobalt ores from the DRC in and were minimal, and no statisticsfor and are yet available. However, imports of copper ores and concentrates from the DRC rose in.

Zambia’s exports of “cobalt mattes and intermediate products” to China were on a rising trend in the lates, and rose sharply in (see Table , below). Zambia supplied almost % (by weight) of China’simports of this commodity in and . Given the lack of oversight in trade from the DRC to Zambia,and the minimal amount of mineral processing within the DRC, it is likely that some of this processed cobaltoriginated from Katanga.

Zambia is also the principal supplier of China’s imports of “refined copper” (see Table , below). Chinahas also imported substantial quantities of this commodity from Congo Brazzaville, South Africa and Uganda.Some of those imports from each of these countries might have originated in the DRC.

There is also currently a rising trend in Zambia’s “unrefined copper” exports to China as indicated in Table (overleaf), but Zambia does not supply a large share of China’s imports of this metal. It is also possible thatquantities of this commodity originated in the DRC.


Tanzania

Tanzania is a potential alternative exit point for minerals exported from Katanga, as there are established trade routes from Zambiaand the DRC through to the Tanzanian port of Dar es Salaam. However, between and , Tanzania’s declared imports ofminerals from the DRC were minimal.

Since March China’s imports of copper ores and concentrates from Tanzania have risen sharply (see Table ). Thesecommodities may have been derived either from Zambia or the DRC along the Chinese-built railway from the copper belt to the portat Dar es Salaam. It may be that customs documents recorded the last port of departure rather than the country of origin.

Table 12: China – imports from Tanzania



UUS$ '000 0

tonne 0

2003

US$ '000 0

tonne 0

2004

US$ '000 0 0 1,372 4,330 9,425

tonne 0 0 492 1,825 2,493


International trade statistics summary

Analysis of international trade statistics also indicates that it is difficult to trace precisely the origin of cobalt and copper beingexported to China from Zambia, Tanzania and South Africa. There is no international certification system that can assist in thetracking flows in trade of these commodities throughout Africa. Further, the absence of effective oversight of the exploitation ofheterogenite in Katanga, as well as the lack of reliable and systematic analysis and certification of minerals being taken from theDRC renders precise analysis on the amounts of minerals being exported from Katanga extremely difficult. Nevertheless, it is clearthat enormous quantities of the DRC’s valuable minerals are being lost every week. On the figures obtained on China’s imports ofthe DRC’s cobalt ores for alone, the average value of cobalt being exported each week from Katanga is US$,,. Seriousdeficiencies in oversight and transparency means that it is unclear how much, if any, of this revenue ends up in DRC centralgovernment coffers.

Bringing it all together: statistical hints and gaps

The “cobalt rush” currently driving mining activities in Katanga is clearly driven by high demand for cobalt and copper ores,concentrates and related materials in China. China’s declared imports of cobalt from the DRC are extremely high, and imports havebeen on a rising trend since the end of . However, these statistics do not always reflect numbers provided to Global Witness bythe DRC government. In March , China alone imported US$,, worth of cobalt ores and concentrates from the DRC,whereas OFIDA statistics claim that the DRC only exported US$,, of cobalt ores and concentrates that month.


Commodity: HS code 7402 – "unrefined copper"


US$ '000 2,076 2,018 29 4,123

tonne 1,331 1,420 20 2,771

2003

US$ '000 2,102 546 80 247 3,165 1,148 7,288

tonne 1,268 300 51 162 1,676 592 4,049

2004

US$ '000 319 100 5,504 5,572

tonne 202 60 1,883 1,897



INTERNATIONAL DONOR assistance inthe DRC comes in many forms and seeks toaddress a range of serious problems facing theDRC, from food security, to demobilization ofchild soldiers, to governmental institutional

strengthening. At the time of writing, there were over donors providing aid and assistance to the DRC throughGovernment bodies, UN agencies, NGOs, and privatefirms. This section provides an overview of internationalmultilateral and bilateral aid provided to the DRC, andlooks to see which donors have policies aimed atstrengthening natural resource governance. The sectionlooks first at international financial institutions (IFIs) andthen goes on to examine bilateral donors.

International Financial Institutions

World Bank

The World Bank has supported economic and structuralreforms in the DRC since . The Bank is candidabout the fragility of the DRC’s economic and politicalenvironment, estimating that it will take fifty-six years forthe DRC to reach levels of GDP. In steps to beginto redress the DRC’s economic challenges, in July the Bank approved an Emergency Early Recovery Projectof US$ million, and the following year approved anEconomic Recovery Credit of US$ million. The Bankalso began to disburse US$ million in an EmergencyMulti-Sector Rehabilitation and Reconstruction Projectin July . In February the World Bank provideda Post-Reunification Economic Recovery credit ofUS$ million to support “urgent reforms in criticalareas including initiating a civil service reform.”

The Bank has identified that in the past extractive-industry led economic growth in the DRC did not meanthat wealth generated by natural resources wasredistributed to the majority of Congolese. Indeed, theBank has stated that “the past focus on natural resourcesand extractive industries… might have contributed to themismanagement of the economy.”

One key recommendation contained in the WorldBank’s Extractive Industry Review conducted by theBank in , was that the Bank should “vigorouslypromote” revenue transparency at country and companylevel in all its operations. In the DRC, the Bank hasstated that the improvement of efficiency andtransparency in the management of natural resources isimportant. The Bank has taken steps to strengthenresource governance in the sponsoring of the newMining and Forestry Codes introduced in . TheBank also supported the preparation of an updatedmining cadastre and a review of concessions allocated todate in the Mining and Forestry sectors. In itsTransitional Support Strategy, the Bank has committeditself to improving natural resources management “with aview to improving both transparency in allocating miningand forestry rights and the management of the revenuesgenerated in these sectors.”

In July the Bank approved $ million to theDRC government to “facilitate growth in the privatesector and rebuild its economy.” The funds werefunneled into a Private Sector Development andCompetitiveness Project aimed at improving theeffectiveness of selected firms in various sectors including

mining. A key component of the Project is buildingcapacity within the Ministry of Mines and improving thefiscal framework for investment. A further component isthe development of enterprises for laid-off Gécaminesworkers in Katanga, as well as “training for un-employedworkers and other vulnerable groups, and supporting thedevelopment of the supply chain to the miningindustry.”

As this report demonstrates, at the national andregional level, technical and administrative capacity bothin the Ministry of Mines and OFIDA remains extremelyweak. This institutional weakness means that, at present,achieving transparency and ensuring revenues aremanaged accountably and responsibly is easier said thandone. Further, at the local level, little has been done todate to “re-train” ex-Gécamines and other unemployedpeople in Katanga. High unemployment combined withdramatic rises in cobalt prices has led to a dramaticincrease in numbers of artisanal miners working inappalling conditions throughout the DRC’s copperbelt.

In an International Development Association (IDA)report setting out the Transitional Support Strategy forthe DRC, the proposed Bank strategy for /includes creating “high and shared” economic growthpartly through improved natural resource management.

To date the Bank has supported the adoption of an anti-corruption strategy as well as a public declaration ofPresident Kabila’s wealth to parliament in August .

The Bank has also recognized that improving thecapacity of the government, the provision of salaries forcivil servants, and the restoration of a functioningstatistical system need to be addressed. This is also apublicised part of the DRC Government’s agenda forreform, which has placed particular emphasis on anti-corruption. The Bank is correct to identify these asareas where reforms are needed: it is now time forconcrete action to be taken and specific projects andplans to be designed and implemented to ensure capacityis augmented and full transparency is achieved.

The Bank, as a taxpayer-funded public institution, hasthe responsibility to ensure its loans and assistancealleviates poverty rather than rewards a country’s failureto manage its own extractive industry revenues effectively.The Bank undermines this responsibility if it providesloans and assistance to the DRC without asking for fulltransparency and effective oversight of the mining sector.

There is an urgent need for global standards ongovernance for development assistance, which can thenbe consistently promoted by multilateral and bilateraldonors. The Bank has a clear leadership role to play here.The Transitional Support Strategy agenda includesmobilizing and coordinating donors: the Bank shouldvigorously promote strong donor cooperation to improvenatural resource governance in the DRC.

International Monetary Fund

International financial institutions appear to becautiously optimistic about the DRC’s economicprospects. In July , the IMF released a study praisingthe DRC government for structural reforms, andindicated that there had been improvements made to thesocial sectors, judiciary and regulatory bodies and thefinancial sector. However, the IMF predicted that itwould take years for the DRC to reach levels ofdevelopment present in – a time when mineral

Donor policy in DRC

processing and export from Katanga provided asubstantial contribution to national coffers.

Following a review of the Poverty Reduction andGrowth Facility, the IMF approved a loan of $ million.This takes the total of funds approved to the DRC toUS$ million of a $US million Poverty Reductionand Growth Facility agreed in . The DRCgovernment must pay back the loan at an annual interestrate of .%, repayable over years. The IMF loan willbe added to the government’s general revenue to “reformand restructure the economy.” In a press statement, anIMF spokesperson called for DRC authorities to ensure“good governance and transparency in natural resourceactivities,” and stated the government planned onadopting laws to combat corruption and moneylaundering.

Despite indications of reforms in the IMF’s report andits show of good faith in allocating a further $ millionto the government, questions must be raised about theimpact of opaque and ineffective management of theDRC’s mining sector on the wider economy. In order forthe IMF’s fiscal reforms to be effective, it is crucial that afull picture of revenue and export flows from the miningsector revenue is built. The IMF has already proven itscommitment to extractive industry transparency inneighbouring Congo Brazzaville and Angola: it shouldmainstream this “best practice” on accountability as partof overall fiscal reforms in the DRC as well.

This section now turns to examine how individualdonor countries are engaging with the DRC. As will bedemonstrated, there is little coherence amongst bilateraldonors on programmes to improve natural resourcegovernance. While it is crucial that donors continue tosupport and augment humanitarian aid programmes inthe DRC, it is equally important for the long-termsustainable and equitable economic development of theDRC to ensure that the DRC effectively and responsiblyharnesses its vast natural wealth.

Bilateral Aid

Belgium is one of the most significant donors in theDRC: from to assistance was at the rate of €million per year (US$ million), and this will be doubledby the end of to a total of € million (US$million). The additional € million will be used mainlyto fund educational and health projects and foster thedevelopment of DRC’s democratic institutions.

Belgium’s programmes are currently focused aroundsocial sectors: health, education, food security,community forest and environment initiatives, as well ashumanitarian aid. While the Belgian governmentacknowledges that good governance and anti-corruptionare areas of concern, there is currently no Belgianinvolvement in programmes related to the effective andtransparent management of the mining sector.

The European Commission’s three general areas ofengagement in the DRC are conflict prevention, goodgovernance and progressive rehabilitation. Under theCotonou Agreement, good governance also is a key pillarof partnerships between the EC and aid recipients. Asthe DRC moves towards democracy, this has beentranslated into the EC making the reinforcement ofinstitutional capacity a priority area of concern. Otherpriority areas are the reduction of poverty through healthprogrammes, and macro-economic stabilisation.According to the EC, good governance and transparencyare two areas that are a priority for future financial

stability and democracy.

In the EC has, to date, provided approximatelyUS$. million (€ million) for technical cooperation,US$. million (€. million) for administrativemanagement, and US$ million (€ million) for theformation of a united police force. In the ECprovided US$ million (€ million) for reinforcingmanagement and capacity and rehabilitating protectedareas; US$ million (€ million) for agriculturalproduction reform; and US$. million (€. million)for rehabilitation in Eastern DRC. In addition, in the EC has provided US$. million (€ million) inhumanitarian aid through ECHO, and a further US$.million (€ million) in . ECHO is supporting theCongolese public health system, food aid, as well asproviding support to rehabilitation and resettlementactivities to assist returning populations.

The United Kingdom’s Department for InternationalDevelopment (DfID) has recently significantly augmentedits bilateral assistance to the DRC, making the UKgovernment one of the most significant donors. Since, DfID has joined with other internationalcommunity members in providing support fordemobilisation, disarmament and re-integration ofsecurity forces. DfID has also been involved in “quickstart” programmes to provide health and education towar-affected parts of the country. The UK is set toincrease its assistance to help rebuild the country from£ million in / to approximately £ million(US$. million) in /. This is in addition tocontributions of around £ million (US$ million)through the European Commission, the United Nationsand the World Bank. The UK has recognised theimportance of addressing natural resource governanceissues during the transitional period, and is in the processof developing governance and anti-corruption strategypolicies.

The United States is currently working in the DRC toaddress security issues and to “develop mutuallybeneficial economic relations.” USAID’s directinvolvement with the DRC government began in June after sanction for nonpayment of debt under theForeign Assistance Act was lifted and a reschedulingagreement was reached between the US and the DRC.The main objectives of US aid to the DRC are: health,democracy and governance, livelihoods and education, aswell as ex-combatant reintegration. In US aid to theDRC amounted to US$ million, in it is US$million, and USAID has requested US$ million for. Of this, the US has allocated approximately US$million for strengthening the capacity of nationalinstitutions in the lead up to elections. This money isbeing distributed through training and conferences,through international NGOs, as well as being directed tokey commissions, ministries and parliamentarycommittees.

Neither natural resource governance, norstrengthening the capacity of government institutions notdirectly involved in the move towards elections, feature inUSAID’s current or planned programmes in the DRC.

Canada’s aid to DRC includes a programme forcapacity reinforcement in the Central Bank of Congo(Banque Centrale du Congo (BCC)) of approximatelyUS$. million. This money will be split equally betweentargets aimed at creating a private sector enablingenvironment in the BCC; and capacity, skills and


productivity enhancement. Canada is also providingsupport for health care, child soldier demobilisation andother peace building initiatives. However, assistance tostrengthen natural resources management capacity doesnot feature in Canada’s overall aid programme to theDRC for .

At the beginning of , France’s annual ongoing andplanned support to the DRC amounted to US$million. France has five areas of priority for thedisbursement of this money: urban development, foodaid, a social fund, support to NGOs, and technicalcooperation. At present, governmental capacity buildingand natural resource management is not a feature ofFrance’s aid programme to the DRC.

In Japan granted US$. million ( million yen)in food aid to the DRC. In March Japan announcedthat it would extend its total assistance for food securityand the revival of agricultural projects by approximatelyUS$ million (,, yen). Governance, capacitybuilding or natural resources management do not featurein Japan’s aid policy to the DRC.

The Netherlands current engagement with the DRChas a regional Great Lakes focus, with its main activitiesin the DRC centred on humanitarian aid, stabilisation,disarmament and the reintegration of combatants. In the Netherlands provided US$ million for logisticalsupport to the transitional government to begin itsactivities. While natural resource management orgovernment institutional capacity building is notcurrently a feature of Dutch aid to the DRC, theNetherlands Development Cooperation AfricaMemorandum identifies the sustainable management ofnatural resources as being important to the promotion ofstability and economic growth. According to theMemorandum, Dutch policy on natural resourcemanagement will “concentrate on good governance,capacity building in the environment sector, sustainableeconomic development and the links between conflictsand the environment.” Global Witness encourages theDutch government to actively explore ways of applyingthis policy in the DRC.

In Sweden’s aid to the DRC through Sidaamounted to approximately US$ million. The bulk ofthis was earmarked for humanitarian aid and conflictprevention (approximately US$ million) and NGOs(US$. million). US$, was set aside forinfrastructure, trade, urban development and financialsystems. Strengthening government institutional capacityis not currently a feature of Sweden’s aid programme inthe DRC.

Summary

The majority of bilateral donors do not currently haveprogrammes or projects supporting strengtheninginstitutional capacity, good governance and transparencyin natural resource extraction in the DRC. The mainfocus of donor aid is humanitarian, the continuation andfurther augmentation of which is to be encouraged.Nevertheless, in addition to humanitarian aid, it is essentialfor the long-term economic development and stability ofthe DRC that all bilateral and multilateral donors worktogether to address the appalling lack of institutionalcapacity and absence of transparency in the DRC’snatural resource extraction sectors. The DRC needs the

institutional tools and impetus to manage resources in away that transparently generates revenues to create theeconomic stability and essential services desperatelyneeded by the majority of Congolese people. Theinternational donor community could, in effect, help theDRC to help itself if greater attention was paid to theimportance of the management of natural resources. Anobvious place to begin is to assist in stopping the massiveloss of revenues and valuable minerals from Katanga.

International donor aid, however, is not provided in apolitical vacuum. The DRC’s fragile transitionalgovernment faces many challenges in the lead up toelections, but it also has the responsibility to work andcooperate fully with the international community toensure reforms are carried through to completion. Whilethe government does not have the full capacity to governthe DRC’s mining sector effectively, it does have theability to request assistance and to cooperate fully withdonors to rapidly implement necessary reforms. Acombination of Congolese political will and donorassistance is required to address the lack of oversight ofmining in Katanga and to construct long-term structuresof effective control and transparent resource governance.


Conclusion

ANALYSIS OF the copper and cobalt sector inKatanga clearly shows that the governance ofnatural resources remains a highly problematicissue in the DRC. There appears to be littlecontrol over the mining sector, with unknown

quantities of minerals haemorrhaging out of the country everymonth. The DRC is missing a crucial opportunity to benefit fromthe current boom in world cobalt prices, as so much of its ore isbeing smuggled out of the country and the vast majority isleaving unprocessed. Mining revenues from the copperbelt couldprovide much-needed revenue for the Congolese government tosupport the economic development that the DRC so desperatelyneeds. However, in its current state, this sector is benefitingneither the economy as a whole nor the local population.

Instead, poverty and instability have increased in the provincein recent years. Artisanal mining is being carried out indangerous and uncontrolled conditions, with thousands ofminers risking their lives to earn around US$ a day. Theinternational community needs to work to develop an integratedstrategy to address problems faced by artisanal miners inKatanga: working conditions need to be regulated as laid out inthe Mining Code (see section ), safety measures implemented,and alternative employment opportunities developed.

The situation would be vastly improved with a concertedeffort to implement the Mining Code on the ground, but as yetthere appears to have been little progress made in theimplementation of regulation in the copper and cobalt sector.Without the active support of the international donorcommunity, this situation is unlikely to change but as yet, thedonor community have shown little willingness to tackle issues ofcorruption and transparency in the DRC. Until these issues aretackled, the DRC will continue to lose millions of dollars amonth in potential revenue from the copper and cobalt sector inKatanga.

Citations

All.Reference.Com, “Katanga, Democratic Republic of Congo,” ColumbiaUniversity Press 2003.[http://reference.allrefer.com/encyclopedia/K/Katanga.html] (uploaded 12August 2004).

ASADHO/Katanga, Rapport préliminaire sur l’exploitation illégale des ressourcesnaturelles en RC Congo, July 2004.

Banque Centrale du Congo, Rapport Annuel, 2002 - 2003’.

Banque Centrale du Congo, Condense d’Informations Statistiques, 11 June 2004.

BBC, ‘DR Congo Uranium mine collapses’, 12 July 2004.

CRU International Limited, The African Copperbelt, February 2003[www.crumonitor.com].

De Borchgrave,Arnaud, ‘Annan’s Congo burden: déjà vu’, Washington Times, 23August 2004

Digital Congo [http://www.digitalcongo.net/acp/BQ321-070503.pdf] (uploaded

6 August 2004)

Economist Intelligence Unit, DRC Country Report, June 2004.

Global Trade Atlas (2002).

International Atomic Energy Agency, Safeguards Current Status, July 2004.[http://www.iaea.org/OurWork/SV/Safeguards/sir_table.pdf] (uploaded 10August 2004).

International Monetary Fund (2004), Sources of Growth in the DemocraticRepublic of the Congo:A Cointegration Approach,Washington D.C.: IMF.

International Crisis Group, ‘Pulling Back from the Brink in the Congo’. 7 July2004, p.2.

IRIN, ‘DRC: IMF approves US$40 million for economic reform.’ 14 July 2004.

IRIN, ‘DRC: UN Mission denied access to collapsed uranium mine,’ 21 July2004.

Mahtani, D.“Illegal uranium mining in Congo. U.N. wants answers,” Reuters, 26March 2004.

Mbendi,“Democratic Republic of Congo – Mining: Nickel and Cobalt Mining,”12 June 2002. [http;//www.mbendi.co.za (uploaded 2 September 2003)].

Metalprices.com [www.metalprices.com (uploaded 30 July 2004)].

MiningNews.net, ‘Cobalt Price Climb Worries Customers’, 21st May 2004[http://www.miningnews.net/storyview.asp?storyid=25398&sectionsource=c9].

Ministère des Mines, Republique Democratique du Congo,

[http://www.geocities.com/ministeremines/2.html] (uploaded 23 August 2004).

MONUC,“Tension rising in Katanga province,” 27 November 2004. [Seehttp://www.monuc.org/Story.aspx?storyID=71] (uploaded 12 August 2004).

National Geographic News, ‘“Gorillas in the Mist” Park Slashed by Squatters’,12 July 2004,[http://news.nationalgeographic.com/news/2004/07/0712_040712_mountaingorilla.html] (uploaded 5 August 2004).

Nouvelle Dynamique Syndicale, unpublished statistics, Lubumbashi, July 2004

OFIDA, ‘Kasumbalesa, le Chantier de l’Espoir’, Revue des Douanes Congolaises,May 2004.

Pitman,T. ‘Congo Shows its Metal,’ Associated Press, 27 June 2004.

United Nations News Service, ‘Security Council Reaffirms Arms Embargo inNew Resolution on DR Congo’, 27 July 2004.

United Nations Security Council, Third special report of the Secretary-General onthe United Nations Organization Mission in the Democratic Republic of the Congo,S/2004/650, 16 August 2004.

United States Library of Congress Country Studies, ‘The Secession of Katanga,’(Congo), 1993.[http://workmall.com/wfb2001/congo_democratic_republic_of_the/congo_democratic_republic_of_the_history_the_secession_of_katanga.html] (uploaded12 August 2004).

Wolters, S.“Update on the DRC: Is the Transition in Trouble?” Institute forSecurity Studies Situation Report, 20 July 2004, p. 15.

World Bank, Transitional Support Strategy for the Democratic Republic of theCongo,Washington D.C.: IDA, 26 January 2004.

World Bank, Striking a Better Balance:The Final Report of the Extractive IndustriesReview. Washington D.C.: December 2003.

Interviews

Global Witness interviews with unnamedsources, Kasumbalesa, 14 May 2004.

Global Witness interviews with staff at Sodimicofactory, Kasumbalesa, 14 May 2004.

Global Witness interview with Mr Mukaz, Chefde Division, Ministry of Mines, Lubumbashi, 20May 2004.

Global Witness interview with Alex Bazano,Lubumbashi, 20 May 2004.

Global Witness interview with Katanga miningspecialist, Lubumbashi, May 2004.

Global Witness interview with senior Gécaminesofficial, Kolwezi, May 2004.

Global Witness interview with senior Gécaminesofficial, Kolwezi, May 2004.

Global Witness interview with mining companyofficial, Lubumbashi, May 2004.

Global Witness interview with unnamed source,Lubumbashi, May 2004.

Global Witness interview with unnamed source,Johannesburg, May 2004.

Global Witness interviews conducted at Kolwezitrain station, May 2004.

Global Witness interviews with artisanal miners,Likasi, May 2004.

Global Witness interviews with traders, Katanga,May 2004.

Global Witness interviews with civil societyrepresentatives, Likasi, May 2004.

Global Witness interviews with civil societyrepresentatives, Lubumbashi, May 2004.

Global Witness interviews with uranium miningand other experts, May – July 2004.

Global Witness interview with unnamed source,London, June 2004.

Global Witness interview with Katanga miningexpert, Belgium, June 2004.

Global Witness interview with Paulo de Sa, July2004.

Global Witness interview with Onno Ruhl,Country Manager,World Bank, 13 July

2004.

Global Witness interview with senior Ministry ofMines official, Kinshasa, July 2004.

Global Witness correspondence with CrownAgents, London, July 2004.

Global Witness interview with senior OFIDAofficial, Kinshasa, July 2004.

Global Witness interview with unnamed source,July 2004.

Global Witness correspondence with the IAEA,August 2004.


References World Bank, Transitional Support Strategy for the Democratic Republic of the Congo, Washington D.C.: IDA, January , p. . “Democratic Republic of Congo – Mining: Nickel and Cobalt Mining,” Mbendi, June . [http;//www.mbendi.co.za

(uploaded September )]. CRU International Limited, ‘The African Copperbelt’, February [www.crumonitor.com]. MiningNews.net, ‘Cobalt Price Climb Worries Customers’, May

[http://www.miningnews.net/storyview.asp?storyid=&sectionsource=c]. Figure correct as of July , www.metalprices.com. This dramatic price increase is driven primarily by high demand in

China and this is certainly the destination of the majority of the DRC’s cobalt – see section on international trade. “Katanga, Democratic Republic of Congo,” All.Reference.Com, Columbia University Press . [See

http://reference.allrefer.com/encyclopedia/K/Katanga.html] (uploaded August ). Ibid. “The Secession of Katanga,” United States Library of Congress Country Studies (Congo), . [See

http://workmall.com/wfb/congo_democratic_republic_of_the/congo_democratic_republic_of_the_history_the_secession_of_katanga.html] (uploaded August ).

Ibid. “Katanga, Democratic Republic of Congo,” All.Reference.Com, Columbia University Press . [See

http://reference.allrefer.com/encyclopedia/K/Katanga.html] (uploaded August ). “Tension rising in Katanga province,” MONUC, November . [See http://www.monuc.org/Story.aspx?storyID=]

(uploaded August ). S. Wolters. “Update on the DRC: Is the Transition in Trouble?” Institute for Security Studies Situation Report, July , p. . La loi portant organisation générale de la défense et des forces armées

The SDC is made up of the president, the four vice-presidents, the minister of the interior, the minister of foreign affairs,and the army, navy and air force chiefs of staff, along with the chief of the Forces Armées de la Republique Democratique duCongo (FARDC).

S. Wolters. “Update on the DRC: Is the Transition in Trouble?” Institute for Security Studies Situation Report, July , p..Eugene Serfuli remained governor, and General Obed was appointed head of the eight military region.

S. Wolters. “Update on the DRC: Is the Transition in Trouble?” Institute for Security Studies Situation Report, July , p. International Crisis Group, Pulling Back from the Brink in the Congo. July , p.. Ibid. Bukavu is situated nearby to the DRC/Rwandan border in South Kivu, an area held by the RCD-Goma military group. It is

a key trading point between the two states. International Crisis Group, Pulling Back from the Brink in the Congo. July , p. . International Crisis Group, Pulling Back from the Brink in the Congo. July , p. . Third special report of the Secretary-General on the United Nations Organization Mission in the Democratic Republic of the Congo,

S//, August . De Borchgrave, Arnaud, ‘Annan’s Congo burden: déjà vu’, Washington Times, August

“Security Council Reaffirms Arms Embargo in New Resolution on DR Congo.” UN News Service, July . See Global Witness, Same Old Story: A background on natural resources in the Democratic Republic of Congo, June . National Geographic News, ‘“Gorillas in the Mist” Park Slashed by Squatters’, July ,

[http://news.nationalgeographic.com/news///__mountaingorilla.html] (uploaded July ). Global Witness interview with unnamed source, Kinshasa, July . See Adastra Minerals website: http://www.adastramin.com/index.cfm?fuseaction=main.home MineSite.com, America Mineral Fields Makes Steady Progress Towards Production At World Class Kolwezi Project, March .

[http://www.minesite.com/archives/features_archive//mar-/america_minerals.htm] (uploaded August).

CRU International Limited, The African Copperbelt, February [www.crumonitor.com]. Global Witness interview with Katanga mining specialist, Lubumbashi, May . ASADHO/Katanga, Rapport préliminaire sur l’exploitation illégale des ressources naturelles en RD Congo, July . Unpublished statistics compiled by Nouvelle Dynamique Syndicale, Lubumbashi, July . Global Witness interview with unnamed source, Lubumbashi, May . For more information on commercial activity in this sector, refer to ASADHO/Katanga’s report ‘Rapport préliminaire sur

l’exploitation illégale des resources naturelles en RD Congo,published in July (compiled from their own research). Digital Congo [see http://www.digitalcongo.net/acp/BQ-.pdf] (uploaded August ). Global Witness interview with senior Gécamines official, Kolwezi, May . Global Witness interview with Katanga mining expert, June . Global Witness interview with senior Gécamines official, Kolwezi, May . Global Witness interview with senior Ministry of Mines official, Kinshasa, July . Website of République Démocratique du Congo Ministere des Mines, http://www.geocities.com/ministeremines/.html Ibid. Global Witness interview with Mr Mukaz, Chef de Division, Ministry of Mines, Lubumbashi, May . Global Witness interview with senior Ministry of Mines official, Kinshasa, July . Global Witness research conducted at the border post of Kasumbalesa, July . Economist Intelligence Unit, DRC Country Report, June . Global Witness interview with senior Ministry of Mines official, Kinshasa, July . Global Witness interview with Katangan mining expert, Lubumbashi, May . Global Witness interview with unnamed source, Lubumbashi, May . See Table , Section . Banque Centrale du Congo, Condensé d’Informations Statistiques, June . Combined total of cobalt and cobalt concentrates – see Appendix for full break down between Gécamines and other

company exports. Global Witness interviews with unnamed sources, Kasumbalesa, May . Global Witness interview with unnamed source, July . Global Witness correspondence with Crown Agents, London, July . OFIDA, “Kasumbalesa, le Chantier de l’Espoir,” Revue des Douanes Congolaises, May . Global Witness interview with senior OFIDA official, Kinshasa, July . Global Witness interview with senior OFIDA official, Kinshasa, July . Global Witness interview with mining company official, Lubumbashi, May . Global Witness correspondence with Alex Stewart [Assayers] Ltd, August .


Global Witness interview with unnamed source, Johannesburg, May . Global Witness interviews conducted at Kolwezi train station, May . “DR Congo Uranium mine collapses.” BBC News, July . “DRC: UN Mission denied access to collapsed uranium mine,” IRIN, July . “DR Congo Uranium mine collapses.” BBC News, July . “DR Congo Uranium mine collapses.” BBC News, July . Global Witness interviews with artisanal miners, Katanga, May . Global Witness interviews with artisanal miners, Likasi, May and Global Witness interview with unnamed source,

London, June . “DR Congo Uranium mine collapses.” BBC News, July ; “DRC: UN Mission denied access to collapsed uranium

mine,” IRIN, July . “DRC: UN Mission denied access to collapsed uranium mine,” IRIN, July . Global Witness interviews with artisanal miners, Likasi, May . Global Witness interviews with artisanal miners, Likasi, May . “DR Congo Uranium mine collapses.” BBC News, July . Global Witness interviews with artisanal miners, Likasi, May . D. Mahtani. “Illegal uranium mining in Congo. U.N. wants answers,” Reuters, March . International Atomic Energy Agency, Safeguards Current Status, July .

[http://www.iaea.org/OurWork/SV/Safeguards/sir_table.pdf] (uploaded August ). Global Witness correspondence with the IAEA, August . Global Witness interviews with uranium mining and other experts, May – July ; “DRC: UN Mission denied access to

collapsed uranium mine,” IRIN, July . Levels of radioactivity measured at Shinkolobwe in July registeredbetween , and , hits per second.

Global Witness interview with Katanga mining expert, June . T. Pitman. “Congo Shows its Metal,” Associated Press, June . International Atomic Energy Agency, Model Protocol Additional to the Agreement(s) Between State(s) and the Agency for the Application of

Safeguards - INFCIRC/, . [http://www.iaea.org/Publications/Documents/Infcircs//infcirccorrected.pdf ](uploaded August ). Global Witness correspondence with the IAEA, August .

T. Pitman, op cit. Article , Law No. / of July Relating to the Mining Code. Global Witness interview with Onno Ruhl, Country Manager, World Bank, July . Global Witness interview with Mr Mukaz, Chef de Division, Ministry of Mines, Lubumbashi, May

Global Witness interview, Mr Mukaz, Chef de Division, Ministry of Mines, Lumumbashi, May . Global Witness interviews with artisanal miners, Katanga, May . See Article , Law No. / of July Relating to the Mining Code. Global Witness interviews, Lubumbashi, May . Global Witness interviews with traders, Katanga, May . Global Witness interview with Alex Bazano, Lubumbashi, May . Global Witness interview with numerous artisanal miners, Likasi and Kolwezi, May . Global Witness interviews with staff at Sodimico factory, Kasumbalesa, May . ASADHO/Katanga, Rapport préliminaire sur l’exploitation illégale des ressources naturelles en RD Congo, July . Global Witness interviews with civil society representatives, Likasi, May . Global Witness interviews with civil society representatives, Lubumbashi, May . ASADHO/Katanga, Rapport préliminaire sur l’exploitation illégale des ressources naturelles en RD Congo, July ; and Global

Witness interview with local civil society representatives, Lubumbashi, May . In this section, values are expressed “c.i.f ” (import value) and “f.o.b” (export value) and in nominal terms (with no account

being taken of inflation). Global Trade Atlas (): “ Zambia.” Note that at the time of writing, Tanzania’s trade statistics for were not available. World Bank, Transitional Support Strategy for the Democratic Republic of the Congo, Washington D.C.: IDA, January , p.. “The Democratic Republic of Congo Receives US$ million for Post-Reunification Economic Recovery,” World Bank

News Release No. //AFR, February . Ibid, p.. World Bank and Extractive Industries, Striking a Better Balance. Washington D.C.: December . World Bank, Transitional Support Strategy for the Democratic Republic of the Congo, Washington D.C.: IDA, January , pp.

– . Ibid, p. – . “The Democratic Republic of Congo Receives US$ Million To Improve Investment Climate,” World Bank News Release

No. //AFR, July . Ibid. World Bank, Transitional Support Strategy for the Democratic Republic of the Congo, Washington D.C.: IDA, January . Ibid, pp. – . Ibid, p.. Ibid. Ibid, p.. International Monetary Fund (), Sources of Growth in the Democratic Republic of the Congo: A Cointegration Approach.

Washington D.C.: IMF. Ibid, p.. “DRC: IMF approves US$ million for economic reform.” IRIN, July . “Belgium to double aid to DR Congo: officials” Agence France-Presse, October . République Démocratique du Congo - Communauté européenne, Stratégie de cooperation et programme indicatif, – ,

p.. USAID: DR Congo. [http://www.usaid.gov/policy/budget/cbj/afr/cd.html] (uploaded August ).



Global Witness’ previous publicationsalso available on our website: http://www.globalwitness.org

Same Old Story — A background study on natural resources in the Democratic Republicof Congo June 2004

Liberia: Back to the Future — What is the future of Liberia’s forests and its effects onregional peace? May 2004

Broken Vows — Exposing the ‘Loupe’ Holes in the Diamond Industry’s Efforts to Preventthe Trade in Conflict Diamonds March 2004

Time for Transparency — Coming clean on oil, mining and gas revenues March 2004

A Conflict of Interests — The Uncertain Future of Burma’s Forests October 2003

For a Few Dollars More — How Al Qaeda Moved into the Diamond Trade April 2003

The Usual Suspects — Liberia’s Weapons and Mercenaries in Côte d’Ivoire and SierraLeone — Why it’s still Possible, How it Works and How to Break the Trend March 2003

Forest Law Enforcement in Cameroon — 1st Summary Report of the IndependentObserver, May — November 2001 November 2002

Logging Off — How the Liberian Timber Industry Fuels Liberia’s Humanitarian Disasterand Threatens Sierra Leone in September 2002

Deforestation without limits — How the Cambodian government failed to tackle theuntouchablesJuly 2002

All the Presidents’ Men — the devastating story of oil and banking in Angola’s privatisedwar March 2002

Branching Out — Zimbabwe’s Resource Colonialism in Democratic Republic of CongoFebruary 2002

Can Controls Work? — A Review of the Angolan Diamond Control System December 2001

Taylor-made — The Pivotal Role of Liberia’s Forests and Flag of Convenience in RegionalConflict September 2001

The Credibility Gap — and the Need to Bridge ItIncreasing the pace of forestry reform May 2001

Review of the Sierra Leone Diamond Certification System and Proposals andRecommendations for the Kimberley Process for a Fully Integrated Certification System(FICS) April 2001

Conflict Diamonds — Possibilities for the Identification, Certification and Control ofDiamonds June 2000

Chainsaws Speak Louder Than Words May 2000

Timber Takeaway — Japanese Over-comsumption — the Forgotten Campaign March 2000

The Untouchables — Forest crimes and the concessionaires—can Cambodia afford tokeep them? December 1999

A Crude Awakening — The Role of the Oil and Banking Industries in Angola’s Civil Warand the Plundering of State Assets December 1999

Made in Vietnam — Cut in CambodiaHow the garden furniture trade is destroying rainforests April 1999

Crackdown or Pause — A Chance for Forestry Reform in Cambodia? February 1999

A Rough Trade — The Role of Companies and Governments in the Angolan ConflictDecember 1998

Going Places — Cambodia’s Future on the Move March 1998

Just Deserts for Cambodia — Deforestation & the Co-Prime Ministers’ Legacy to theCountry June 1997

A Tug of War — the Struggle to Protect Cambodia’s Forests March 1997

Cambodia,Where Money Grows on Trees — Continuing Abuses of Cambodia’s ForestPolicy October 1996

RGC Forest Policy & Practice — the Case for Positive Conditionality May 1996

Corruption,War & Forest Policy — the Unsustainable Exploitation of Cambodia’s ForestsFebruary 1996

Thai-Khmer Rouge Links & the Illegal Trade in Cambodia’s Timber July 1995

Forests, Famine & War — the Key to Cambodia’s Future March 1995

Global Witness investigates andexposes the role of natural resourceexploitation in funding conflict andcorruption. Using first-handdocumentary evidence from fieldinvestigations and undercoveroperations, we name and shamethose exploiting disorder and statefailure in the natural resource sector.We lobby at the highest levels for ajoined-up international approach tomanage natural resourcestransparently and equitably.We haveno political affiliation and are non-partisan everywhere we work. GlobalWitness was co-nominated for the2003 Nobel Peace Prize for our workon conflict diamonds.

AcknowledgementsThis report was realised withfinancial support from the UKDepartment for InternationalDevelopment (DfID).

Design by Dan Brown([email protected]).

All photos © Global Witness.Front cover photo:Artisanal mine,Kolwezi, DRC, May 2004.

Printed on 100% unbleachedrecycled paper.

© Global Witness Publishing Inc.2004

ISBN 0 9753582 5 1

Global Witness Publishing Inc.8th floor, 1120 19th Street NWWashington DC 20036

http://www.globalwitness.org/

Global Witness Publishing Inc.8th floor, 1120 19th Street NWWashington DC 20036

http://www.globalwitness.org/

© Global Witness Publishing Inc. 2004

ISBN 0 9753582 5 1