Monthly Archives: May 2015

Mongolians Protest Centerra Gold Mine


Africa: Exploiting Minerals, Exploiting Communities

18th May 2015


In Africa, and indeed in most developing countries across the globe, extractive industries have sparked much controversy and debate.

While these industries bring with them the promise of economic growth and social development, they have, in many cases, instead contributed to the devastation of the countries’ governance systems and economic structures, which has led to an increase in poverty in resource-rich areas.

This has seen a rise in human rights abuses, and at times irreversible damage to the environment. Indeed, that promise of economic and social transformation has rarely come to fruition.

History has seen many instances of the siphoning off of Africa’s riches, however, present-day culprits are not only from outside of the continent, but include unaccountable African officials and corporations.

Foreign organisations collaborate with illegal transnational networks that facilitate the illicit flows of extractives from impoverished countries. The result is the persistence of grinding poverty in areas that appear to be blessed with plentiful resources. This paradox is visible in Angola, the Democratic Republic of the Congo (DRC), Nigeria and a dozen other African nations.

As the United Nations observed in 2002, Western mining companies that deal in rare metals, gems and other resources have been deeply involved in the large-scale and systematic robbery of the DRC’s mineral wealth. These companies worked with a network of cross-border elites from neighbouring countries, including rival groups of politicians, military leaders and criminal elements. This facilitated a self-financing war economy centred on mineral exploitation.

That promise of economic and social transformation has rarely come to fruition

Worldwide, many states have financed their development through resource extraction. However, this has not worked well in Africa. By some estimates, the continent holds as much as 30% of global mineral reserves, and even higher percentages of the world’s gold, platinum, diamonds and manganese. New exploration continues to reveal ever-larger reserves, yet poverty and underdevelopment continue to deepen in resource-rich states.

According to the 2014 Human Development Report, 18 of the 20 countries ranked the lowest according to the Human Development Index (HDI) are in Africa, with Niger in the bottom position (187) followed by the DRC (at 186). This is the result of poor natural resources governance, corruption, illegal cross-border networks, illicit financial flows and money laundering – especially in the extractive industry.

It is estimated that Africa loses a total of US$38.4 billion a year through trade mispricing and US$25 billion through other illicit flows. This is more than what Africa receives through aid and foreign direct investment. A joint report by the African Development Bank and Global Financial Integrity found that a staggering 60-65% of this lost revenue disappears in commercial transactions by multinational companies.

There are strong correlations between the extractives industries, corruption and fragility

Corruption is arguably the most important driver of the misappropriation of natural resources, inefficient revenue flows and abysmally low levels of economic growth in these developing countries. Anti-corruption commissions have been created in several African states but have had limited, if any, success in curbing corruption.

The last decade has further seen a proliferation of initiatives aimed at improving the governance of the extractives sector. This includes the Extractive Industry Transparency Initiative (EITI); the Kimberly Process Certification Scheme in 2003; Publish What You Pay; the Revenue Watch Institute and many others. EITI, for example, has established a global standard whereby countries are required to fully disclose taxes, royalties and other fees their governments derive from oil, gas and mining. However, despite these global efforts, things have not changed much. While some countries have ratified initiatives such as the EITI, others, including Kenya, are yet to do so.

There are strong correlations between extractives industries, corruption and fragility. Kenya, for instance, has witnessed several examples of what can happen when corruption becomes so ingrained that a nation’s security forces are unable to effectively protect its people. This was seen in resource-rich areas like the Turkana-East Pokot border, where clashes claimed more than 54 lives, and the recent Garissa University College attack, in which 147 people died.

Governments should put transparency and accountability at the heart of their extraction policies

According to the Fragile States Index Rankings 2014, Kenya is placed 18th in the world out of 178 states. Number one on that list is neighbouring South Sudan, followed by Somalia. Yet in the Corruption Index, Kenya ranked position 145 out of 175 countries, South Sudan 171 with Somalia being the last at 174.

Local and international companies continue to declare huge profits while poverty levels continue to increase in most African countries.

This points not to exceptionally high business talent, but more likely to exceptionally low corporate ethics. Unreasonable resource extraction contracts and payments made to public authorities and officials easily go under the radar. Intra-company transactions are also often unsupervised and can become a vehicle for tax avoidance.

As a starting point, African governments should adopt national strategies that clearly set the terms for the development of their natural resources, and which are aimed at poverty reduction and inclusive growth.

Natural resources must be managed efficiently and the revenues shared fairly, and strategies must focus on projects that can generate more jobs through links with the local economy, which should include human capital development.

Processing natural resources prior to export would further bring more value and benefits to the poor. Investment in the extractive sector should therefore be a priority for governments to ensure that there is sufficient local skills and capital to extract, process and export these resources. Building on the Africa Mining Vision, governments should put transparency and accountability at the heart of their extraction policies.

Sebastian Gatimu, Researcher, Governance, Crime and Justice Division, ISS Nairobi


Zimbabwe: Govt Diamond Consolidation Plan in Limbo


Canadian mining company spied on opponents and activists in Brazil

Mining company Kinross’s ambitions to create most productive gold mine in Brazil plagued by health risks and threats to activists and opponents

Jalviana Morais da Costa, 86, is a former garimpeira, or gold hunter in the river banks in Paracatu, Brazil

Juliana Morais da Costa, 86, is a former garimpeira, or gold hunter in the river banks in Paracatu, Brazil Photograph: Luis de las Alas



Mining sector decries lack of federal consultation with First Nations on new resource reporting rules

By Mackenzie Scrimshaw | May 2, 2015 4:12

The Mining Association of Canada (MAC) is seeking assurance from the Department of Natural Resources that it’s adequately consulting aboriginals about the government’s new transparency act for the extractive sector, the head of the association says.

“I think we’re doing more of the consulting than they are,” president and CEO Pierre Gratton said. “I’m not sure what they’re doing.”

The association is particularly concerned about a provision that will require companies to publicly report the resource revenues they pay to aboriginal governments.

The act requires companies to report a breakdown of their payments to domestic and foreign governments for any cumulative amounts greater than $100,000. Although it received royal assent in December 2014, the act hasn’t yet come into force.

MAC reiterated this concern Thursday when the Extractive Sector Transparency Measures Act (ESTMA) working group convened for its second meeting to discuss how companies will satisfy their obligations for reporting payments.

“Consulting with First Nations and the Inuit and the Metis to make sure that they know what this legislation is, they understand what is it is and they see the merits of it…is, for us, very important,” Gratton said in an interview.

The Department of Natural Resources hosted Thursday’s meeting.

In an e-mail, department spokesperson Jacinthe Perras said the working group exists “to seek views and input on the development of implementation tools related to the form and manner for reporting entities to meet obligations under the Act, including a reporting template.

“The new reporting system will increase transparency while ensuring that businesses are not overly burdened by aligning with emerging global standards.”

The MAC’s Gratton raised the issue at a Canada 2020 symposium Wednesday, posing a question to a panel on aboriginal peoples and economic development. The panelists — finance and utility executives as well as aboriginal advocates — seemed unaware of the new reporting rules. Then, Clarence Louis, chief of B.C.’s Osoyoos Indian Band, responded — after saying he wasn’t certain what Gratton was talking about.

“Our corporate information, our self-generated income, is none of the federal’s or provincial’s or the taxpayers’ business,” Louis is quoted in an iPolitics article.

Gratton reflected on this incident the following afternoon.

“Part of why I asked the question was to see if some leaders in the indigenous community in Canada actually knew about this and it turned out they didn’t, which sort of reinforces my concern that the government’s going ahead with this without really talking to the people that are going to be affected by it,” he said.

This provision “could be a good thing,” but it’s “very important” the government reassures aboriginals “that this won’t lead to a clawback or somehow disadvantaging communities that have these agreements.

“We’ve got no indication any of that has been forthcoming.”

Publish What You Pay (PWYP) Canada — also part of the working group — takes a position somewhat similar to MAC’s.

“NRCan should continue to consult as widely as possible with First Nations on that aspect of the law,” acting director Kady Seguin said.

“Wherever there is a governance role that’s being played, transparency can help ensure that there is some sort of accountability.”

As for whether this includes aboriginal governments, Seguin said “any form of governance role we feel is important to have an element of transparency.”

iPolitics asked Seguin if this provision should carry even it’s met by opposition.

“I think that’s where we feel that the consultation process from NRCan is very important,” she said, adding the forthcoming reporting framework could “possibly resolve” potential concerns.

Like MAC, PWYP-Canada is one of the parties that initially pushed for this legislation.

“We lobbied for it,” Gratton said of MAC, “Though we didn’t for including aboriginal peoples.

“We deliberately excluded indigenous governments from our work because we knew it would require extensive consultation and we felt we had neither the time nor the resources to do that. And it could be done at a later date,” he said. “But then the Harper government decided to include aboriginal governments.”

MAC became more concerned after it met with aboriginals and listened to their concerns, Gratton said.

He says he thinks these concerns come from “a distrust of the federal government’s intentions and whether this would lead to a next step, which would be to claw back funds. So, if it’s disclosed that they get ‘x’ amount from industry, then they’d get that much less from government, leaving them no further ahead.

“And that would be a problem for us, too, because obviously, then what’s the incentive for sitting down and negotiating with us if they’re going to end up no further ahead financially?”
Accordingly, MAC urged Ottawa to consult aboriginals.

“Good relations with First Nations are absolutely critical to our business and the last thing we need is for governments to do something that in some way undermines that,” he said.

After all, the two parties have a significant relationship, so “we can’t afford to have something like this divide us.”

With files from James Munson.