Monthly Archives: February 2018

Kenya: UK Company to Survey Sh161 Billion Kakamega Gold

By Victor Juma

19th February 2018

In Summary

– The announcement is a signal that the multinational could soon join Goldplat which mines the commodity in Migori.

– At a total of 1.1 million ounces, the recoverable deposits are worth an estimated Sh160.8 billion based on the price of Sh137,430 per ounce on Friday.

– Increased gold production will diversify the country’s exports, help to fund government expenditure and shore up the local currency from dollar receipts.

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Acacia Mining, a British company that has been exploring for gold in Kakamega, says it has started a survey to establish commercial viability of the deposits estimated at 1.1 million ounces of the precious metal.

The announcement is a signal that the multinational could soon join Goldplat which mines the commodity in Migori.

“The updated inferred resource estimate completed for the year-end returned … 1.044 million ounces at Isulu and for Bushiangala 126,600 ounces,” Acacia said of its Kakamega sites in a trading update.

“A technical study to determine mineability of these deposits was commenced in Q4 2017.”

At a total of 1.1 million ounces, the recoverable deposits are worth an estimated Sh160.8 billion based on the price of Sh137,430 per ounce on Friday.

The study comes after Acacia intensified exploration activities in western Kenya, which cost it $12.2 million (Sh1.2 billion) in the year ended December, up from $10.5 million (Sh1 billion) a year earlier.

The recent rally in gold prices is expected to encourage production around the world. The current price of about $1,360 per ounce, a 20-month high, represents a gain of 20 per cent from lows of $1,133 in December 2016.

Increased gold production will diversify the country’s exports, help to fund government expenditure and shore up the local currency from dollar receipts.

Acacia, for instance, paid $143 million (Sh14.4 billion) in royalties and taxes to the Tanzania government where it has some of its largest operations.

Gold exports from Kenya have, however, been sluggish so far. Goldplat’s local subsidiary Kilimapesa Gold, for instance, sold about Sh374 million worth of the precious metal in the six months ended December — boosted by increased production at its Migori plant.

Kilimapesa’s output rose 2.2 times to 2,681 ounces in the period compared to 1,190 ounces a year earlier, the multinational disclosed in regulatory filings.

The company’s gold sales rose 2.4 times to 2,720 ounces from 1,093 ounces, placing the value of the commodity sold in the review period at Sh374 million.

The royalty rate the company pays to the Kenyan government was not immediately clear but miners of other commodities are paying royalties in the low single digits.

SOURCE: https://www.nation.co.ke/business/UK-company-to-survey-Sh161bn-Kakamega-gold/996-4310528-uheggp/index.html

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    See also:

Tanzania: Why ‘Mother’ Barrick Gold Needs to Be Rid of ‘Daughter’ Acacia Mining?

London-listed Acacia Mining accused of “sophisticated tax evasion” in Tanzania

Mining firms sue Kenya over permits

By James Kariuki
7th February 2018

IN SUMMARY

– The government said Cortec’s 21-year licence was unprocedurally issued and was against regulations.

– Dr Kiptoo said the cancellations were inspired by the need to safeguard the environment.

Global mining firms are demanding Sh334 billion from the government as compensation for cancelling their licences.

About 10 different cases have been brought to the attention of the International Centre for Settlement of Investments Disputes (ICSID) based in Dubai regarding the revocation of their exploration permits.

Trade Principal Secretary Chris Kiptoo said Kenya is actively involved in the cases and that all agreements with global firms are under review.

“There are ongoing cases at ICSID with claims amounting to Sh334bn. We have seen how vague language in investment treaties can result in massive payouts.

“Kenya has developed a model investment treaty and an investment agreements policy with clear rules and responsibilities,” he said at the 11th Annual Forum of Developing Country Investment Negotiators in Nairobi.

INVEST

One of the disputes involves a Sh200 billion claim by Cortec Kenya and a Sh61.8 billion claim by WalAm Energy Inc.

The others have not been posted on the ICSID’s website.

However, other firms that have lost their licences include Sirmonet Mineral Kenya, Yongtai Mining Company, Balham Trading Company, Ololunga Mining and Industrials as well as AQ Kenya Gold Ltd.

Cortec’s prospecting licence for Niobium and rare earth at Mrima Hills in Kwale was revoked months after it obtained a National Environmental Management Authority permit and announced a Sh44 billion investment in the venture.

CONTRACT BREACH

The government said Cortec’s 21-year licence was unprocedurally issued and was against regulations banning the exploration of minerals in a gazetted forest.

WalAm’s 30-year licence to explore for geothermal suffered a similar fate in 2012 when the Government accused it of breaching contract terms with regard to the construction of geothermal plants.

Dr Kiptoo sought to justify the licence cancellations, saying they were inspired by the need to safeguard the environment, public health, avert taxation disputes and appease communities identified for eviction to pave the way for the mining projects.

SOURCE: https://www.google.com/amp/s/www.nation.co.ke/news/Mining-firms-sue-Kenya-over-permits/1056-4295772-view-asAMP-mvnjrb/index.html

Africa: Mining Legislation in Africa Gone Back to Colonial Days

PRESS RELEASE
5th February 2018

Mining in Africa has reverted to the pre-independence days of colonialism in which legal regimes exist primarily to facilitate profit for mine owners, according to Dr Yao Graham, executive director of Third World Network in Ghana.

Dr Graham was speaking at the Alternative Mining Indaba, a platform for the voices of civil society and people impacted and affected by mining, in Cape Town this morning.

He pointed out that the majority of African countries opted to nationalise mineral resources at independence, a choice which vested ownership of mines in the state on behalf of the people of that country.

“Legal regimes in Africa, however, today exist primarily to facilitate the profits of mining. Laws make corporate welfare possible,” Dr Graham noted.

Decisions about how minerals are exploited should be based on how best the interests of people – those living as well as future generations – were advanced. Any policy framework should have at its heart the notion of sustainability and inter-generational equity.

All elements of community struggle can be regrouped under the concept of collective ownership of mines, Dr Graham said.

He added that it was a huge paradox that communities campaigned against this situation in fragments: “We talk about communities sharing the benefits, managing environmental benefits, workers enjoying better benefits – but these are all fragments. We have lost awareness of most important legal provision – public ownership of mineral regimes on this continent. We have not tried sufficiently to interrogate what this should mean.”

Dr Graham said that it was flawed logic to argue that the best way to share minerals is for multinationals to manage them and then share some of their profits with governments for people.

“Our ownership of minerals should mean that communities make much bigger demands for accountability. Currently, our laws are very defective in accountability, with too much left at the discretion of the authorities,” he added.

Current practice had led to a pattern of unsustainable exploitation, whereas value needed to be added by transforming minerals into other assets, so that less minerals are used, leaving sufficient for future generations.

Earlier in the morning, delegates heard about a community in Botswana that has been left bereft by the closure of a mine in 2015.

Keineetse Kealeboga Maswabi of the Mmadinare community in Selebe Phikwe told the conference that when people in the community were ordered to move in the early 1970s to make way for a mine, they welcomed it and did so without demanding any compensation.

Although services in their new location improved, they were not allocated land to own. Neither did the mine carry out an environmental assessment or establish a sustainability fund.

After the mine closed in 2015, unemployment rose and affected communities found that they had not been given certificates of rights to plough land. This certificate was now required in order for farmers to access government assistance schemes.

“The land board now treats them as squatters,” Maswabi said.

The Alternative Mining Indaba presents an alternative voice – the voice of communities – to that of corporates, governments, investors and financiers who meet yearly during the African Mining Indaba. Through effective advocacy, the AMI aims to enhance transparency and accountability in the governance of natural resources and lead to a continent that extracts minerals sustainably and distributes natural resources revenues equitably.

The objectives of the AMI are to:

– Provide a platform to empower communities affected and impacted by the extractives industries to reclaim their rights through the formulation of alternatives;
– Advocate for transparent, equitable and just extractives practices in the management, governance and distribution of national resources through policy and legislative reform;
– Create meaningful decision-making processes for communities, advocating for just national and regional policies and corporate practices;
– Provide space for engagement for the inter faith communities, governments, CSOs and private sector to share information and experiences; and
– Provide space for the inter faith community to lead and accompany affected and impacted communities.

The AMI is organised by the Economic Justice Network of the Fellowship of Christian Councils in Southern Africa (EJN of FOCCISA) in collaboration with:

Bench Marks Foundation

Christian Council of Mozambique

IANRA (International Alliance on Natural Resources in Africa)

Tax Justice Network Africa

Zimbabwe Environmental Lawyers Association (ZELA)
Publish What You Pay

Norwegian Church Aid
Mozambique Christian Council

Diakonia Zambia

Zimbabwe Council of Churches

Issued by Quo Vadis Communications on behalf of the Alternative Mining Indaba (AMI)

SOURCE: http://allafrica.com/stories/201802070321.html

New Evidence of Africa’s Systematic Looting, From an Increasingly Schizophrenic World Bank

Patrick Bond

A brand new World Bank report, The Changing Wealth of Nations 2018, offers evidence of how much poorer Africa is becoming thanks to rampant minerals, oil and gas extraction. Yet Bank policies and practices remain oriented to enforcing foreign loan repayments and transnational corporate (TNC) profit repatriation, thus maintaining the looting.

Central to its “natural capital accounting,” the Bank uses an “Adjusted Net Savings” (ANS) measure for changes in economic, ecological and educational wealth. This is surely preferable to “Gross National Income” (GNI, a minor variant of Gross Domestic Product), which fails to consider depletion of non-renewable natural resources and pollution (not to mention unpaid women’s and community work).

In its latest world survey (with 1990-2015 data), the Bank concludes that Sub-Saharan Africa loses roughly $100 billion of ANS annually because it is “the only region with periods of negative levels – averaging negative 3 percent of GNI over the past decade – suggesting that its development policies are not yet sufficiently promoting sustainable economic growth…Clearly, natural resource depletion is one of the key drivers of negative ANS in the region.”

The Bank asks, “How does Sub-Saharan Africa compare to other regions? Not favorably.” Contrary to pernicious “Africa Rising” mythology, the ANS decline for Sub-Saharan Africa was worst from 2001-09 and 2013-15.

Other regions of the world scored strongly positive ANS increases, in the 5-25 percent range. Richer, resource-intensive countries such as Australia, Canada and Norway have positive ANS resource outcomes partly because their TNCs return profits to home-based shareholders.

Africa’s smash-and-grab ‘development policies’ aiming to attract Foreign Direct Investment have, even the Bank suggests, now become counter-productive: “Especially for resource-rich countries, the depletion of natural resources is often not compensated for by other investments. The warnings provided by negative ANS in many countries and in the region as a whole should not be ignored.”

Such warnings – including the 2012 Gaborone Declaration by ten African governments – are indeed being mainly ignored, and for a simple reason, the Bank hints: “The [ANS] measure remains very important, especially in resource-rich countries. It helps in advocating for investments toward diversification to promote exports and sectoral growth outside the resource sector.”

Africa desperately needs diversification, but governments of resource-cursed countries are instead excessively influenced by TNCs intent on extraction. Even within the Bank such bias is evident, as the case of Zambia shows.

Zambia’s missing copper

Last year, the Bank appointed Zambia the main pilot country study within the project “Wealth Accounting and Valuation of Ecosystem Services” (WAVES). Zambian forests, wetlands, farmland and water resources were considered the “priority accounts.” Conspicuously missing was copper, the main component of Zambia’s natural wealth.

Was copper neglected in WAVES because such accounting would show a substantial net loss? One Bank estimate of copper’s annual contribution to Zambia’s declining mineral wealth a decade ago put it at a huge 19.8 percent of GNI. Were such data widely discussed, it might compel a rethink in Zambia’s desperate privatisation of mines and export of unprocessed ore.

Naturally most World Bank staff work not in Zambians’ interests, but on behalf of other international banks and TNCs. This compels them to squeeze Zambia’s scarce foreign exchange: first, so TNCs can take profits home, and second, so Lusaka repays loans no matter how unaffordable and no matter how corrupt the borrowing government. Repayment is now especially difficult given that the kwacha declined from a level around 1 to the US$ in the 1990s to around 5 to the US$ from 2003-15, to the 9-12/US$ range since.

From 2002-08, the Zambian government led by Levy Mwanamasa (1948-2008) came under severe pressure from the World Bank to sell the most valuable state assets to repay older loans, including those taken out by his corrupt predecessor, Frederick Chiluba (1943-2011). That debt should have been repudiated and cancelled.

Even then, when selling Africa’s largest copper mine at Konkola, Mwanamasa should have ensured at least $400 million went into Zambia’s treasury. But the buyer, Vedanta chief executive Anil Agarwal, laughed wickedly when bragging to a 2014 investment conference in Bangalore, India, that he tricked Mwanawasa into accepting only $25 million. “It’s been nine years and since then every year it is giving us a minimum of $500 million to $1 billion.” (Agarwal is now in the process of buying Anglo American’s South African mining assets, having purchased 20 percent of the firm in 2016-17.)

Against the looting of Africa: top-down or bottom-up?

Zambia is not alone. The Bank reports that from 1990-2015 many African countries suffered massive ANS shrinkage (a process termed ‘dissaving’ as a polite substitute for ‘looting’), including Angola (68 percent), the Republic of the Congo (49 percent) and Equatorial Guinea (39 percent). As commodity prices peaked in the 2007-14 super-cycle period, resource depletion was the major factor for Africa’s wealth shrinkage.

What can be done? There are really only two ways to address TNC capture of African wealth: bottom-up through direct action blocking extraction, or top-down through reforms.

The futility of the latter is exemplified by the African Union’s 2009 Alternative Mining Vision (AMV). It proclaims (without any reference to natural resource depletion capital accounting), “arguably the most important vehicle for building local capital are the foreign resource investors – TNCs – who have the requisite capital, skills and expertise”

South African activist Chris Rutledge opposed this neoliberal logic last year in an ActionAid report, The AMV: Are we repackaging a colonial paradigm?: “By ramping up models of maximum extraction, the AMV once again stands in direct opposition to our own priorities to ensure resilient livelihoods and securing climate justice. It is downright opposed to any type of Free Prior and Informed Consent. And it does not address the structural causes of structural violence experienced by women, girls and affected communities.”

The first strategy – community-based opposition – could be far more effective. According to a pamphlet prepared by Johannesburg faith-based mining watchdog Bench Marks Foundation for the civil society Alternative Mining Indaba in Cape Town this week, “Intractable conflicts of interest prevail with ongoing interruptions to mining operations. Resistance to mining operations is steadily on the increase along with the associated conflict.”

The Alternative Indaba’s challenge is to embrace this resistance, not retreat into reformist NGO silos – and not continue to ignore mining’s adverse impact on energy security, climate and resource depletion as it often has.

Indeed, three years ago, Anglo American CEO Mark Cutifani conceded that due to community protests, “There’s something like $25 billion worth of projects tied up or stopped,” a stunning feat given that all new mines across the world were valued that year at $80 billion. (A map of these can be found at the Environmental Justice Atlas, http://ejatlas.org.)

Meanwhile, the World Bank’s lending staffers (distinct from the Changing Wealth of Nations researchers) are still subject to protests over mining here. Women living in the Marikana slums, organised as Sikhala Sonke, remain disgusted by the $150 million financing commitment made to Lonmin, which from 2007-12 the Bank bizarrely considered its ‘best case’ for community investment – until the police massacre of 34 workers there during a wildcat strike. (Bank president Jim Yong Kim even visited Johannesburg two weeks after that, but didn’t dare mention much less visit his institution’s ‘best case’ mining stake.)

The Bank’s other notorious South Africa operations included generous credits to the apartheid regime, relentless promotion of neoliberal ideology after 1990, a corrupt $3.75 billion Eskom loan in 2010 (the largest-ever Bank project loan, which still funds the most polluting coal-fired power plant under construction anywhere in the world), and ongoing lead-shareholder investments in the CPS-Net1 rip-offs of South Africa’s 11 million poorest citizens who receive social grants.

To top it all off, in spite of the embarrassing revelations about TNC exploitation unmistakeable in The Changing Wealth of Nations 2018, the Bank is a financial sponsor of this week’s African Mining Indaba at the Cape Town convention centre. Each year, it’s the place to break bread and sip fine Stellenbosch wines (though perhaps not water in this climate-catastrophic city) with the world’s most aggressive mining bosses and allied African political elites, conferring jovially about how to amplify the looting.

SOURCE: https://www.counterpunch.org/2018/02/05/new-evidence-of-africas-systematic-looting-from-an-increasingly-schizophrenic-world-bank/