DR Congo

DRC: Digging in corruption - Fraud, abuse and exploitation in Katanga's copper and cobalt mines

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I. Summary

The province of Katanga, in the south-east of the Democratic Republic of Congo (DRC), is one of the world's richest copper and cobalt producing areas. Yet the people of Katanga, as in the rest of the DRC, remain extremely poor, and the state has failed to provide most of the province with basic infrastructure and public services, especially in rural areas.

The mining sector in Katanga is characterised by widespread corruption and fraud at all levels. A significant proportion of the copper and cobalt is mined informally and exported illicitly. Government officials are actively colluding with trading companies in circumventing control procedures and the payment of taxes. The profits are serving to line the pockets of a small but powerful elite - politicians and businessmen who are exploiting the local population and subverting natural riches for their own private ends. Large quantities of valuable minerals are leaving the country undeclared, representing a huge loss for the Congolese economy and a wasted opportunity for alleviating poverty and enhancing development. A local source estimated that at the end of 2005, at least three quarters of the minerals exported from Katanga were leaving illicitly.1

The mining industry in Katanga has two parallel sectors: the formal sector, where foreign and multinational companies use industrial mining methods, and the informal or "artisanal" sector, where tens of thousands of individuals dig for minerals independently, in a completely unregulated environment. Most of the products mined artisanally are exported raw, usually in the form of heterogenite, which contains copper, cobalt and a range of other minerals, or, increasingly, as malachite, an important ore of copper. This means that even when these exports are declared, the DRC is losing out on the higher prices it could obtain if it processed the minerals before exporting and selling them. Instead, processing takes place in Zambia, South Africa, or in the final country of destination - most often China or other Asian countries - providing considerable economic gain for those countries but little added value for the DRC.

This report updates a Global Witness report entitled "Rush and Ruin: The Devastating Mineral Trade in Southern Katanga", published in September 2004. The present report is based primarily on field research carried out by Global Witness in Katanga in November and December 2005. Global Witness researchers interviewed a wide range of people in and around the provincial capital Lubumbashi; in the mining areas of Likasi and Kolwezi; at Kasumbalesa (the border post between DRC and Zambia); in the Congolese capital Kinshasa; and in Zambia, DRC's southeastern neighour through which the minerals are exported. Those interviewed included miners, middlemen known as négociants, transporters, representatives of mining and trading companies, government and security force officials, trade unionists, members of non-governmental organisationsKatanga in 2005, but has noted a number of worrying developments concerning large mining contracts drawn up under the transitional government of the DRC. This report outlines concerns about some of these contracts signed since 2004. These relate primarily to complaints expressed by people in Katanga about the imbalanced nature of these contracts which ensure disproportionately large shares of the profits for foreign or multinational companies and a negligible amount for the state mining company Gécamines. Local perceptions of imbalance and unfairness have been reinforced by the lack of transparency surrounding these contracts and the absence of public debate and consultation. This situation has created deep resentment among the population in Katanga who see potentially vast profits from these mining operations flowing out of the country, with little or no change in their standards of living. The report also highlights the involvement of high level political actors in the negotiation of these contracts and in syphoning off the profits from the mineral trade in Katanga - the heartland of President Joseph Kabila. The situation in Katanga has implications far beyond the province. Unlike other regions of the country, the southern part of Katanga, where the copper and cobalt mines are located, was not the scene of fierce fighting during the war in the DRC and has remained under government control. Despite this, extensive corruption, abuse and illicit practices have persisted in the mining sector, and the relative stability in the area has brought none of the expected benefits of the natural wealth. Katanga should serve as a stark warning for the future of mining areas in less stable parts of the DRC. If the government has been unable or unwilling to reform the management of natural resources in an area over which it has retained firm control, the chances of instituting such reforms in conflict-stricken areas of the country may be even more remote. The Congolese government and donor governments should take prompt action to reverse this situation in order to prevent a further slide into chaos. Historic elections which are due to take place in the DRC in July 2006 represent a unique opportunity for fundamental reform. This report contains recommendations for action which should be priorities for the new government. If these reforms are embarked upon without delay, they could have long-lasting effects for the development of the country as a whole and for the revitalisation of its economy. They would also mark an important step in putting an end to decades of corruption and impunity in the mining sector and ensuring that the Congolese population finally starts to benefit from the natural wealth of their country.and other members of civil society. Further research was carried out in Zambia and South Africa in January and February 2006.

The main focus of this report is on the artisanal mining sector. The exact number of artisanal miners in Katanga is not known - there are no accurate records or statistics - but at the end of 2005, their number was estimated at around 150,000 or more.2 This report documents the ruthless exploitation of artisanal miners by government and security force officials and trading companies. At local and provincial levels, officials from various government departments, including the ministry of mines, the police, customs, intelligence services and local government offices, are all extorting large sums of money from miners in a system of institutionalised corruption. The association claiming to represent artisanal miners, Exploitants miniers artisanaux du Katanga (EMAK), is also extorting money from miners instead of protecting their interests. Négociants are financially exploited by the trading companies to whom they sell the minerals and are forced to accept prices which do not correspond to the real value of the products.

In addition to their financial vulnerability, artisanal miners in Katanga are working in harsh conditions, without protective clothing, equipment or training. Scores of miners die every year in preventable accidents, most commonly when they are trapped by collapsing mineshafts. No one is investigating or taking responsibility for these deaths or for the welfare of artisanal miners. Yet miners continue taking these risks, because there are so few alternative sources of livelihood for them.

The formal mining sector in Katanga has not been free of corruption, exploitation and abuse either. Global Witness did not carry out in-depth research into the formal sector in Katanga in 2005, but has noted a number of worrying developments concerning large mining contracts drawn up under the transitional government of the DRC. This report outlines concerns about some of these contracts signed since 2004. These relate primarily to complaints expressed by people in Katanga about the imbalanced nature of these contracts which ensure disproportionately large shares of the profits for foreign or multinational companies and a negligible amount for the state mining company Gécamines. Local perceptions of imbalance and unfairness have been reinforced by the lack of transparency surrounding these contracts and the absence of public debate and consultation. This situation has created deep resentment among the population in Katanga who see potentially vast profits from these mining operations flowing out of the country, with little or no change in their standards of living. The report also highlights the involvement of high level political actors in the negotiation of these contracts and in syphoning off the profits from the mineral trade in Katanga - the heartland of President Joseph Kabila.

The situation in Katanga has implications far beyond the province. Unlike other regions of the country, the southern part of Katanga, where the copper and cobalt mines are located, was not the scene of fierce fighting during the war in the DRC and has remained under government control. Despite this, extensive corruption, abuse and illicit practices have persisted in the mining sector, and the relative stability in the area has brought none of the expected benefits of the natural wealth. Katanga should serve as a stark warning for the future of mining areas in less stable parts of the DRC. If the government has been unable or unwilling to reform the management of natural resources in an area over which it has retained firm control, the chances of instituting such reforms in conflict-stricken areas of the country may be even more remote. The Congolese government and donor governments should take prompt action to reverse this situation in order to prevent a further slide into chaos.

Historic elections which are due to take place in the DRC in July 2006 represent a unique opportunity for fundamental reform. This report contains recommendations for action which should be priorities for the new government. If these reforms are embarked upon without delay, they could have long-lasting effects for the development of the country as a whole and for the revitalisation of its economy. They would also mark an important step in putting an end to decades of corruption and impunity in the mining sector and ensuring that the Congolese population finally starts to benefit from the natural wealth of their country.

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