Tag Archives: resource curse

The Jihadist Mafia: Controlling the Gold of Sahel

Burkina Faso is struggling to contain a fast-growing jihadist insurgency. Along with Mali and Niger, it has become the main front line against terrorists in the Sahel, a dry strip of land that runs along the edge of the Sahara. This year alone the conflict has killed more than 1,600 people and forced half a million from their homes in Burkina Faso….A worrying new trend is a battle by jihadists and other armed groups to take control of the region’s gold rush.

Although gold has long been mined in the region…it has boomed in recent years with the discovery of shallow deposits that stretch from Sudan to Mauritania. International mining companies have invested as much as $5bn in west African production over the past decade, but the rush has also lured hundreds of thousands of unsophisticated “artisanal” miners. The International Crisis Group (ICG), an NGO, reckons that more than 2m people are involved in small-scale mining in Burkina Faso, Mali and Niger. In total they dig up 40-95 tonnes of gold a year, worth some $1.9bn-4.5bn.

Artisanal Mining’s Claustrophobic Conditions

This rush—in a region where states are already weak and unable to provide security—has sucked in a variety of armed groups and jihadists, including the likes of Ansar Dine and Islamic State in the Greater Sahara…The jihadists probably have direct control of fewer than ten mines…But they have influence over many more. In some areas artisanal miners are forced to pay “taxes” to the jihadists. In others, such as Burkina Faso’s Soum province, the miners hire jihadists to provide security… Other armed groups such as ethnic militias are also in on the bonanza and collect cash to guard mines. International mining firms may also be funding the jihadists by paying ransoms for abducted employees or “protection” money to keep mining, according to a study published by the OECD, a club of mostly rich countries.

For the moment much of Burkina Faso’s artisanal production is sneaked into Togo… Togo does not produce much gold domestically but it sent more than 12 tonnes of gold to Dubai in 2016. Gold is also taken out of the Sahel through major airports in hand luggage. 

The resource curse: How west Africa’s gold rush is funding jihadists, Economist, Nov. 16, 2019

Free-For-All: Gold Mining and the Polluted Rivers of Central African Republic

Four Chinese-run gold mines should be closed in the Central African Republic because of pollution threatening public health, a parliamentary panel said in a report published on July 14, 2019.  “Ecological disaster,” “polluted river,” “public health threatened,” were some of the phrases used in the report.  “Gold mining by the Chinese firms at Bozoum is not profitable for the state and harmful to the population and the environment,” the commission found after its investigation into mining in the northern town.  “The nature of the ecological disaster discovered onsite justifies the immediate, unconditional halt to these activities,” the report found.

Members of the commission spent four days in Bozoum a month ago in response to “multiple complaints from the population.”  There, they found a badly polluted River Ouham, shorn of several aquatic species following the excavation of its riverbed.  They discovered that a rising death rate in fishing villages as well as shrinking access to clean drinking water.

The investigators also voiced fears that the country’s “resources are being squandered with the complicity of certain ministry of mines officials.”  The CAR is rich in natural resources but riven by conflict which has forced around one in four of its 4.5 million population to flee their homes. Under those circumstances, exploitation of the country’s natural resources is difficult to monitor effectively given that the state only has partial control of its own territory.

Central African Republic Report Cites Ecological Disaster in Calling for Closing of 4 Chinese Gold MInes, Agence France Presse,  July 14, 2019

Another Resource Curse: Amber Fossils

In a bustling market in Tengchong, China, vendors hawk globs of amber, some the size of cantaloupes, with astonishingly pristine fossils inside. Mined across the border in Myanmar, the amber has yielded extraordinary finds—the hatchlings of primitive birds, the feathered tail of a dinosaur, frogs, snakes, a host of insects, and more—allowing scientists to build a detailed chronicle of life in a tropical forest 100 million years ago. 

In 2018, scientists reported 321 new species immaculately preserved in Burmese amber, bringing the cumulative total to 1195. One team recently argued that Burmese amber may boast more biodiversity than any other fossil deposit from the entire reign of the dinosaurs. “You think this can’t even be possible,” says Philip Currie, a paleontologist at the University of Alberta in Edmonton, Canada, “but it’s happening.”

But as much as Burmese amber is a scientist’s dream, it’s also an ethical minefield. The fossils come from conflict-ridden Kachin state in Myanmar… In Kachin, rival political factions compete for the profit yielded by amber and other natural resources. The amber comes from mines near Tanai township in Kachin, where for decades Myanmar’s army and the local Kachin Independence Army, an ethnic insurgency, have battled over control of lucrative resources such as jade, timber, and, most recently, amber. “These commodities are fueling the conflict,” says Paul Donowitz, the Washington, D.C.–based campaign leader for Myanmar at Global Witness, a nongovernmental organization. “They are providing revenue for arms and conflict actors, and the government is launching attacks and killing people and committing human rights abuses to cut off those resources.”

 Visitors to the mines describe a lush terrain transformed into barren hillsides. Tents cover claustrophobic holes up to 100 meters deep but only wide enough for skinny workers, who say they are responsible for their own medical care after accidents. The miners dig down and, when they hit layers of amber, tunnel horizontally with hand tools to dig it out. They sort finds at night, to avoid publicizing valuable discoveries. Amber with fossil inclusions is the most precious, proof after weeks of uncertainty that a mine will be profitable. Reached by phone through an interpreter, miners say both warring sides demand bribes for the rights to an area and equipment—and then tax 10% of the profit.

The amber is then smuggled into China and sold to the highest bidder. Yet if scientists don’t engage in the amber trade, specimens are lost to science.

Exerpts from Joshua Sokol, Troubled Treasure, Science, May 24, 2019

The Power Plays in Africa

As the overthrow of despot Robert Mugabe entered a stalemate on November 17,  2017, eyes turned to China — Zimbabwe’s largest foreign investor and a key ally — amid speculation over its role in the military coup.Source in Harare believe the Zimbabwean conflict within the ruling party Zanu PF is involving two rival camps has direct links to China and Russia with both countries trying to control and protect their own economic interests.

The army chief General Constantino Chiwenga, visited Beijing l — just days before tanks rolled into the streets of Harare. President Mugabe has been been hostile to the Chinese in recent years accusing them of plundering the countries diamonds worth $15 billion.  On October 2017 First Lady Grace Mugabe was in Russia where she represented her 93-year-old husband at a function where he was honoured with some accolade in Russia at the World Federation of Democratic Youth (WFDY) in Moscow.

“It is a BRICS internal rivalry with both Russia and South Africa on one side trying to protect their economic interests and China on the other side,” a regional think-tank in London said on November 17, 2017… Russia has been investing in several projects in southern African nations, for example, the ALROSA group of diamond mining companies is engaged in several projects in Zimbabwe, while mining and steelmaking company Evraz and Severstal steel and steel-related mining company conduct their business in South Africa.

Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, have created a trading bloc similar to OPEC to control the flow of exports according to Bloomberg.

Zimbabwe, Canada, and the U.S. are among other major platinum group metals producers.

Russian and South African officials signed a memorandum of understanding today to cooperate in the industry.South Africa mines about 70 percent of the world’s platinum, while Russia leads in palladium, a platinum group metal used in autocatalysts, with about 40% of output, according to a 2012 report by Johnson Matthey Plc.

According to the Chamber of Mines of Zimbabwe (CMZ) and geologists, Zimbabwe has far bigger platinum reserves than Russia. The country currently has the second known largest platinum reserves after South Africa. Experts say underfunding and limited exploration has over the years stifled growth of the mining sector.

The Zimbabwe chamber is on record saying it seeks to increase production to the targeted 500 000 ounces per annum requires the setting up of base and precious metal smelters and refineries, investment of $2,8 billion in mines, $2 billion in processing plants and between $200 and $500 million to ensure adequate power supply. Already, the country’s major platinum miners – Zimplats, Unki and Mimosa who are currently processing the metal in neighbouring South Africa – have undertaken to construct the refinery….

Miles Blessing Tendi, a lecturer in African history and politics at the University of Oxford, says there is no way to be certain if China knew about Mugabe’s fate but believes China’s respect for sovereignty would make their involvement uncharacteristic.

Excerpt, It gets ugly as Russia and South Africa gang-up against China over Zimbabwe coup, http://www.thezimbabwemail.com/, November 17, 2017

The Oil Curse – South Sudan

South Sudan’s oil fields have become a battleground in the struggle for power in Africa’s newest nation, encouraging Western nations and regional mediators to consider international monitoring of crude revenues as a way to remove a major bone of contention from such conflicts.  South Sudan sits on Sub-Saharan Africa’s third-biggest crude reserves, and its oil fields were early targets in fighting that erupted in December 2013 and has rumbled on despite two ceasefire deals and U.N. warnings that a man-made famine looms.

It marks an alarming slide into dysfunction by a nation whose creation three years ago the United States hailed as a foreign policy success. Instead of lifting the nation out of grinding poverty, oil is blamed for stoking a war…Diplomats and regional mediators said monitoring revenues was gaining traction as an idea for discussion, though the mechanics of such a system and how the warring sides would be pushed towards a deal have not been determined….

South Sudan’s oil output has tumbled by about a third to 160,000 barrels a day since the fighting began in December 2013, but it remains the main source of cash for President Salva Kiir’s government both by selling crude and by borrowing against future earnings, digging the nation deeper into debt.  As of June 25, 2013 South Sudan owed $256 million to China’s National Petroleum Corp, which has 40 percent of a venture developing South Sudan’s oil fields, and a further $78 million to oil trader Trafigura. [a Dutch multinational commodity trading company] It plans to borrow about $1 billion from oil firms in fiscal year 2014/15, equal to about a quarter of forecast revenues.

Rebel leader Machar, who was fired as deputy president last year, said oil sites would be a “legitimate target” unless funds were put into a neutral escrow account pending any deal.

But President Salva Kiir’s government says such outside intervention would violate its sovereignty and insists it has not bought arms since fighting began.  “We are not the protectorate of anyone,” presidential spokesman Ateny Wek Ateny said. “We have the right to buy arms, but we haven’t bought anything since December,” he said, despite rebel claims of weapon shipments arriving in recent months.  Kiir and Machar come from rival ethnic groups, and the conflict has re-opened deep ethnic divisions in the country.

Monitoring revenues is on the table for talks sponsored by the regional African grouping IGAD, though diplomats acknowledge it can only be part of a broader deal on how to share wealth and power in the divided nation…South Sudan has already lost billions of petrodollars in its young life. Kiir wrote to 75 former and serving officials in 2012 seeking the return of $4 billion that disappeared since 2005. No significant amounts were repaid, diplomats said.  Though the country – the size of France – has almost no roads and only a third of its 11 million people can read, South Sudanese now watch more wealth frittered away on fighting than on building roads or paying for schools….Fighting has killed at least 10,000 people, displaced 1.5 million and left a third of the population facing the prospect of famine as they have not planted crops…

But Western diplomats say pressure for a deal on oil monitoring needs to come from the region, led by heavyweight neighbours such as Kenya and Ethiopia.China, with its oil interests, would need to support the move, though diplomats said it had worked with the West during the crisis. Alongside China, other oil investors are India’s ONGC Videsh and Malaysia’s Petronas.”  If they can get the oil sector right, share the oil revenues in a much more inclusive manner, then that will dictate the country’s future,” said Luke Patey, author of a book on Sudan and South Sudan’s oil industry.

Excerpts from South Sudan conflict drives idea of oil wealth monitoring, Reuters, Aug. 1, 2014]

Dumping Coal in the Sea

Until recently Colombia was lax in enforcing its environmental laws. So it came as a shock to the country’s mining industry when, in January, the government halted coal exports from a port operated by Drummond, an American miner, in a row over pollution. The suspension has been costly not only for Drummond: its operations generate $66m a month in royalties and taxes for the Colombian treasury.

The mining minister, Amylkar Acosta, confirmed this week that the government would let the company resume its exports later this month, when it completes improvements to the port facility to prevent contamination of nearby beaches. The government has been under pressure to take action since environmentalists photographed an incident last year in which more than 500 tonnes of coal were dumped into the Bay of Santa Marta to stop a barge from sinking. Last month six employees at the port were charged, and face possible jail sentences. Drummond has been fined $3.6m and told to clean up the mess.

The case is an illustration of how the government, having welcomed foreign miners, is now having to contend with public disquiet over both pollution and the way the country’s mineral wealth is shared. In an election in May, President Juan Manuel Santos will seek a second term. So he cannot ignore the “hostile” climate of public opinion on the issue, says Alvaro Ponce, a Colombian mining expert.

Protests by nearby residents have delayed several big projects, including AngloGold Ashanti’s proposed gold mine in Tolima province and Eco Oro’s planned gold and silver mine in Santander province. A study by Colombia’s national audit office, published in January, found that economic and social development in towns next to large mining operations is worse than in places where illegal coca crops are grown for making cocaine.

The environment ministry is seeking new powers to require licences for exploration as well as extraction. Mining firms grumble that the process of getting projects approved is already tortuous enough. This and the recent fall in world prices of some minerals mean that up to $7.3 billion of investments are stalled, they say. Mr Acosta says the miners must accept that besides getting their official permits, they have to convince local communities to accept their presence, earning a “social licence” to operate. “Without that, the projects become unviable,” he says.

The backlash against mining has been building for some years. In the mid-2000s, when commodity prices were booming and Colombia’s internal conflicts were subsiding, the government offered incentives for foreign firms to come in and create mining jobs. It awarded exploration permits for swathes of territory, including in areas hitherto off limits, such as the fragile páramo tundra in the Andes. “The floodgates were opened,” says James Lockhart-Smith of Maplecroft, a risk-analysis firm.

But Colombia’s regulators were ill-prepared. In 2011 the government stopped accepting new applications for licences while it dealt with a backlog of 19,000. It rejected 90% of these, then turned its attention to 10,000 projects that had already been given licences, finding that 92% were failing in some way to comply with their conditions.

Despite all the stumbles and setbacks, Colombia is getting somewhere in its drive to exploit its mineral reserves. In 2013 mining investment was $3.6 billion, 21% more than in 2012. Mining already accounts for 2.3% of GDP and 7% of exports, and foreign companies are still lining up to explore new prospects. By the standards of resource-rich emerging economies, it is a fairly well-run place, so the chances are that it will succeed in coming up with a licensing regime that eases public worries without deterring investment. As in richer countries, mining projects will still be welcomed, but not at any price.

Mining in Colombia: Digging itself out of a hole, Economist, Mar. 15, 2014, at 61