MAC: Mines and Communities

Eritrea: Nevsun accused of turning blind eye to forced labour

Published by MAC on 2013-01-21
Source: Globe & Mail, Canadian Press, statement, Bloomberg (2013-01-17)

Human Rights Watch has release a report, Hear No Evil: Forced Labor and Corporate Responsibility in Eritrea's Mining Sector, which is highly critical of the role of the Canadian mining company in Eritrea. The key accusation is that the company failed to prevent the use of forced labour, via a state sub-contractor Segen Construction Co.

Both the company & the Eritrean overnment have rejected the conclusions.

Previous coverage on MAC: Canada's Nevsun challenged over alleged abuses in Eritrea

Nevsun accused of turning blind eye to forced labour

Geoffret York

The Globe and Mail

15 January 2013

Johannesburg - For the conscripts who were ordered to work at a Canadian gold mine in Eritrea, the conditions were nearly unbearable: 12-hour shifts, six days a week, with poor food and no toilets, for a salary of less than $15 a month.

When one conscript left the mine without permission to attend a grandparent's funeral, he was captured and imprisoned for four months, and then forced back into his unit.

These are among the allegations in a hard-hitting report by Human Rights Watch, to be released Tuesday, which criticizes the Canadian mining company for failing to prevent the use of forced labour at its mine. The report is based on interviews with former workers at the mine, who later fled the country.

The Vancouver-based company, Nevsun Resources Ltd., responded to questions from The Globe and Mail by saying that it expresses "regret" for any forced labour at its mine in Eritrea. It said it doesn't permit conscripted labour at its mine today, but doesn't know whether its subcontractor used conscripts in the past.

The allegations highlight the ethical and moral challenges for Canadian mining companies when they operate in countries with long histories of human rights abuses. And it raises the question of whether Canadian companies can develop mines in countries such as Eritrea without becoming complicit in those abuses.

Human Rights Watch, an independent group based in New York, said some companies, including Canadian companies, are failing to do enough to prevent the use of forced labour. The report is titled "Hear No Evil."

Eritrea, located in the Horn of Africa, is one of the world's most repressive and secretive countries. It has never held a national election since its independence in 1993, and Human Rights Watch has said the country is becoming "a giant prison" of torture, arbitrary arrest and forced labour.

Eritrea also enjoys vast mineral resources, which are luring a number of mining companies from Canada, Australia and China.

Nevsun is the operator and majority owner of the Bisha mine, the first and only modern mine in Eritrea today. The mine employs nearly 1,000 people and produced about 313,000 ounces of gold in 2012, making it one of the biggest contributors to Eritrea's impoverished economy. It provides nearly a quarter of the national gross domestic product.

"There are always tradeoffs in where you're working," Nevsun president Cliff Davis told The Globe and Mail in 2011 when he was asked about Eritrea's human-rights abuses.

"As a mining company, we shouldn't be imposing some form of political environment that we're familiar with," Mr. Davis said.

The company said it was required to hire an Eritrean company, Segen Construction, as a major subcontractor at the mine. Segen is owned by Eritrea's ruling party. Nevsun said it was not permitted to hire any other contractor for certain construction jobs at the site, and it was not permitted to do the work itself.

"The company expresses regret if certain employees of Segen were conscripts four years ago," Nevsun said in a statement.

The company said it became aware in 2009 that Segen might be employing conscripts from Eritrea's system of mandatory national service. It says it obtained a written guarantee from Segen that it would not use conscripts at the mine. There are currently 140 Segen employees at the mine, but all will leave by August when their current work is finished, the company said.

Human Rights Watch says Nevsun tried to investigate the forced-labour allegations, but Segen stonewalled the investigation and prohibited Nevsun from interviewing its workers or inspecting their camp. "Its response to Segen's stonewalling has been one of quiet acceptance," Human Rights Watch said.

After the Eritrean government promised to refrain from using forced labour at the mine, Nevsun "did not put adequate safeguards in place to ensure that this agreement was honoured," the report said.

Human Rights Watch said it interviewed four Eritreans who worked at the mine, and each provided "detailed and credible" accounts of forced labour and terrible living conditions. One said the conscripts were clearly emaciated, and another said they were "dehumanized."

The former workers said Segen told the conscripts that they were forbidden to speak to any foreigners. They lived in a "climate of fear," the report said.


Eritrea: Mining Investors Risk Use of Forced Labor

Canadian Firm Failed to Adequately Address Issue

Human Rights Watch release

15 January 2013

If mining companies are going to work in Eritrea, they need to make absolutely sure that their operations don't rely on forced labor. If they can't prevent this, they shouldn't move forward at all.
- Chris Albin-Lackey, business and human rights senior researcher

(Toronto) - International mining firms rushing to invest in Eritrea's burgeoning minerals sector risk involvement in serious abuses unless they take strong preventive measures. The failure of the Vancouver-based company Nevsun Resources to ensure that forced labor would not be used during construction of its Eritrea mine, and its limited ability to deal with forced labor allegations when they arose, highlight the risk.

The 29-page report, "Hear No Evil: Forced Labor and Corporate Responsibility in Eritrea's Mining Sector" describes how mining companies working in Eritrea risk involvement with the government's widespread exploitation of forced labor. It also documents how Nevsun - the first company to develop an operational mine in Eritrea - initially failed to take those risks seriously, and then struggled to address allegations of abuse connected to its operations. Although the company has subsequently improved its policies, it still seems unable to investigate allegations of forced labor concerning a state-owned contractor it uses.

"If mining companies are going to work in Eritrea, they need to make absolutely sure that their operations don't rely on forced labor," said Chris Albin-Lackey, business and human rights senior researcher at Human Rights Watch. "If they can't prevent this, they shouldn't move forward at all."

Eritrea is one of the world's poorest and most repressive countries. In recent years the country's largely untapped mineral wealth has provided a badly needed boost to its economic prospects. The Bisha project, majority owned and operated by the small Canadian firm Nevsun Resources, is Eritrea's first and so far only operational mine. It began gold production in 2011 and produced some $614 million worth of ore in its first year.

Other large projects led by Canadian, Australian, and Chinese firms are in the pipeline, however. Numerous exploration firms are scouring other leases for new prospects.

Eritrea's government maintains a "national service" program that conscripts Eritreans into prolonged and indefinite terms of forced labor, generally under abusive conditions. It is through this forced labor program that mining companies run the most direct risk of involvement in the Eritrean government's human rights violations. Human Rights Watch has documented how national service conscripts are regularly subjected to torture and other serious abuses, and how the government exacts revenge upon conscripts' families if they desert their posts. Many Eritreans have been forced to work as conscript laborers for over a decade.

Most national service conscripts are assigned to the military, but others are made to work for state-owned companies. Some of those companies are construction firms that the government pressures international companies to take on as contractors.

Nevsun Resources operates the Bisha mine through a joint venture with Eritrea's state-owned mining firm, the Eritrea National Mining Corporation (ENAMCO). Nevsun acknowledged to Human Rights Watch that it initially failed to carry out any kind of due diligence activity around the human rights risks involved with the project. At the government's urging, it then employed a state-owned contractor called Segen Construction Company to build some of the infrastructure around the mine site. Segen has a long track record of allegedly deploying forced labor in connection with its projects.

Human Rights Watch interviewed several Eritreans who worked at Bisha during its initial construction phase. Some said they were deployed there as conscript laborers by Segen. They described terrible living conditions and forced labor at paltry wages. One former conscript said that he had been arrested and imprisoned for several months after leaving the work site to attend a relative's funeral.

"Nevsun employed a contractor with a long track record of alleged reliance on forced labor, without adequate safeguards in place," Albin-Lackey said. "What's worse, Nevsun has continued to operate and to employ this contractor even though it is not allowed to monitor its labor practices."

During the project's early stages, Nevsun did not have adequate procedures in place to ensure that forced labor was not being used to build its project. The company has since tightened those policies, largely through an improved screening procedure that is meant to vet all workers at the mine to ensure that they are there voluntarily. Nevsun says that these policies are now adequate to the task of keeping their project free of forced labor.

Human Rights Watch has not encountered allegations that forced labor is currently being used at Bisha, but monitoring is extremely difficult due to the limited access for independent human rights investigators into Eritrea. But even Nevsun cannot be truly certain that forced labor is not being used since its contractor refuses to cooperate with efforts to monitor its human rights performance.

Nevsun says that Segen has promised not to use forced labor at Bisha. But Segen has refused Nevsun's requests to interview Segen employees to verify that they are working at Bisha voluntarily. Segen has also refused to allow Nevsun to visit the site where its workers are housed to assess conditions there. In 2010, Nevsun began providing food to Segen's workers after receiving reports that they had deplorable living conditions and inadequate food.

In 2012, Nevsun attempted to expand the mine without re-engaging Segen. The Eritrean government objected, and Nevsun brought Segen back on. Segen workers are still on site at Bisha.

"Nevsun has allowed itself to be bullied by its own local contractor, which has the backing of the Eritrean government, and it shouldn't accept this state of affairs," Albin-Lackey said. "This should be a lesson to other mining firms working in Eritrea - if they wait until there is a problem to address the human rights risks of working there, it may well be too late."

Unfortunately, it appears that other companies are moving ahead with mining projects without addressing these risks. Human Rights Watch interviewed the CEO of Australia's South Boulder Mines, which is on the verge of developing a $1 billion potash mine in Eritrea. The CEO acknowledged that the company has done no assessment of the potential human rights risks involved with the project, including the potential risk of the use of forced labor.

The Canadian firm Sunridge Gold, which is also working on plans to develop a mine in Eritrea, did not respond to requests to discuss the issue of forced labor and other human rights abuses. The newest entry into the mining scene is China SFECO, a Shanghai-based conglomerate that recently purchased a controlling interest in another mining project from Australia's Chalice Gold.

Based on the Bisha experience, the greatest risk of abuse may occur during the construction phase of these projects. Nevsun has also acquired the rights to another deposit near its Bisha site which, if it turns out to be commercially viable, could involve more construction or infrastructure work.

Mining firms that want to work in Eritrea should refuse to work with any contractor implicated in the use of forced labor, and insist on the right to investigate any and all allegations of abuse connected to their operations, Human Rights Watch said.

All mining firms working in Eritrea should undertake human rights due diligence activity to identify and mitigate the full range of risks posed by the projects they plan to undertake. The importance of human rights due diligence is heavily emphasized by the United Nations-endorsed Guiding Principles on Business and Human Rights, which have been widely accepted as a legitimate benchmark of responsible corporate behavior.

Once projects are under way, companies should keep a close eye on events in the field to make sure that their project is not moving forward through forced labor or other abuses. Companies should insist on unfettered, independent access to all workers at their mine site and the right to fire local contractors that are credibly implicated in abuse.

The home governments of multinational mining companies should regulate and monitor the human rights practices of domestically based companies when they operate in high-risk environments like Eritrea, Human Rights Watch said. The governments should press these companies to uphold high standards and to investigate alleged abuses in their foreign operations. No country currently monitors the extraterritorial human rights performance of its companies except in certain narrow contexts, such as investment in Burma.

"It is negligent for mining companies to ignore the risks of forced labor that clearly exist in Eritrea," Albin-Lackey said. "It is also long past time for these companies' home governments to make their overseas human rights records an issue of domestic concern."

Download this press release in Tigrinya (PDF)


Human rights report says forced labour used in Canadian-Eritrean mine project

Mike Blanchfield

The Canadian Press

15 January 2013 

OTTAWA -- A highly critical human rights report scheduled for release Tuesday is expected to shed new light on the darker implications of the Conservative government's ambitions for Canadian mining companies in Africa.

The report by Human Rights Watch says Vancouver-based Nevsun Resources Ltd. (TSX: NSU) failed to ensure that forced labour was not used in the construction of its mine in Eritrea, the hermit-like pariah state on the Horn of Africa.

Though the company was concerned when the problems first came to light and tried to investigate, it was blocked by its state-owned partner, says the report by the New York-based agency.

Nevsun said it has since instituted rigorous screening practices at its Bisha mine project and taken steps to ensure that forced labour is no longer used.

"When Nevsun began building its Bisha mine in Eritrea in 2008, it failed to conduct human rights due diligence activity and had only limited human rights safeguards in place," Human Rights Watch said.

The Eritrean government insisted that Segen Construction Company, a local Eritrean contractor, carry out construction of the mine in 2008. Segen -- owned by the ruling People's Front for Democracy and Justice -- routinely exploits conscript workers that the government assigns to it, the report alleges.

The agency said Eritrea's conscripted workers, some of whom are forced to labour for over a decade, face torture and other serious abuse, and revenge is extracted on their families if they desert their posts.

Nevsun addressed the report in a statement on its website that was posted four days ago in anticipation of Tuesday's report.

Nevsun said it became aware of the allegations involving the Segen employees in 2009, and had to expand its employee safeguards to cover those employees. It obtained a written guarantee from Segen not to use conscripts at Bisha.

Nevsun said the last of the 140 Segen employees still working at the mine -- one-tenth of the mine's total workforce -- will be gone by the end of August when their current work is completed.

"The Company expresses regret if certain employees of Segen were conscripts four years ago, in the early part of the Bisha Mine's construction phase," Nevsun said.

Chris Albin-Lackey, a senior researcher at Human Rights Watch, said Nevsun allowed itself to be bullied by the state-backed local contractor.

"This should be a lesson to other mining firms working in Eritrea -- if they wait until there is a problem to address the human rights risks of working there, it may well be too late."

The Canadian company controls a 60 per cent interest in Eritrea's first fully functioning mine. It began gold production in 2011 and has produced $614 million worth of ore, said Human Rights Watch.

Another Canadian company, Sunridge Gold Corp. (TSXV:SGC), is among a handful of companies from Australia and China that are also hoping to make inroads in Eritrea's resource sector.

Sunridge said it expects to begin its mine construction later this year, and will strive to avoid human rights problems.

"We will be very, very careful going forward not to fall into the same category. And we'll have to make sure we fully screen future employees," Gregory Davis, Sunridge's vice-president for business development, said in an interview.

"We are aware of that issue and we do everything we can to make sure that doesn't happen on our project."

Last week, as part of his government's ongoing commitment to help Canadian resource companies gain an equal footing in thriving African countries, Harper announced new measures in the sector.

"The development of mining, oil and gas resources in Africa is critical to the future prosperity of the continent," Harper said during a visit of Thomas Boni Yayi, president of Benin and chair of the African Union.

Harper announced support for the African Mineral Development Centre to help advise African countries manage their extractive industry "responsibly and transparently."

Eritrea is an isolated, repressive country that counts the Islamists of the failed state of Somalia as allies.

It was the subject of United Nations sanctions in 2009 because of its support for the groups, which are trying to overthrow Somalia's recognized government.

A UN Security Council monitoring group concluded that Eritrea was behind an unsuccessful attempt to bomb the African Union leaders' summit in Ethiopia in 2011.


Human Rights Watch to detail abuse at Eritrea mine

Reuters

14 January 2013

A human rights group will issue a report next week detailing workers' claims of abuse at a mine owned by Canadian gold miner Nevsun Resources Ltd in the African country of Eritrea.

"The report we're releasing next week describes the allegations against Nevsun and its contractor in some detail," said Chris Albin-Lackey, a senior researcher with Human Rights Watch, on Friday.

The pending report prompted Nevsun to issue a statement expressing regret over allegations that a contractor had used forced labor during the construction of its Bisha gold project.

The Bisha mine is the only modern mining project in the Horn of Africa nation and employs about 1,000 locals.

Shortly after construction started in 2008, claims surfaced that one of the company's contractors, Segen Construction, was using forced laborers from the country's national service program.

While Nevsun said it was required to use state-managed Segen for certain construction work, it said the use of conscripted labor at the Bisha site is not permitted.

"The company expresses regret if certain employees of Segen were conscripts four years ago, in the early part of the Bisha Mine's construction phase," Nevsun said in a statement.

The company said that it has procedures in place to ensure that all individuals working at the Bisha mine are there of their own free will and are not conscripts.

The gold mine is majority owned by Nevsun and produced some 313,000 ounces of gold in 2012.

The Human Rights Watch report, which details mining-related abuses in Eritrea, will be released on Jan. 15.

Forced conscription of citizens to work without pay for an undetermined period of time is a serious issue in Eritrea. Several hundred refugees cross the border into neighboring Ethiopia each month to escape the practice, the United Nation's refugee agency said in a report in July 2012.


Nevsun Comments on Human Rights Matters

Nevsun Resources statement

11 January 2013

Nevsun Resources Ltd. today provided a comment on its approach to human rights at the Bisha Mine in Eritrea, in which Nevsun has a 60% ownership position. Nevsun provided the comment because it anticipates that both the Company and a Bisha Mine subcontractor will be mentioned in a forthcoming report by a non-governmental human rights organization.

"Nevsun is committed to responsible operations and practices at the Bisha Mine, based on international standards of safety, governance and human rights," said Cliff Davis, President and CEO. "Our 60%-owned subsidiary Bisha Share Mining Company (BMSC) directly employs nearly 1,000 Eritreans at the Bisha Mine and provides a safe and supportive working environment. Bisha had zero lost time accidents in all of 2012."

Positive social and economic impact

Nevsun strives to ensure that the Company's presence has a positive social and economic impact. With spin-off effects, the Bisha Mine has created meaningful employment for thousands of Eritreans. The Company's commitment to corporate social responsibility is detailed in its 2011 CSR report, available on its website at this link: http://www.nevsun.com/pdf/2011-nevsun-csr-report.pdf

From inception of mining in early 2011 Bisha has contributed more than US$400 million in cash remittances to the Eritrean government and government owned entities. In addition, the mine contributed tens of millions of dollars to the economy of Eritrea through salaries, wages, benefits, local supply-chain purchases, and community assistance and the mine did not displace any local communities. Considering that the Bisha Mine is the only modern mine in Eritrea, this contribution is a significant benefit to the national economy and the local communities.

Compensation for Eritreans directly employed by BMSC is well above the average for Eritrea. Employees are provided free food and free accommodations or free local commuting. These employees also receive free training and have opportunities for advancement. Employees also have access to free medical care at the mine's clinic.

Conscripted labour is not allowed at Bisha

The use of conscripted labour at the Bisha site is not allowed. BMSC has strong practices and procedures to ensure that all individuals at Bisha are working of their own free will and are not conscripts. The procedures include the inspection of national service discharge documentation for all Eritrean workers at Bisha. The inspection process is further supported by a Bisha-issued photo ID card for those employed directly or by subcontractors.

In early 2009, within a few months of the start of mine construction, Nevsun became aware of allegations that a particular subcontractor, Segen Construction, might be employing conscripts from the country's national service. Unfortunately, at the time, BMSC's national service discharge document inspection procedures did not apply to subcontractors. In response to the allegations BMSC acted quickly by immediately extending its procedures to include subcontractors and by obtaining a written guarantee from Segen that it would not use conscripts at Bisha. There are currently 140 Segen employees at the mine, representing about 10% of the 1,400 Eritreans employed directly or indirectly at Bisha. Segen is not a permanent fixture at Bisha. All Segen employees will leave Bisha by the end of August, 2013, when their current work is completed.

The Company expresses regret if certain employees of Segen were conscripts four years ago, in the early part of the Bisha Mine's construction phase. Segen is controlled by the Eritrean State and BMSC is required to use Segen for certain construction work at Bisha. BMSC is not allowed to do such work itself or to engage any other subcontractor for such work.

Please see the Company's Annual Information Form for the fiscal year ended December 31, 2011 and the Company's Management Discussion and Analysis for the quarter ended September 30, 2012 for a more complete discussion of the risk factors associated with our business.

About Nevsun Resources Ltd.

Nevsun Resources Ltd. is a Vancouver-based mining company with an operating mine in Eritrea. Nevsun's 60%-owned Bisha Mine commenced gold production in February 2011 and is scheduled to transition to copper/gold production in 2013. Management expects the Bisha Mine will rank as one of the highest grade open pit base metal deposits in the world.

A detailed stock quote on TSX: NSU can be found here.

For Investor Relations Contact:

kin communications inc.
tel. 604.684.6730 | tf. 1.866.684.6730 | fax. 604.684.6740 NSU@kincommunications.com


Eritrea rejects HRW claim of forced labour at gold mine

William Davison and Bealfan Hayle

Bloomberg

17 January 2013

Eritrea's government rejected as "cheap shots and lies" a report by Human Rights Watch that said forced labor was used to construct a gold mine it owns with Canada's Nevsun Resources Ltd.

Segen Construction Co., a sub-contractor owned by the ruling People's Front for Democracy and Justice that worked on the project, used conscripts during the building of the Bisha Mine from 2009 to 2011, the New York-based advocacy group said in a report released Jan. 15. "Conscripts are regularly subjected to torture and other serious abuses," it said.

HRW's report is a "distortion" of Eritrea's national- service program, said Girma Asmerom, the nation's ambassador to the African Union. "They call it forced labor," he said in an interview yesterday in Ethiopia's capital, Addis Ababa. "That shows deliberate ignorance."

Eritrea, which became independent from Ethiopia in 1993 after a 30-year war, is "one of the most closed and repressive countries in the world," according to HRW. Former rebel leader President Isaias Afewerki's government has banned private media and the Horn of Africa country hasn't held national elections since independence.

Mining companies in Eritrea risk involvement in "gross human-rights abuses" unless they take strong preventative measures, HRW said. One former Segen conscript out of two interviewed said he was imprisoned for four months after he ignored the refusal of a request to attend a grandparent's funeral, it said.

‘Not Allowed'

Segen may have used conscripts in early 2009 when Nevsun didn't check whether sub-contractors' workers had been released from national service, the Vancouver-based company said in a statement e-mailed on Jan. 11.

"The use of conscripted labor at the Bisha site is not allowed," it said. The company "acted quickly" to start checks and to obtain a written assurance from Segen that no conscripts would work at the mine, it said.

The Bisha mine produced $614 million of gold in 2011, according to Nevsun.

Segen Managing Director Tesfay Goitom and Eritrean Mines Minister Tesfai Ghebreselassie declined to comment when contacted by phone.

All 18-year-old Eritreans do national service, which is designed to protect the nation's security and sovereignty, encourage ethnic harmony and assist economic development, Girma said. Participants have been "permanently mobilized" since a two-year war broke out with Ethiopia in 1998, he said.

Mining Growth

Chalice Gold Mines Ltd., an Australian explorer for the metal, sold its Zara Project in Eritrea to China SFECO, a unit of Shanghai Construction Co., last year before construction started, Chief Executive Officer Doug Jones said.

"Chalice has not and does not use state-run firms in its activities in Eritrea," he said in a Jan. 11 e-mailed response to questions.

South Boulder Mines Ltd., based in Perth, has had no exposure to the national-service program at its Colluli potash project, which is at a "feasibility" stage, Managing Director Lorry Hughes said in a Jan. 11 e-mail. It plans to produce $500 million a year of the fertilizer ingredient from 2016, it said in April.

The state-owned Eritrean National Mining Co. owns 40 percent of Bisha, which is about 150 kilometers (124 miles) west of the capital, Asmara. Mining-led growth in Eritrea is expected to slow to 3.4 percent this year from 7.5 percent in 2012, according to the International Monetary Fund.

--Editors: Paul Richardson, Bryson Hull

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