MAC: Mines and Communities

ENRC failed to respect human rights in DRC, says UK government watchdog

Published by MAC on 2016-03-14
Source: Statement (2016-03-14)

London Calling asks: "But what about Brazil and Vedanta? "

Arguably, ENRC is the most delinquent mining company that's left the London Stock Exchange over the past decade.

Whether it was forced out or chose to quit of its own accord, faced with the prospect of further revelations of quasi-criminal acts, is somewhat moot.

The OECD's UK National Contact Point (NCP) has now judged the Kazakhstan outfit to be guilty of three failures in observing human rights at two mine sites in the Democratic Republic of Congo (DRC). These are fairly mild charges - while the company still has the option to comply with the OECD's recommendations for improving its conduct.

In contrast, three years ago the NCP was decidedly more severe with another London-listed company, Vedanta, in light of its violation of Indigenous Peoples rights in India. [See: UK Government finds Vedanta guilty of major breach of trust].

Yet, Vedanta is still safely ensconced in the UK capital - despite a mounting list of its disregard for tribal communities. [See for example: Vedanta's Lanjigarh subterfuge]

Meanwhile, ENRC has been camped for several years in Brazil's Bahia province, where its iron ore subsidiary BAMIN has damaged local peoples' water supplies and dumped mine wastes on agricultural land used by farmers. [See: Pedro da Ferro - the iron stone 

And, despite the current surfeit of iron ore on world markets, this mine-port project remains on the company's books.

For other background articles on ENRC, see: Eurasian Natural Resources Corp (ENRC) & and more background on the case here. You can read the UK NCP’s statement here.

[London Calling is published by Nostromo Research. opinions expressed in this column do not necessarily represent the view of any other party. Reproduction is welcome under a Creative Commons Licence]

ENRC (now Eurasian Resources Group) failed to respect human rights, says UK government watchdog

RAID press release

12 March 2016

The UK government has sent a clear message to investors in high risk environments, like the Congo, that they cannot evade their human rights responsibilities.

In a blow to efforts to rebuild its reputation after an ignominious exit from the London Stock Exchange[1], the Eurasian Resources Group (ERG, formerly ENRC) has been publicly criticised by the UK Government for failing to address human rights impacts at mine sites under the control of its subsidiaries in the Democratic Republic of the Congo (DRC).[2] ENRC had tried – but ultimately failed – to get the adverse findings overturned.

Human rights organisations, Rights and Accountability in Development (RAID) and its Congolese partner, Action contre l’impunité pour les droits humains (ACIDH) had filed a complaint against ENRC almost three years ago.[3] The complaint was examined by officials at the UK’s National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises, in the Department for Business, Innovation and Skills, who concluded:

According to the findings, ENRC - though not directly responsible - had been aware of the contamination of water sources at two mine sites in southern DRC controlled by its subsidiaries, Comide and Africo Resources Limited (a Canadian company). Several thousand people living in the remote villages of Lenge and Kisankala, which lie on neighbouring mine sites, were effectively denied access to clean water. ENRC was also aware from its due diligence report that ‘the population in the vicinity of the Comide and Africo licences is largely poverty stricken’.[4]

Many of the difficulties mining communities in the DRC face today can be attributed to the chaotic allocation of mine licences in the period during and after the Congo’s wars. Over the past 15 years there have been numerous reports questioning the legitimacy, financial basis and economic fairness of the DRC’s mining contracts.[5]

The NCP proceedings are supposed to help parties resolve disputes through mediation rather than resorting to protracted and costly legal proceedings. The ENRC complaint has dragged on, partly because of the complexity surrounding the ownership of the mines.[6]

The company disputed most of the NGOs’ claims but refused to disclose relevant information such as its social and environmental assessments or its Memorandum of Understanding with the Congolese mine police, deployed at the sites. When attempts at mediation broke down, ENRC sought to get the NCP’s conclusions overturned on procedural grounds, but their appeal was rejected.

The UK government recommends that the company should provide better information to the communities about the standards of conduct expected of staff and security contractors and advise them about changes to the schedule for mining. The UK NCP also asks ENRC to use its influence with Africo/Swanmines to ensure ‘unrestricted and continuing community access to water’ [§ 77].

Local village chiefs expressed their satisfaction with the NCP statement but want reassurances that the company will carry out the UK Government’s recommendations.

The NCP did not reach a finding as regards the frequent clashes with artisanal miners, but noted that the company had failed to demonstrate that it ‘had taken action to address the ongoing risks to communities from its security operations or to encourage its business partners to apply [OECD] Guidelines standards in addressing them’[§ 65]. A 2012 report prepared for ENRC shareholders noted that ‘security arrangements are not yet aligned with international standards’.[8]

The UK Government will monitor developments at the mine sites and ERG will be required to report on progress in implementing the NCP’s recommendations in a year’s time [§83].

--

[1] Jack Farchy ‘Eurasian Resources Group seeks to draw a line under scandals’ Financial Times November 1, 2015. Available http://www.ft.com/cms/s/0/0132c21e-7800-11e5-a95a-27d368e1ddf7.html#axzz42WOACfM5. In April 2013 the UK’s Serious Fraud Office launched a criminal investigation into ENRC focusing upon ‘allegations of fraud, bribery and corruption around the acquisition of substantial mineral assets. The SFO investigation is continuing (see https://www.sfo.gov.uk/cases/enrc/).

[2] UK NCP Final Statement: Complaint by RAID against ENRC. Available at: https://www.gov.uk/government/publications/uk-ncp-final-statement-raid-complaint-against-enrc-democratic-republic-of-congo

See also RAID's press release at: http://documents/proecdfinalstatementtenrcdrc-pdf 

[3] At the time the complaint was filed, May 2013, ENRC plc was listed on the London Stock Exchange. In November 2013 ENRC was acquired by the Eurasian Resources Group (ERG), a privately-owned Luxembourg-based natural resources company, after which it delisted.

[4] Competent Person’s Report prepared for ENRC on the Mineral Assets of Camrose dated November 2012

[5] See, for example, Africa Progress Panel, AFRICA Progress Report 2013 - Equity in Extractives: Stewarding Africa’s natural resources for all see p. 58 and Annex 1)

[6] ENRC took control and responsibility for these licences when it acquired 50.5% of a company called Camrose Resources Limited (“Camrose”) on 20 August 2010. Camrose is a private limited company incorporated in the British Virgin Islands. In December 2012 ENRC consolidated control by acquiring 100% of Camrose. Camrose and La Congolaise des Mines et Developpement (Comide) became indirectly wholly owned by ENRC. Camrose in turn has an 63.7% interest in Africo Resources Ltd, a Canadian company. Africo has a 75% interest in Swanmines which together with Gecamines (the Congolese state-owned company) holds the mine licence for the Kalakundi concession, where Kisankala is located. Included in Africo’s other shareholders are companies affiliated to or controlled by Camrose.

[7] ERG Press Service – Eurasian Resources Group at Mining indaba: 'Africa central to future growth' 22/-2/2016 available at: https://www.erg.kz/en/news/347

[8] Competent Person’s Report prepared for ENRC on the Mineral Assets of Camrose dated November 2012

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