MAC: Mines and Communities

DRC: 'Poverty-driven' artisanal mining in spotlight after tragedy hits Congo

Published by MAC on 2019-07-02
Source: Financial Post [Canada]

Canada's Financial Post has offered a more balanced perspective on last week's disaster  that cost at least 43 mineworkers' lives.

The disaster was summarily dealt with by some spokespeople [see: More than forty workers Killed in landslide ].

But many vital questions still remain unanswered.

'Poverty-driven' artisanal mining in spotlight after tragedy hits Canadian miner's Congo property

'You need to find alternative ways for these guys to work'

Financial Post [Canada]

2 July 2019

The death of dozens of artisanal miners in Congo on the property of a Toronto-Stock Exchange-listed Canadian company highlights the fraught relationship between overseas mining companies and local communities.

At least 43 artisanal miners have reportedly died while digging for cobalt — a vital metal for the batteries found in smartphones, tablets and electric cars — on a spot of ground that overlooks Katanga Mining Ltd.’s vast Kamoto Copper Complex.

Throughout much of Africa and other parts of the world, artisanal miners are often found near mines, taking grave risks to scour tailings or waste rock in search of valuable metals. Their numbers appear to be growing, along with tragic accidents, which has provoked questions and challenges for mining companies.

“Artisanal mining is largely poverty-driven,” said Joanne Lebert, executive director of Ottawa-based Impact, a non-profit focused on policy issues in the extractive sector. “They’re doing it because they need a source of income. They’re hand to mouth.”

Lebert, whose organization has two offices in the Democratic Republic of Congo, is opening a third office in the country in September, as it launches an initiative to bring greater transparency to the cobalt supply chain.

The Democratic Republic of Congo, located in Central Africa, is the largest French-speaking country on the continent with a population of roughly 80 million.

Among the poorest countries in the world — ranked 176 out of 187 on a Human Development Index by the United Nations — it is also blessed with abundant natural resources, including gold, copper and cobalt.

As global demand for cobalt rises, the DRC will play a critical role in the global supply chain, producing an estimated 65 to 70 per cent of the world’s cobalt, but it is plagued by problems.

Katanga had told analysts it expected to produce 26,000 tonnes of cobalt and 285,000 tonnes of copper from its DRC operations, but scaled those numbers back after trace amounts of radioactive uranium were detected in its ore, leading to suspension of some operations for the first few months of the year.

Last December, the company announced a nearly $30 million settlement with the Ontario Securities Commission after misstating its financial position and failing to adequately disclose the “elevated risk of public sector corruption in the DRC,” among other mistakes.

After announcing dozens of artisanal miners had died on Friday, the company said it would help with the search and rescue and noted its output would not be affected.

The company is listed on the TSX, but Glencore controls 86 per cent of its shares. Glencore’s stock had rebounded 3.58 per cent on Friday after falling seven per cent. The Swiss-based mining and trading firm has operations around the world, and in 2017 partnered with the Ontario Teachers’ Pension Plan on a $300 million plan to invest in base metal royalties and streams.

For Katanga, the situation in the DRC had apparently been building with the company saying in a press release that as many as 2,000 artisanal miners per day have been flooding onto its property.

Claude Kebemba, executive director of Southern Africa Resource Watch, which aims to bring transparency to the resources sector, said that last week, the Congolese government sent military forces to stop artisanal miners from entering a different cobalt mine owned by a Chinese company.

“You need to find alternative ways for these guys to work,” said Kabemba, based in Johannesburg, but whose organization has a DRC office.

Currently, the large industrial mines are largely automated, with few opportunities for the people who engage in artisanal mining, he said.

Artisanal mining is legal in the DRC, but Kebemba said the designated sites are often isolated spots that have not been surveyed by geologists, so people tend to flock to industrial sites that have proven mineral reserves. The work is dangerous, but a means to obtain cash, he said.

“People know it’s very harsh conditions,” said Kabemba. “To go underground, you either have to be on drugs or be drunk.”

(There is) a proposed law that, if passed, would impose new obligations on companies to make disclosures about how their materials are sourced.

It is not the only Canadian-linked company operating in the DRC. Toronto-based Barrick Gold, among the world’s largest gold producers, operates its Kibali mine in the north of the country.

According to a technical report on the Kibali mine from 2018, opening the mine was expected to eliminate numerous artisanal mining sites and would have negative repercussions on certain local economies. So far, the company has not reported any tragedies similar to what happened at Katanga’s mine.

Lebert, of Ottawa-based Impact, said that the cobalt sector is unique in that it’s a small market in which demand is growing, creating an opportunity for investors to ask for greater transparency in the supply chain.

She said in Canada, there is a proposed law that, if passed, would impose new obligations on companies to make disclosures about how their materials are sourced. Either way, investors are demanding more transparency and artisanal mining tragedies are becoming the problems of mining companies.

“These things are going to continue to happen,” she said. “It is not going to go away, it’s going to grow if anything. Glencore has may be a responsibility to finally try and find a solution that’s more constructive.”


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