MAC/20: Mines and Communities

Africa update

Published by MAC on 2007-02-08


Africa update

8th Feburary 2007

Police continue to harass members of South Africa’s Maandagshoek community as they seek redress from Anglo American's subsidiary, Anglo Platinum, and an end to its illega loccupation of their tribal land. More than half a year after shootings of unarmed protestors in 2006, the chair of Anglo American, Mark Moody-Stuart, has still taken no steps to meet with the community and listen to their grievances.

Guinea remains "in turmoil" according to a Canadian mining source, superceding the report we carried last week that the citizens' uprising against the government. [http://www.minesandcommunities.org/Action/press1355.htm].

Many people are reported to have been shot dead by the state's brutal military.

Also premature, it seems, are prospects that the Tanzanian government will secure any significant increase in income from foreign mining companies.

Is that really surprising?


Police Harass Maandagshoek Activist After He Speaks Out Against Councilor and Anglo Platinum

Press Statement, Jubilee South Africa, National Office

8th February 2007

At around 20:00 this evening, police vans arrived in Maandagshoek, Limpopo (near Burgersfort) searching for Emmanuel Makgoga, the spokesperson for the Maandagshoek community in their fight against Anglo Platinum. Mr. Makgoga had spoken at a community mass meeting, where reportedly 5,000 people attended to air their grievances to representatives from the Limpopo Premier's Office and the Department of Minerals and Energy.

The community asked Mr. Makgoga to speak on their behalf about the lack of development, broken promises, the police brutality and human rights violations, and the fact that mining that has taken place without a proper agreement between Anglo Platinum (and its partner - Patrice Motsepe's African Rainbow Minerals) and the community.

Mr. Makgoga talked about the fact that the mine promised to improve roads and basic services, but never delivered. He also confronted a local councilor that was present, telling him that the councilor has done nothing for their community. The councilor was shouting angrily, moving toward Mr. Makgoga, when the community stepped in and chased the councilor from the meeting. Later the police arrived, but government representatives said that they were safe and secure and that it was a peaceful meeting.

Mr. Makgoga also stated in that meeting that he had recently attended the World Social Forum in Nairobi as part of the Jubilee South Africa delegation. He said "We met people from all different countries in Nairobi. We made solidarity across the world as we spoke about our problems with the platinum mines. We told them everything the mines have done to us and they have given us support."

As Mr. Makgoga arrived in Maandagshoek around 20:00 this evening, fellow community members informed him the police were looking for him. Hundreds of community members immediately began mobilising to protect Mr. Makgoga and to prevent the police from arresting him. These are the same police that recently beat, harassed, and arrested 15 community members from Magobading and other areas. In June of 2006, these same police arrested community leaders, including Mr. Makgoga, and two chiefs - Kgoshigadi Joyce Kgoete and Kgoshi Isaac Kgoete for courageously standing with the community to protect their land during a peaceful demonstration.

At this time the community continues its demonstration against the police in Maandagshoek. Mr. Makgoga stated, "We know our rights since 1994. They can't do to us what they did during apartheid. I'm not going to shut my mouth until we have everything we deserve from these mines. We own this land with platinum in it, but we are not benefiting at all. I'm not going to be intimidated to be quiet and we as a community are not afraid."

*Naga ke a rona! The Land is Ours!*

For more information, please contact Emmanuel Makgoga (Maandagshoek) 082 343 5095, Lazarus Moime (Maandagshoek) 082 544 8100 or Anne Mayher (Jubilee South Africa) 082 398 6882 akmayher@gmail.com.


Guinea in turmoil

Protests in Bauxite-Rich Country Could Affect Aluminum Production

By Anthony Vaccaro, The Northern Miner

5th February 2007

Drills at Cassidy Gold's Kouroussa project have kept turning despite political instability in Guinea. Much of the country's worst violence is occurring in the capital, Conakry -- some 570 km west of Kouroussa.

The corpses of protesters have been cleared off the streets of Conakry -- Guinea's capital city. The dead totalled at least 30 after the military opened fire on unarmed crowds, whose numbers had swelled to roughly 30,000 in connection with a week-long general strike that halted a significant chunk of the country's bauxite exports.

And while the loss of life -- and the dire economic conditions that initially inspired the protests -- is foremost on the minds of the international community, experts are also trying to sort through the severity of the impact on Guinea's bauxite industry.

With almost half of the world's bauxite reserves (bauxite is refined to make alumina, which is then smelted to make aluminum), Guinea stands second only to Australia in terms of bauxite production. But the West African nation is the largest exporter of the ore, due to Australia's refining capabilities.

Those exports took a heavy hit when the country's largest bauxite company -- Compagnie des Bauxites de Guinea (CBG) -- was effectively shut down by striking workers and then cut off from its supply chain in late January.

"It's a country-wide work stoppage. The issues are bigger than just bauxite mining," says Kevin Lowery, director of corporate communications for Alcoa (AA-N) -- a partner in CBG. "We understand that and we're keeping an eye on things."

After the work stoppage was reported, Alcoa said shipments would continue, using stockpiles. But that plan was thwarted when railcars carrying stockpiles to port came under attack from rock-throwing protestors.

Asked if shipments from stockpiles could begin sooner than operations, Lowery offers: "If something can be done in a safe manner on an interim basis, we would explore doing that."

CBG is 49% owned by the Guinean government and 51% owned by Halco -- a consortium in which Alcoa has a 45% stake, Alcan, a 45% stake, and privately held Dadco, 10%. Alcoa is the operator of the facility, which produces 14 million tonnes of wet bauxite a year.

Also hit by the strike is St. John, N.B.-based Global Alumina . The company is developing a US$2.8-billion bauxite refinery in the country, in line with the government's plan to keep more downstream production in Guinea.

But not all bauxite-related industry in the country has stopped. Guinea's two other bauxite mines -- both controlled by Moscow-based Russian Aluminum Group -- are continuing with operations. Combined, the two operations produce roughly 6 million tonnes of bauxite per year.

Supply chain

For its part, Alcan says its bauxite supply chain hasn't been significantly disturbed.

"We're okay," says Alcan spokesperson Alexander Christen. "We have a contingency plan in place and we're sourcing from other places in the world. At this time, there's been minimal impact, but that could change if the situation deteriorates further."

Christen estimates that such an impact would be felt if operations were hindered for another "week to a month or two."

Traders in London were reported as saying fears of a supply squeeze were pushing alumina prices higher.

With the mining sector accounting for over 70% of exports in 2004, and bauxite alone making up 17% of the country's gross domestic product, the loss of revenue is clearly an impetus for the government to resolve the situation.

But thus far, the government's response has been largely limited to banning protests and then sending in the military when its decrees are not obeyed. Negotiations with union leaders have been short and unfruitful.

Experts say the critical mass of protesters isn't yet large enough to topple a military of 8,000 strong, but the growing discontent is an indication of a change in the national psyche.

"What these strikes tell me is that people in Guinea have been tipped over the edge," Bram Posthumus, a West African analyst, told the IRIN news organization. "The strike will continue. People have been scared (of the government) for a long time, and for them to go out on the street like this is an enormous change in attitude."

While the military might of President Lansana Conté isn't being questioned, the leader's physical health and mental stability are.

Conté -- who is estimated to be 76 years old -- has become increasingly reclusive in recent years, as his diabetes and kidney problems worsen. He has ruled the country since seizing power in 1984.

Situated on the coast of West Africa, between Sierra Leone and Guinea-Bissau, Guinea's population of 10 million had already seen two popular strikes against Conté in 2006.

The previous strikes were organized by the National Confederation of Guinean Workers (CNTG) and the Guinean Workers Union (USTG) to protest a 30% inflation rate, tripling fuel prices, worsening standards of living and endemic corruption. Transparency International ranked Guinea as the second most corrupt nation in the world in 2006.

Union role

The unions have taken a central role in the protests. Experts say self-serving attitudes have given all political parties a bad name in the country, whereas the unions are seen as being more closely aligned with the population's true interests, and more legitimate than rival political parties.

That standing was partly earned by the key role unions played in winning the country's independence and installing President Ahmed Sékou Touré in 1960. They were, however, later banned when Touré came to see them as a threat to his one-party rule.

Touré's authoritarian rule didn't end until his death in 1984, after which Conté rose to power.

Conté's tenure has been marked by early promise and recent decay.

Beyond persisting social and economic woes, the latest strike was triggered by union outrage at Conté's visit to a prison where two of his compatriots had been incarcerated for corruption. Conté personally had the convicted felons set free.

While the incident occurred in December, the indignation of the union spread to the population, so that by the end of January, the scope of the protest was so broad that even union leaders admitted they no longer had control of it.

Finding a resolution to the violence within Guinea's own borders is seen as being especially urgent because of fears that troubles there could spill over into neighbouring countries. With its long borders and central position, experts fear that the fragile peace of neighbouring Sierra Leone, Liberia and Côte D'Ivoire could be in jeopardy.

Despite a new round of negotiations between Conté and union leaders, at press time, rhetoric remained strong, and hopes for reconciliation were dim.

"The strike will continue until the final victory," Ibrahima Fofana, leader of the Guinean Workers Union told IRIN. "Almost no solutions have been found to the problems we have posed."


Tanzania Proceeds With New Mining Tax Policy

By Jon A. Nones

6th February 2007

CAPE TOWN (ResourceInvestor.com) -- In October of last year, Tanzanian President Jakaya Mrisho Kikwete directed the Energy and Minerals Ministry to review mining policies and laws. Two mining deals have been renegotiated, and more may be on the way.

At Mining Indaba 2007 on Tuesday, Kikwete told delegates that Barrick and Resolute Mining have signed new agreements that waive a tax concession.

"It will allow companies to pay tax earlier," he said at a news conference.

Under the new legislation, firms would pay the existing corporate tax of 30% and a royalty of 3% for gold and 5% for diamonds much earlier - with times depending on the life of the mines, he said. Under the old mining policy, companies could defer tax for up to 20 years.

Kikwete said Resolute and Barrick are the only two to sign agreements so far, but other mining companies have been notified of the change.

"We offer one of the more competitive fiscal incentives in the world," said Kikwete.

He said that there are numerous tax incentives in place, like allowances in the year of exploration.

"VAT does not apply to mining companies producing minerals for exports, for example," he added.

Barrick was the first to consent to the new legislation in late August 2006, after the government agreed to remove the clause in its earlier contract that required the company to pay 15% additional capital allowance on unredeemed capital expenditure. However, Barrick will be required to pay $6.76 million a year until it starts making profits.

Barrick has three producting properties in Tanzania: Bulyanhulu, Tulawaka JV and North Mara. In 2005, Balyanhulu mine produced 311,000 ounces of gold at total cash costs of $358 per ounce, Tulawaka, a 70/30 joint venture with MDN Northern Mining, produced 87,000 ounces at total cash costs of $253 per ounce (Barrick's share) and North Mara totalled approximately 250,000 ounces.

Resolute agreed to the new legislation in late November, after the government served a $32 million tax assessment on its subsidiary Resolute (Tanzania) Limited. The company estimates the cost impact of this package to be about $10-$15 per ounce of production.

Resolute Mining's Golden Pride project produced 145,043 gold ounces in 2006, down from 149,866 in 2005 at a cost of $312/oz, up from $269 in 2005.

Kikwete said that no further changes to royalty taxes are foreseen in the near future. However, many other mining companies have yet to sign the new agreement.

Other mining companies operating in Tanzania aside from Barrick and Resolute include AngloGold which produces about 600,000 ounces of gold at its Geita Mine per annum, MDN Northern Mining and TanzaniteOne.

Companies exploring include Xstrata, Coeur d'Alene Mines, and Tanzanian Royalty Exploration Corp.

Gold, diamonds, gemstones and industrial minerals are the country's main mineral resources. Tanzania is the third largest gold producer in Africa at about 50 tonnes per annum. In addition more than 200 kimberlite pipes are available - many of which are "yet to be evaluated," Kikwete said.

"Prospects look good particularly for gas but also for oil," he said.

The country's mining sector accounts for roughly 3.3% of total GDP. There has been about $2.5 billion in foreign investment since 1998, according to Kikwete.

"Tanzania is open for business, I invite all of you to come to Tanzania and join hands with us," concluded Kikwete.

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