MAC: Mines and Communities

Africa update: huge new investments, no change for the better

Published by MAC on 2007-10-23

Africa update: huge new investments, no change for the better

23rd October 2007

Foreign direct investment in Africa's extractive industries have doubled over just the last three years.The World Bank's International Finance Corporation (IFC) will spend 75 to 80 per cent of this year's investments alone on the continent's mining sector. And the world's major mining companies are targeting Africa as never before.

But, on the ground little, if anything, has changed for the better among mining-affected communities, as these updates demonstrate

MAC contributing editor, Abu Brima, has been campaigning in Canada to reveal the unacceptable practices of Sierra Leone diamond-miner, Koidu Holdings. Formerly owned by the reprehensible UK-based, quasi-mercenary outfit, Branch Energy, Koidu is now in the hands of the Benny Steinmetz Group (BSG), based in Geneva. BSG has stakes in mineral ventures in DR Congo, Botswana and Zambia as well as Sierra Leone.

(For information on Steinmetz's recent role in the attempted a take over of Nikanor in DRC - see: )

Gabonese environmental groups are demanding that the government reveal the terms of a US$3 billion iron ore mining deal with China which, they fear, could damage virgin forest.

Six communities in Ghana are suing an Australian mining company for failure to pay proper compensation and for damaging their crops; while a group of smallscale miners accuses another company of wilfully attacking them.

UK company Camec - which hasn't been able to convince a DRCongo commission of its rights to operate - has turned to bio-fuel cultivation in Mozambique (which, some may view as even more damaging to agriculture than a mine.

Meanwhile, the Zambian government seems to be retreating on its promise to impose higher royalties and taxes.

Africa becomes mining boomtown from metals surge



19th October 19, 2007

LONDON - High commodity prices are fuelling metal and mineral exploration budgets across the globe but resource-rich Africa stands out as a jewel.

"We are targeting more exploration investment in Africa than any other region around the globe," the world's largest mining firm BHP Billiton told Reuters in an email.

The Australian giant plans to spend $800-million (U.S.) on exploration this year, in line with 2006, and next year expects to increase its exploration spend to $1.2-billion.

BHP Billiton is not alone searching for resources in far-flung places that until recently were too risky to explore.

"Overall, the gold-mining industry is tending to go to emerging and undeveloped countries as discoveries are scarce," the world's largest gold producer Barrick Gold said.

In 2007 Barrick expects to invest about $185-million in exploration, up slightly from 2006, the firm said in an email.

The International Finance Corporation, the private financing arm of the World Bank, will spend 75 to 80 per cent of this year's investments in the mining sector on projects in Africa.

The IFC's mining division specializes in financing mining projects and assists companies investing in developing countries to spur economic growth.

"We are beginning to see a total convergence in the sort of objectives that we have as a development bank to those of successful mining companies," senior manager William Bulmer of IFC's mining division told Reuters.

He said the institution expects clear development benefits to come out of projects that are successfully executed.

"Our commitment now is very much for growth in terms of IFC's role in the sector," Mr. Bulmer said.

Mr. Bulmer said mining firms faced additional risks when moving into these markets whether it was political, environmental or social and community issues.

"This is why, quite frankly, IFC is often partnering with these large companies, because they certainly don't need our money, it is to bring in this type of assistance," Bulmer said.

Over the past few years mine project investments had been fairly modest, at around $300 million of FDI, "but we expect that to increase significantly," he added.

In 2007 IFC's expected mining portfolio budget amounted to $567.5-million, while money raised from commercial banks or B-loans totalled $50-million. This is up from $393.4-million and B-loans of $25-million in 2003.

One recent IFC investment is a $5-billion equity stake in Rio Tinto's iron ore project in Guinea.

The world's second largest diversified miner, Rio Tinto, spent $194-million in the first half of 2007 on exploration, up from $113 million during the same period of 2006.

Africa benefited from 16 per cent of its exploration budget.

"We have increased our focus on Africa...We are looking to develop a number of projects in different parts of Africa," Rio Tinto's spokesman told Reuters.

In Africa total FDI inflows in the extractive industries, including oil and natural gas, exceeded their previous record set in 2005. At $36-billion it was twice the 2004 level, the World Investment Report 2007 by the United Nations said.

High commodity prices and buoyant demand from emerging economies, mainly in Asia, fuelled inflows, the report said.

Nonetheless, Australia and North America remained unchallenged as the world's most important mining regions.

The majority of Rio Tinto's assets are in Australia at 55 per cent, 18 per cent in the United States, 12 per cent in Canada, 6 per cent in South America and only 4 per cent in Africa.

The same goes for the majority of FDI inflows in extractive industries going to developed countries in 2006, mainly because of significant cross-border merger and acquisition activity.

But the trend points to developing and transition economies taking a larger share of investments in extractive industries, the United Nation's UNCTAD) report said.

In total global private investment in non-ferrous metal exploration increased to $7-billion dollar in 2006, up from $2 billion in 2002, the report added.


Mining companies violating rights in Sierra Leone - activist

Constant blasting for diamonds, low wages are one firm's legacy

By RAMON GONZALEZ , Western Catholic Reporter, Edmonton

22nd October 2007


Some Canadian mining companies are committing human rights violations and major environmental degradation in Sierra Leone,jeopardizing the health, security and well being of people, says a visiting community activist.

Abu Brima, executive director of the Network Movement for Justice and Development (NMJD), pointed the finger specifically to Koidu Holdings, which mines diamonds from kimberlite in the Kono district in eastern Sierra Leone.

The company, which Brima says has changed names and headquarters several times in the past to avoid international scrutiny, mines in the heart of the heavily populated Kono District and its operations are damaging both the environment and the community.

"They blast and they blast during the day when the people are at work or going about their business," Brima said. "Stone particles fly around destroying homes and buildings.

"They have failed to relocate about 5,000 people who are directly affected by the blasting. And they have not compensated the people of the community appropriately for the damages caused to their plantations."

Brima is the 2007 solidarity visitor of the Canadian Catholic Organization for Development and Peace, which supports the work of the Network Movement for Justice and Development.

He is visiting Edmonton, Camrose and St. Paul before going to Ottawa to accompany CCODP officials to deliver 160,000 petitions to the Canadian government demanding firm action against Canadian companies that violate international standards.

The petition demands the government to refuse support for mining companies that do not respect international environmental and human rights standards.

The WCR was unsuccessful in its efforts to track down a head office for Koidu, which Brima said was Canadian owned, in order to get a response to his statements. A May 2007 press release from Energem Resources of Vancouver said that company had sold its 40 per cent interest in Koidu.

Water pollution

Brima says Koidu Holdings has reduced the amount and the quality of the water that people in the community have access to. Ponds of polluted water sit everywhere and people have to walk several kilometres to find fresh water.

The rights' activist also accused the company of routinely using state police forces to arrest community leaders who oppose their mining practices.

"They use the state forces because they have money," he said. "The communities are very poor communities, very backward and so the people do not have the power and the company, in alliance with the authorities, hire the services of the police."

Brima said Koidu Holdings has shut itself off to the public. "They do not consult and when we organize meetings they do not attend. They do not respect the laws of the land."

Working conditions

The about 400 workers employed by the company make about $200 a month, enough to support a family of five for about two-and-a-half weeks.

"They do not pay well and the living conditions are very poor," lamented Brima, a father of four. "The workers are not very well protected. Last year two workers were actually killed by machines." What do Brima and his Network Movement for Justice and Development want Koidu Holdings to do?

"We are trying to get them to operate responsibly and that means that they have to comply with not only their own environmental assessment and action plans but over and above to operate according to international standards," Brima said.

The company did an environmental and social impact assessment in 2003 but has not followed its own action plan as it publicly promised, he said.

"They must take into account the need to protect the community, to protect the environment and to compensate and relocate the people affected by the blasting, the dust and the noise. It's part of their action plan. I'm talking about 5,000 people who live in the community." Brima said people are also demanding the newly elected government of Sierra Leone review the contract with Koidu Holdings, which was signed during the war with a military junta, not a democratic government.

Brima agreed with the current CCODP campaign demanding the Canadian government establish an independent ombudsperson's office to investigate complaints and make recommendations to ensure that Canadian mining companies abroad respect human rights and the environment.

Copyright © Western Catholic Reporter


Gabon's Greens Fret Over China Iron Ore Project

PlanetArk GABON

12th October 2007

LIBREVILLE - Environmental groups in Gabon demanded on Thursday the government reveal the terms of a US$3 billion iron ore mining deal with China, saying they feared the huge project could damage an area of virgin forest.

The project, awarded to state-owned China National Machinery & Equipment Import & Export Corp., is for the construction of a big iron ore mine in the Belinga mountains of Gabon's remote northeast Ogooue-Ivindo province. The Chinese group expects to complete the mine in three years.

The deal also foresees building a 560 km (350 mile) railway to carry the ore to the Atlantic coast, a bulk commodities and container port and two hydroelectric power stations. Local ecology groups say they fear the contract, whose detailed terms have not been made public, may not contain sufficient safeguards to protect against environmental damage, for example through parallel logging activities by the Chinese.

"We demand immediate publication of the contract made between the government and the consortium led by China National Machinery & Equipment Import & Export Corp.. This way, Gabonese will know if their interests are being protected," Marc Ona Essangui, who heads a coalition of environmental groups, said.

Essangui told a news conference the groups believed the Chinese consortium was being granted exemption from all taxes for 25 years.

They called for a full environmental impact study.

Gabon has part of the Congo Basin forest, the second largest forest in the world which conservationists fear is being damaged by uncontrolled, illegal logging as well as by a proliferation of mining projects.

In the last few years, China has snapped up multi-billion-dollar energy, mining and infrastructure deals in Africa, like Belinga, as it seeks to secure oil and raw materials for its expanding, resource-gobbling economy.

While many African governments praise Beijing for its "no strings attached" approach to aid and trade, Western critics say China cuts corners by ditching safeguards against corruption and labour and environmental abuses.

Following public concern expressed by the environmental groups, Gabonese President Omar Bongo last month invited two of their members to be part of an inter-ministry commission tasked with supervising the Belinga project.

Bongo, Africa's longest serving ruler, has maintained more than three decades of cordial ties with Beijing. He said last month he agreed with the idea of preserving nature but also had to consider Gabon's development.

"Whatever happens and whatever anyone says, Belinga will go ahead," the president said.

Story by Antoine Lawson



Australian gold mine sued by communities

A total of 479 community representatives from six communities (Akoti Etwebo, Sorano, New Obra, Paboase and Sefwi Paboase) in the Western region of Ghana have sued Chirano Gold Mines Limited in a High Court in Ghana. Chirano Gold Mines is an Australian Mining Company operating a gold mine in the Western region of Ghana.

In a Statement of claim the communities are:

a. demanding for payment of fair and adequate compensation for the destruction of their crops and property

b. praying for an order to stop the company from polluting their drinking water sources, to immediately supply potable water to the communities and to take measures to protect the environment and rights of the villagers.

Chirano Gold Mines Limited is one of the five Gold Mining companies in Ghana that have strip-opened Ghana's forest reverses for surface mining against public protests. The company took over large tracks of farmlands for its gold mining activities thereby displacing hundreds of thousands of villagers from their land. The compensation that the company offered to the villagers for their land and property was woefully inadequate. For instance, the company paid about US$2 for each cocoa tree, a tree that has an average gestation period of fifty years with annual yield of half a maxi bag of cocoa beans worth US$50.

All attempts by the communities to get the company to negotiate the compensation price failed. At a point the company was threatening leaders of the communities with police brutalities. One of the community representative was invited to appear at the police station for apparently no crime or charges. They have no option but to pursue the matter in court.

[Statement by Environment Unit, TWN-Africa, 20 October 2007]



On October 18th, 2007 police attacked small-scale miners at a place called “MONEY PIT” (SIKA MENASO), at Kenyasi in the Bong Ahafo region of Ghana

A team of police from Sunyani and Goaso attacked the small- scale miners who were at work without provocation. The attack resulted in the abuse of people’s human rights and destruction of property. Several of them sustained various degrees of personal injuries.

The following indicates the type of actions and damages caused by the team:

Three(3) of the miners sustained gun shots and several others were frightened with warning shots

Pits were put under patrol and set fire to, without any account as to whether there were human beings inside or not.

Thirty five bicycles belonging to the small- scale miners were ceased and burnt,and others buried.

Two (2) motor bicycles were taken away.

Mobile phones, money and clothing were seized.

Tipper-Trucks with loaned tyres were busted

Villages around were burnt

Fufu Seller’s soup [delivery] was stopped and eaten by the police who afterwards set fire to the cooking utensils.

Access roads to town were blocked and finally the miners came home from far distances with unprecedented dresses.

REPORT BY RICHARD ADJEI – POKU, Livelihood & Environment Ghana, Kenyasi and Ahafo Area.


UK company, CAMEC, recently disgraced in DR Congo (see MAC story: is turning its hand to exploiting 30,.000 hectares of sugar cane in Mozambique for ethanol.

23 October 2007

Mozambique signs ethanol mega-deal: $510 million, 30,000 hectares of sugarcane (Biopact) - Mozambique's Agriculture Minister has confirmed his country has signed a huge $510 (€360) million deal with London-listed Central African Mining & Exploration Company Plc (CAMEC) to establish an energy plantation and to build a plant to produce 120 million litres of ethanol per year, as well as fertilizers. The plan was described earlier (here), but there was uncertainty over its scope.

Agriculture Minister Erasmo Muhate said the deal envisages raw material for the ethanol will be sugarcane planted over an area of 30,000 hectares in the southern province of Gaza.

I hope that with this project a city emerges, and there will be more benefits for local communities, while helping to cut Mozambique's high fuel costs. - Agriculture Minister Erasmo Muhate.

Current high oil prices are catastrophic for oil importing, energy intensive developing countries, which can spend up to 15% of their GDP on importing fuels (compared to 2-3% for OECD countries). The ethanol produced in Mozambique will therefor bring major economic benefits. The fuel will be aimed at the domestic and regional markets, including the production of electricity from the cane residues (bagasse), to be used locally. The project, to be known as PROCANA, will create and estimated 7,000 jobs and generate an annual revenue of $40 (€28) million from 2010 onwards.

Joana Matidiana, spokesperson of the government of Gaza said the new employment opportunity for the people of Massingir and surrounding areas is "welcome, as it will contribute largely in the fight against poverty in Mozambique".

It is beyond any doubt that production of ethanol is one of best opportunities for the country. We want to diversify our economy because we don't want to depend on just four major products of export. We would like to contribute with some other products, such as alcohol. We can also contribute with the export of electricity, as the sugar mill could also generate electrical power and sell it to the domestic market. - spokesperson of Mozambique's Agrarian Promotion Centre.

With the emergence of a 'biofuels city', the Mozambican government hopes to cut down number of nationals who flee poverty and illegally emigrate to South Africa, so far believed to be over a 1,000 per day. CAMEC is expected to start construction of the integrated ethanol factory within the next year, with completion after three years.

Mozambique has only recently begun to understand that it is a 'biofuel superpower'. Its agro-ecological resources allow for the production of a wide range of efficient energy crops, including eucalyptus, grasses, starch crops like cassava, or sugarcane and jatropha. Analysts affiliated with the International Energy Agency estimate that the country can produce around 7 Exajoules of biofuels sustainably, that is roughly 3.1 million barrels of oil equivalent per day.

The country currently consumes around 590,000 tonnes of oil products per year, the bulk being diesel (IEA data). This equates to around 0.18EJ. Achieving full energy independence is well within reach, with capacity to spare to supply international markets.

When it comes to the availability of land for energy crops, the country currently uses around 4.3 million hectares out of a total of 63.5 million hectares of potential arable land, or 6.6 per cent. Moreover, some 41 million hectares of poor quality land are available for the production of energy crops that require few inputs and are not suitable for food production.

Recently Mozambican scientists and researchers told an International Symposium on Tropical Roots and Tubers that they are determined to develop varieties of cassava appropriate for the production of biofuels and to use the potential of a cassava industry as a tool for poverty reduction and rural development.

Meanwhile, a host of companies has already begun investing in Mozambique's biofuel potential. Canada's Energem recently acquired a jatropha biodiesel project based on an initial 1000 hectares; it will begin planting a further 5000 hectares, and will invest in an additional 60,000 hectares over the coming years. Chinese, Italian, Portuguese and Brazilian companies are active in the sector as well.

Most recently, the government of India and Mozambique discussed the potential of the biofuel sector to alleviate poverty in the country.

Source: Biopact


Mineral levies won't be 'punitive,' Zambia vows


24th October 2007

Zambia has engaged a team of foreign consultants to help it renegotiate mineral royalties and taxes with foreign miners, Finance Minister Ng'andu Magande said yesterday, adding that the new taxes would not be "punitive."

Mr. Magande said the foreign experts and senior government officials were finalizing proposals for raising mineral royalties, corporate tax and withholding tax on dividends to shareholders before negotiations with the foreign firms. Key foreign investors in Zambia's mining sector include Canada's First Quantum Minerals Ltd., Australia's Equinox Minerals Ltd., London-listed Vedanta Resources PLC and Swiss firm Glencore International AG.


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