MAC/20: Mines and Communities

Madagascar - Rio Tinto breaks new ground as Daewoo gets boot

Published by MAC on 2009-01-19

Despite recent doom and gloom surrounding many of its operations, Rio Tinto has finally opened one of the most controversial mines in recent history.

Until a few years ago, critics of Rio's proposed mineral sands project in south eastern Madagascar included the World Bank , WWF and Conservation International. But, among international NGOs, only Friends of the Earth England Wales and Northern Ireland, and Partizans, appear to remain as staunch opponents.

Meanwhile, the Malagasy government has put on hold a oil plantation scheme, proposed by South Korea's Daewoo corporation, after citizens' protests that it was "neo colonialist."

What is the essential difference between a British mining company taking over vast strips of the country's seaboard to export minerals - and another foreign enterprise doing similar in order to grow maize and palm oil?


Rio Tinto starts ilmenite production in Madagascar

By Daniel Wallis

Reuters

15th January 2009

NAIROBI - A subsidiary of UK-based multinational Rio Tinto (RIO.AX) (RIO.L) has started ilmenite production at its QMM mineral sands operation at Fort Dauphin in Madagascar, the company said on Thursday.

Rio Tinto Iron & Titanium, part of the world's fourth-biggest diversified mining group, owns 80 percent of the development in the south of the Indian Ocean island. The Madagascar government owns the rest.

Madagascar ilmenite is 60 percent titanium dioxide, the firm said, making it higher quality than most other global sources.

"This first production is a major landmark in a project which, notwithstanding many complex challenges, has been described as a model for future projects in Africa and elsewhere in the developing world," Rio Tinto Chief Executive Tom Albanese said in a statement.

The company said the ilmenite from Madagascar would be shipped to Rio Tinto's metallurgical complex in Sorel-Tracy, Quebec, which had been upgraded to process it. It said the total investment cost in Madagascar and Canada was $1.2 billion.

The Sorel-Tracy facility will produce a new 90 percent titanium dioxide chloride slag suitable for global titanium feedstock markets, where it is used in the manufacture of pigments for the paint and plastics industries, the firm said.

The company said phase one production at Mandena, north of Fort Dauphin, would eventually ramp up to 750,000 tonnes per year. Later phases planned at Ste Luce and Petriky would bring the potential to boost production to 2.2 million tonnes a year.

The QMM project is part of an incipient mining boom in Madagascar, where most people live on less than $2 a day. Set to produce nickel, cobalt, bauxite and ilmenite, explorers are also looking for oil, gold, coal, chrome and uranium.

The first ilmenite shipment is scheduled for March 2009 when work is finished on the new Ehoala port, south of Fort Dauphin.

The port, which will cost $145 million including a $35 million World Bank loan, will be able to handle vessels up to 60,000 tonnes. It is expected to help open Madagascar's isolated and impoverished southern region and let the economy benefit from rising trade between Africa and Asia.

Harry Kenyon-Slaney, Rio Tinto Iron & Titanium's managing director, said the project would bring the region big benefits.

"The floating dredge and wet plant, successfully launched in November, and the dry mill launched in December are producing concentrate at target quality," he said in the statement.

"We are still in the early commissioning stage but expect to increase production over the coming months."

The QMM project includes conservation zones and the involvement of non-profit groups like Conservation International, Flora and Fauna International, Birdlife International and London's Kew Gardens. (Editing by Sue Thomas)

© Thomson Reuters 2009 All rights reserved


Land-rental-deal-collapses-after-backlash-against-colonialism

Daily Telegraph

14th January 2009

One of the world's largest land deals, a scheme to lease African farmland to rich countries to grow their own crops, has collapsed amid accusations of 'neo-colonialism'.

Madagascar was poised to sign a 99-year agreement to rent 1.3 million hectares of land to South Korea's Daewoo Logistics Corporation to plant maize and palm oil for export.

Food-importing countries with little arable land, mainly in Asia and the Middle East, are increasingly looking overseas to secure food supplies after the prices of staple foods rocketed last year.
But the practice has drawn criticism that it harks back to colonial-era "plantation agriculture" where rich outsiders force subsistence farmers off fertile land to grow export crops.

Now the Daewoo plan, the largest in Africa covering an area of roughly half of Madagascar's current arable land, has been put on hold after the Malagasy people protested that it would make them a "South Korean colony".

"We are in big trouble with the government of Madagascar," said Shin Dong-hyun, the general manager of planning and finance at Daewoo Logistics Corporation.

"The process was ongoing, but it has suddenly been stopped because of media reports. Those reports have made Madagascan people very angry because it makes them ashamed for being a part of what they say is a neo-colonial system."

The company had planned to grow maize and palm oil on vast commercial farms for export either back to South Korea or to sell at international markets to raise funds to buy other food for its domestic market.

Kenya, Sudan, Ethiopia and now Madagascar have all recently offered vast tracts of farmland for lease, hoping to cash in on a growing trend whereby developing countries from Ukraine to Cambodia offer fertile land to the highest bidder.

Qatar plans to lease 40,000 hectares along Kenya's coast to grow fruit and vegetables for its own citizens, in return for building a £2.4 billion port close to the Indian Ocean tourist island of Lamu.

Abu Dhabi announced discussions with Sudan to rent 30,000 hectares of land watered by the Nile to grow its own maize and alfalfa. Senegal is also said to be hunting for a similar deal.

The idea, which has been called a "new scramble for Africa", is not without its critics, who question why Africa should lose valuable farmland when it is chronically short of its own food.

Jacques Diouf, the head of the United Nations Food and Agriculture Organisation, has called the land deals a type of "neo-colonialism".

"It's clearly a good sign that these developing country governments are looking to more long-term ways to benefit from their agricultural land, but at the moment these deals all look far more lucrative for the buyer than for the seller," said Duncan Green, the head of research at Oxfam.

Kenya's deal with Qatar also looks set to come up against stern resistance from local growers.

"We cannot be happy in a country which has so many hungry people to see our farmland being used to grow crops for foreigners," said Zachary Makanya, the director of Pelum Kenya, an organisation representing small scale farmers.

"Instead of selling our land to Qatar or whoever, the Kenyan government should invest in helping our farmers to grow more and sell more to our own people."

According to Chido Makunike, an African agribusiness analyst and food exporter based in Dakar, Senegal, such "plantation" agriculture models are old fashioned and ineffective, despite promises of jobs and modern farming techniques.

"The realistic future of commercial farming in Africa is likely to be a hybrid combining commercial farms with local growers," said Mr Makunike.

"Commercial farmers can set up a smaller nucleus farm for high yield, high input agriculture, but then support surrounding small-scale farmers to be out-growers who they contract to grow for them.

"Instead of these people being farm-labourers they remain farmers or small business people in their own right who retain the dignity of being their own bosses."

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