The DRC, Conflict Minerals and Chinese Money

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It would seem that in spite of democracy, not much changes in The Democratic Republic of Congo (DRC). To say bribery, corruption, theft, tax evasion and coercion are rife in the DRC is to invite accusations of western imperialist bigotry and the unjustified use of stereotypical labels from many quarters, but the reality is business and indeed much of anything involving money in the DRC does not operate to standards widely assumed by the rest of the world as fair and open.

Four years after signing what was said to be a US $9 billion minerals-for-infrastructure deal with China, President Joseph Kabila’s cronies are said in a Mineweb article to still be negotiating behind closed doors with their Chinese partners, without almost any involvement by the Ministries of Budget, Finance or Economy. According to Global Witness, an NGO with extensive experience in the region, negotiations are being handled by one insider, Augustin Katumba Mwanke, a presidential adviser without any official role in government who in a 2002 final report of the United Nations Panel of Experts on the Congo was named as “one of the chief figures in an elite network of Congolese and Zimbabwean political, military and commercial interests [which] seeks to maintain its grip on the main mineral resources…of the government-controlled area [of the Congo].” According to Mineweb, the UN report contended that, “This network has transferred ownership of at least USD 5bn of assets from the state mining sector to private companies under its control in the past three years with no compensation or benefit for the state treasury.”

Against this backdrop, the US is to enact the “conflict minerals bill in April, which will require companies to prove that minerals extracted from the DRC and its nine neighboring countries are not linked to conflict. In a country where conflict verging on civil war has been almost continuous for the last 16 years, in which an estimated 5.4 million people have been killed, including 2.7 million children, rebel groups still control large sections of the eastern provinces guaranteeing conflict-free sources will be tough. Although a Reuters report quotes Dieudonne-Louis Tambwe, deputy technical co-coordinator at the DRC Ministry of Mines, saying the government would provide mining services and regulators to create secure centers where diggers could sell their products for state controlled export. Going on the authorities’ track record, one has to question how reliable any system set up and run by the authorities is going to be, how regulators will ensure purchased minerals are from where they say they are. Mr. Tambwe told Reuters: “This is an answer to what the Americans are doing with the legislation. We provide documentation so that whatever products have gone through that scheme are certified.”  The reality is US (and European) companies will almost certainly not buy from the DRC.

No such compunctions about minerals being linked to human suffering will hinder the Chinese, though; they are almost certainly seeing this as a positive development, leaving the field open to them and strengthening their hand at the table as the only buyer of substance. Meanwhile, the World Bank’s IDA and the IMF announced in July 2010 that they would support USD 12.3 billion in debt relief for the DRC for zero in return. At least the Chinese hold out the chance of getting some valuable metals in return for their dollars, in spite of the ruling elites’ efforts to cream off a fair proportion of the spoils for themselves.

–Stuart Burns

*Please click here to download the MetalMiner Conflict Minerals Legislative Guide, covering the details of the new Dodd-Frank Wall Street Reform and Consumer Protection Act and how mandated audits will affect companies that purchase tin, tantalum, tungsten and gold.


Read more on the intersection of China and the DRC:

What China and the DRC Mean for Tin Investment, Tantalum and Conflict Minerals Legislation Part One

What China and the DRC Mean for Tin Investment, Tantalum and Conflict Minerals Legislation Part Two

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