Tag Archives: artisanal miners

Artisanal Mining and Dodd-Frank

Image Mark Craemer from http://www.eea.europa.eu/signals/signals-2011/articles/interview-mark-craemer

North Kivu, Democratic Republic of Congo, Bisie Mine
Congo’s soil is bursting with buried treasure. Its long civil war, which ravaged the east for the best part of a decade, was financed largely by metals extracted….Congo’s tin, tantalum and tungsten are used in electronics around the world. Although some of these minerals come from big industrial copper mines in Katanga, Congo’s south, and a gold mine in South Kivu, there is not yet a single modern mine in North Kivu.

Until now the province’s metal has been dug out almost entirely by hand. Yet Alphamin hopes to show that it can run a modern industrial mine in a part of the world that scares other modern miners away.

Alphamin says that the investment is attractive—even at a time of low commodity prices—because the ore that it plans to extract is richer than that found anywhere else in the world. Behind the company’s camp on the hill are stacks of carefully ordered cylinders of rock drilled out to map the riches beneath the mountain. (Like almost everything else in the camp, the drill rig had to be lifted in by helicopter.) The ore they contain is 4.5% grade. That means that for every 100 tonnes of ore extracted, the firm will be able to sell 3.25 tonnes of tin (not all the tin can be extracted from the rock). Most other mines would be happy to produce 0.7 tonnes…..

If the gamble pays off Alphamin’s investors will make juicy returns. But to do so they may have to convince locals that the project is in their interest. If not, they risk protests and sabotage.In 2007 some 18,000 people lived at Bisie, working the site with pickaxes and shovels. They produced some 14,000 tonnes of tin that year—or perhaps 5% of world production. To get it to market people carried concentrated ore on their heads through the jungle to an airstrip where small planes could land to carry it out. It was back-breaking work but lucrative for many Congolese. That era began to come to an end in 2011, thanks in part to an American law.

Under the Dodd-Frank act, a law aimed mainly at tightening bank regulation, firms operating in the United States must be able to show where the minerals used in their products came from. The idea was to stop rebels in poor countries from selling gold and diamonds to fund wars. The law all but shut down artisanal mining in much of eastern Congo.

Elsewhere in eastern Congo artisanal mines have gradually reopened thanks to a verification scheme under which the UN and the government check mines and allow certified ones to “tag and bag” minerals. The site at Bisie has, however, never been certified. And although Alphamin will provide some well-paid jobs to locals, as well as pay taxes to the central government, its mechanised operations will never employ anything like the thousands of people who once toiled there with pick and shovel. Alphamin has promised to fund local projects, such as a new school, that are intended to benefit 44 villages.

Excerpts from Mining in the Democratic Republic of Congo: The richest, riskiest tin mine on Earth, Economist, Aug. 27, 2016

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The Fight for Gold: central bank of Sudan against the Militias

central bank of sudan

Jebel Amer, Darfur, Sudan:  Fighting between rival tribes over the Jebel Amer gold mine that stretches for some 10 km (six miles) beneath the sandy hills of North Darfur has killed more than 800 people and displaced some 150,000 others since January 2013. Arab tribes, once heavily armed by the government to suppress insurgents, have turned their guns on each other to get their hands on the mines. Rebel groups that oppose the government also want the metal.

The gold mine death toll is more than double the number of all people killed by fighting between the army, rebels and rival tribes in Darfur in 2012, according to U.N. Secretary General Ban Ki-moon’s quarterly reports to the Security Council.  U.N. officials and diplomats told Reuters the government has been complicit in the violence by encouraging at least one militia group to seize control of mines, a charge the government denies.  Until last year the Darfur conflict pitted the government and its Arab militias against three large rebel groups. The Jebel Amer attack changed that, dividing Arab tribes against each other.  But international peace efforts are still focused on bringing the main rebel groups into a Qatar-sponsored deal Khartoum signed with two splinter groups in 2011.

At the last meeting to discuss the Qatar deal in September, Qatar’s deputy prime minister, Ahmed bin Abdullah al-Mahmoud, expressed concern about the recent tribal violence, but stressed a key factor in bringing peace to Darfur would be to get the rebels to the negotiating table, according to Qatari state media….

The recent resurgence in violence is rooted in Sudan’s loss of a huge chunk of its territory in the south two years ago. When South Sudan seceded in 2011, the rump state of Sudan lost most of its oil production – worth some $7 billion in 2010 – sending the economy into a spin. Sudan’s GDP contracted by 10 percent last year, according to the World Bank.

To replace the oil the government in Khartoum has encouraged people to dig for gold. Now half a million diggers roam Darfur and the north of the country with mine detectors and sledgehammers, according to the mining ministry. The gold rush helped boost output by 50 percent last year to around 50 tons, making Sudan Africa’s third-largest producer, equal with Mali after South Africa and Ghana, according to official data and expert estimates. Gold exports have become Sudan’s lifeline, providing the government with $2.2 billion (net) last year and making up more than 60 percent of all exports.

Sudan’s central bank, desperate for anything to secure foreign currency, pays artisanal miners up to 20 percent more than the global market price, several gold trading sources told Reuters. The central bank denies this.

At the same time, around a quarter of Sudan’s annual gold output is smuggled abroad, industry sources inside and outside Sudan said. If that figure is right, the government lost up to $700 million last year – money it badly needs.  “The government is so desperate for the gold that they are willing to stoke conflict to get artisanal mines under its control,” said Magdi El Gizouli, a fellow at the Rift Valley Institute, a think tank based in London and Nairobi.

On a sunny morning in early January 2013, dozens of Land Cruisers surrounded the town of El Sireaf near the Jebel Amer gold mine. Men readied themselves behind mounted machine guns and mortars and started firing.  “I saw 30 cars. They came from all sides and fired randomly into houses,” said Fateh, a worker who hid in his house as the attack began. “They shot women, children, even cattle, anything they spotted,” he said, asking for his full name to be withheld as he fears the gunmen might come back.  The attackers, members of the Arab Rizeigat tribe appeared to locals to have one goal: to seize control of the mines from the Bani Hussein, a rival Arab tribe…

Until the fighting began, the area was dominated by small artisanal miners. Over the past couple of years, gold diggers arrived from neighboring Chad, the Central African Republic and even far-flung West African countries such as Nigeria and Niger, Darfur residents said.”There were even some Libyans, Syrians and Jordanians,” said Suleiman Dubaid, a Bani Hussein leader who said seven members of his family were killed during the fighting. “Some people made 6,000 (Sudanese) pounds ($800) a day.”

The gold is smuggled out in bags or underwear, to middlemen on the other side of the Chad border. From there it goes to the capital N’Djamena where it is loaded onto commercial flights or stashed in the baggage of courier firms, Sudanese gold sources and Darfur residents say. The final destination is often Dubai, the Middle East’s main gold market.Some gold is also smuggled to Cameroon, where it is exported and shipped to gold markets in India and China, a Sudanese gold source said.

Nonetheless, gold revenues are expected to fall as low as $1.5 billion this year due to declining global prices… That may be one reason, say Western diplomats, tribal leaders and international peacekeepers working in Darfur, why government officials encouraged the Rizeigat tribe to break the Bani Hussein’s control of the Jebel Amer mine. “They wanted the Rizeigat to shake up things a bit so that at least some of the gold goes to the central bank,” said a Western diplomat.

Khartoum has used the Rizeigat before: The tribe provided the core of the feared “Janjaweed” militias, armed and unleashed by the government in 2003 to put down the rebel insurgency, according to rights groups such as Human Rights Watch.The Rizeigat were also Khartoum’s allies during the 1983-2005 civil war with the south, sending fighters armed by the government.

The Rizeigat had their own reasons to seize the mine, according to Western diplomats and tribal leaders. Many of them had been integrated into state forces such as the border guards or central reserve police, but Khartoum has slashed funding to those forces.  Since the January attack, Rizeigat tribesmen have mined Jebel Amer on their own, residents said. Guards have sealed off roads and banned anyone from the Bani Hussein or even some government forces from approaching the site. They attacked a nearby army base in June, according to an internal report from the UNAMID peacekeepers seen by Reuters.

Darfuri rebels want gold, too. Tribesmen from the Zaghawa, the backbone of the rebel Sudan Liberation army (SLA), until recently operated its own mine in Hashaba to the east of Jebel Amer. There is no data on how much rebels make from gold sales but locals and UNAMID staff say Hashaba’s output was much smaller than Jebel Amer.  The potential spoils are huge. To the south of Jebel Amer, for instance, there is an area called “Shangil Tobaya”, which is Sudanese Arabic for “turn a brick and you find gold.” Rebels and Arab militias are vying for control for a strip of low-rise mountains. “People say there is gold up there but we cannot check it because the armed militias are there,” said Adam Saleh, a local farmer.

Excerpts, Special Report: The Darfur conflict’s deadly gold rush, Reuters, Thursday, Oct. 10,  2013