The Global Heroes

Who pays the hidden price for Congo’s conflict-free minerals?


SOCIAL MEDIA

10th June 2020 By The Global Heroes Investigations

Valentin was in trouble. His arms were tied behind his back and he couldn’t move. The sun was beating down in the courtyard of the mining company where he and his friends were being held.

The men had been arrested by mining police for peacefully protesting the low price of the coltan ore they had dug out by hand from deep narrow shafts in the Democratic Republic of Congo.

Western activists have sought to help end violence in Congo by championing conflict-free mineral policies that aim to stop armed groups profiting from the trade. But thousands of miners like Valentin are paying a heavy price. At his mine, Kisengo, a monopoly on clean coltan has kept prices low, reduced revenues, and driven some miners to trade their wares illegally or move into the illicit artisanal gold sector.

A miner works underground at a coltan mine in Kisengo, DRC
Emmanuel Freudenthal/IRIN
Emmanuel Freudenthal/IRIN

A proposed executive order by US President Donald Trump reportedly seeks to cancel those regulatory controls. The draft order, obtained by The Guardian and Intercept, claims to be acting out of concern over “mounting evidence” that instead of preventing minerals from fuelling conflict, these controls are actually causing harm and contributing to instability in the region. On this occasion, Trump may have a point. A months-long IRIN investigation in mineral-rich eastern Congo found that some artisanal mining communities have suffered serious consequences as a result of the new conflict-free rules.

Several thousand self-employed miners work alongside Valentin [1] in the Kisengo mine. Like him, they’re only allowed to sell to a single company. That company, MMR, is a pioneer in the supply of untainted minerals. It has exclusive rights to purchase the entire production of the four main artisanal mines in what was formerly Katanga Province – now four smaller provinces.

“We don’t set prices. We impose them on miners.” That’s how one MMR employee, who asked for anonymity, explained the relationship.

 

[1] Name changed. Although one of MMR’s employees confirmed the arrest of miners, the head office later denied having any knowledge of it.

Good intentions

Emmanuel Freudenthal/IRIN

Artisanal mining is one of the main sources of livelihoods in eastern Congo.

Like Valentin, some 240,000 miners work with just picks and shovels, under extreme conditions, to extract valuable minerals, among them coltan. The dark metallic ore contains the commercially important element tantalum, which is extracted and used to make key components in mobile phones and almost every other electronic device.

The forests and grasslands where the miners work are crisscrossed by armed militias, whose violence has led to millions of deaths since the 1990s. The motivations of these groups range from local grievances to regional proxy wars. But one thing many of them have in common is that they sustain themselves by taxing the natural resources trade – in particular minerals.

In reaction, human rights activists in the United States lobbied for a law, section 1502 of the Dodd-Frank Act, which was passed in 2010 and requires publicly listed companies to determine whether their products contain “conflict minerals” produced in Congo.

The new rules provided the impetus for similar legislation in Congo and neighbouring countries. This year, the European Union will have its own version, which will apply worldwide. Whether these efforts have reduced conflict in Congo is hotly debated between activists and academics.

Passed in the wake of the financial crisis of 2007-2009 to tighten company oversight, Dodd-Frank was hugely unpopular with the Republican Party and is now under general assault by the Trump administration, which reportedly intends to suspend section 1502 for two years.

Keeping it clean

Emmanuel Freudenthal

For minerals to remain truly conflict-free, their flow has to be kept separate from tainted materials.

It’s a challenge. The mines validated as conflict-free can be just a few hills away from those controlled by armed groups. And the trade is messy, with miners and mineral traders operating independently and constantly on the move across the region. Conflict minerals can easily leak into the supposedly clean supply chains. 

Emmanuel Freudenthal/IRIN
A fleck of gold in the palm of a Congolese miner

“If you use the old trading networks… it’s almost impossible to track your minerals,” explained Ken Matthysen, who helped conduct a unique survey of more than 1,600 mines in eastern Congo for the Belgian research institute IPIS.

MMR has been at the forefront of efforts to produce bona fide conflict-free minerals. Its first clients included companies such as Fairphone and Motorola that make a big deal out of sourcing materials responsibly. 

While other mines have more open access, potentially allowing tainted minerals to leak in, MMR goes to great pains to make sure its production is kept pure, from the shafts all the way to export.

The company was also among the first to implement a traceability scheme, called iTSCi, which currently channels nearly all of Congo’s legal coltan exports.

Exclusive contract

Emmanuel Freudenthal/IRIN

The production of conflict-free minerals kicked off in a village called Kisengo, in eastern Congo.

In 2007, large deposits were discovered there, which soon attracted the miners, with families and merchants in tow. More than 20,000 people arrived within the first year.

Indian businessmen were also attracted to Kisengo’s natural riches. In March 2010, their company, MMR, obtained the exclusive rights to purchase the entire production of Kisengo and three other large mining sites. This proved a particularly good deal as, around the same time, the price of tantalum doubled on international markets.

Emmanuel Freudenthal/IRIN

The contract between MMR and the provincial government of Katanga, headed by Moïse Katumbi at the time, was not subject to any tender. Instead, the agreement gave MMR exclusive rights, on the understanding that the company would prevent the mineral trade from funding armed groups and maximise tax revenues for the province. In exchange, MMR had to build a hospital and a school in Kisengo, which it eventually did.

The contract also instructed MMR to collaborate with a miners’ cooperative, CDMC, which, according to Africa Intelligence, was founded by a brother of the mining minister. The minister, Martin Kabwelulu, did not reply to IRIN’s emails.

MMR has enforced this agreement with the help of the army, and latterly the police, as set out in its contract. Claude Iguma, a PhD researcher who has studied the security situation in Kisengo, counted 43 policemen in the village, most of them armed with assault rifles, and five control points at its exits. MMR pays the police on top of their government salaries, according to several IRIN interviews with informed sources and prior research, but the company denies this.

Low-balling

Emmanuel Freudenthal/IRIN

Despite the impressive security apparatus, minerals are still smuggled out of MMR’s concession.

There’s good reason for that. The prices offered by MMR are much lower than those offered on the black market.

Several traders told IRIN they could smuggle minerals out of the Kisengo mine and sell them for twice the price MMR offers. MMR has been buying coltan for $20-24 per kilo, whereas one trader told IRIN he sold ore from Kisengo in the Rwandan capital, Kigali, a few months ago for more than $50 per kilo.

Emmanuel Freudenthal/IRIN
Amani, the gold trader | Congo’s conflict-free minerals

The price of coltan depends on its tantalum content, and Kisengo’s ore is known by traders to be of the highest quality.

According to confidential information obtained by IRIN, MMR has bought between 100 and 160 tonnes of coltan annually from Kisengo miners over the past few years. This could add up to anywhere between $3 million and $9 million in annual export sales, depending on production, grade, and exact price.

Purchase prices are set by a committee composed of MMR itself, formal representatives from the miners' cooperative, and government officials.

But the miners’ cooperative, CDMC, supposedly a separate entity, is indistinguishable from the company. Its director sits behind an empty desk in MMR’s building. Questioned by IRIN on this point, the company said: “All entities that work collaboratively with MMR on production of minerals spend time in MMR facilities." But MMR also pays the salaries of CDMC’s employees, according to two CDMC managers interviewed by IRIN.

As such, none of the members of the price-setting committee effectively represents the miners’ interests.

Protests erupt

Emmanuel Freudenthal/IRIN

In May 2016, a delegation of miners met with MMR to request better prices, but the company refused.

Valentin and some of the others decided to strike, and a large crowd of miners ended up blocking access to the mine. Valentin said they harassed no one but simply demonstrated, saying, “No organisations owned by foreigners will be allowed to come and conduct its activities… until the price is increased.”

At the end of that day, MMR increased the price from $20 to $22 per kilo. When the police reportedly fired shots in the air, the miners dispersed and returned to town.

But a little later on, more than a dozen protesters, including Valentin, were arrested by the mining police, tied up in MMR’s compound for several hours, thrown into one of MMR’s cars, and taken to Kalemie (half a day’s drive away), where they were jailed overnight, according to several miners and independent eyewitnesses.

There, they were accused of being armed rebels and only released after the provincial governor, Richard Kitangala, intervened.

A local MMR representative said the car had been commandeered by the police and denied that the miners were held in its compound.

Contacted by email, MMR’s head office responded: “We know nothing of the specifics that are referred to here.” The head of the mining police responsible for the area said he was not authorised to speak with journalists and could not provide a spokesperson.

Similar protests against MMR’s monopoly have occurred routinely over the years. In 2011, UN investigators foundthat when miners protested the coltan price in another of MMR’s mines, the police and army were deployed. The report said: “Live rounds were fired, and two civilians were killed." But MMR told IRIN: “We doubt this is true, as we have never heard of such incident.”

Night owls

Emmanuel Freudenthal/IRIN

By protesting, Valentin and his colleagues secured a couple of dollars more per kilo for their ore. But there is another way a miner can look to increase his revenue.

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