Congo Mining Deal at heart of Corruption Allegations

A London business has acquired all the shares of a Congolese mining company, in the middle of a corruption scandal involving the industry’s investment in Africa and the Congolese government.

Miners work in a pit close to Mongbwalu, Congo’s de facto gold capital.

ENRC (Eurasian Natural Resources Corporation) signed a $550m deal to buy out 49.5% of Israeli billionaire Dan Gertler’s share of Camrose Resources.

In their official press statement, ENRC detailed the effect this acquisition would have on its other mining investments in Africa.

Camrose holds 70% interest in Metalkol, and 55% in Comide, both of which mine copper and approximately 64% of Africo, which develops base metal and gold assets throughout Africa.

The added socio-economic stigma of corrupt multinational investment in DRC added pressure on ENRC to review its professional relationship with Mr Gertler, who has been accused of “looting Congo at the expense of its people.”

(That brilliant sound-bite courtesy of Jean-Pierre Muteba, the head of an NGO coalition in Congo’s Katanga province, which oversees mining activity and its economic impact on the local community).

Child labour in coltan mines in DRC

ENRC acted after pressure from politicians, investors and campaigners to increase its transparency and demonstrate how local people benefit from its mining operations.

Eric Joyce, a Scottish MP, has accused ENRC of “wrecking its reputation and integrity by entering into ropy deals with, frankly, shady middlemen.”

Critics say Mr. Gertler has used his close personal relationship with government officials to secure preferential corporate treatment.

In an interview with Bloomberg Markets, due to come out next month, Mr. Gertler insists his efforts in the Congo should earn him a Nobel Prize. “They need people like us”, he says, “who come and put billions in the ground. Without this, the resources are worth nothing.”

A Congolese miner checks his load of mineral chips he got inside a deep cassiterite mine in the north Kivu region. Photo: AFP

To put this in a broader context, this deal comes a week after the IMF froze its loans to Congo – because the government would not release details about deals between state-owned mining firms and companies related to Mr. Gertler.

Antoinette Sayeh, Director of the Africa Department at the IMF says they are committed to improving the DRC’s political climate. But these efforts are hindered because of road-blocks like this, particularly “given the significance of natural resources in this economy and the huge impact that [they] can have.”

There is also pressure from the British government to reduce aid to the Congo if the government does not show that profits from its mining industry benefit its people.

With a per capita income of $280 per annum – significantly below the level that the country formerly known as Zaire achieved after independence from Belgium in 1960 – Congo’s mining industry is at the heart of its economy and has spent years embroiled in corruption and socioeconomic scandals.

A very young girl breaks up rock at an abandoned state-owned copper mine in the city of Kipushi in the Democratic Republic of Congo, May 10, 2012. (John Lehmann /The Globe and Mail)

This latest deal to muscle out business interests accused of further exacerbating extreme poverty and turning a blind eye to human rights abuses (Human Rights Watch frequently reports cases of rape and violence against children in and around mining towns in DRC) could be the step in the right direction that African businesses need to take to tackle some of its longest-standing problems with multinational companies and investments.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s