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DRC mining contracts

By Joel Hudson,2014-06-18 00:33
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DRC mining contracts ...

    IS A GENUINE AND TRANSPARENT PROCESS OF MINING

    CONTRACTS RENEGOTIATION POSSIBLE IN THE DRC?

    Claude KABEMBA

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    1. Introduction

    ? If there is a country where the paradox of plenty and poverty is so manifest it has to be

    the Democratic Republic of Congo (DRC). The DRC is intensely rich in natural

    resources, most famously for its minerals.

? The DRC is ―one of the most well endowed countries in the world with respect to 1minerals.‖ This is not a new revelation. We have known for centuries now that the DRC

    is a geological scandal.

? The DRC holds roughly one-third of the world‘s cobalt reserves and 10 percent of its

    copper reserves. You also have tin (cassiterite) which is the most traded metal on the

    London Stock Exchange.

    ? The commodity boom of recent years has raised the profile of the mining industry in the

    DRC.

    ? A relative peace in some parts of the country after a decade of war (Officially the war has

    ended. But it continues) and the organization of elections in 2006 which brought in a

    legitimate government have relatively reduced the risk of doing business in the DRC.

    ? Despite its metal resources, the average citizen‘s income is less than one dollar a day.

    Government revenues for mining only totalled just US$ 32 million in 2006. You have

    over 284 mining companies in the Katanga province alone. Where does the money these

    companies pay go? Do they pay the taxes at all?

    ? While in other parts of the country such as Katanga and Kasai you have registered

    companies doing business side by side with artisanal mining, in another part especially

    in the East you have an informal extraction of coltan taking place which government

    has no control of.

    ? In the East of the country there is an armed battle going on for the control of the mines.

    Here you do not know who is in charge and who is making money. What we are sure

    of is that the Congolese people who dig and transport these resources for miles and

    miles do it most of the time for free or in exchange for something to eat.

    ? In the DRC, war is economics by other means just as war is politics by other means

    for claussewitz.

    2. The Congolisation of mineral resources

    ? We cannot comprehend the necessity of the renegotiation of current mining contracts in

    the DRC without looking back into the historical aspects of the commercialisation of

    minerals in the DRC.

    1 Mark Smith, …..

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? Congolisation is a term borrowed from an eminent Congolese academicProfessor

    Ernest Wamba dia wamba.

? ―Congolisation‖ is the process of the creation of Congo that favors the foreign interests.

? This Congolisation can be divided in three stages:

    The colonial period

? My reference to the colonial past has another meaning.

    ? It is not a simple attempt, as many have done before, to argue that the crisis of the state

    in the DRC is purely a result of the colonial history.

    ? It is critical to revisit DRC‘s colonial history and see how its manifestations continue to

    influence directly and indirectly the way political agents have behaved for centuries.

    ? As such this exercise is not an attempt to make utopian and sterile attempts to repeat the

    past, but to go beyond.

This is what the Belgian Minister of finance said in a speech asking the Belgian

    Chamber to ratify the decisions of the Berlin Conference:

“May the Congo, gentlemen, from this day forth, offer to our superabundant activity,

    to our industries, more and more confined, outlets by which we shall know how to 2profit.”

? Before the Berlin Conference European economies were hungry for overseas markets,

    raw materials, cheap labor and hugely profitable land.

    ? European nations were expanding their territory by acquiring land on other continents in

    search of raw materials for their industries.

    ? Their foreign policy establishments became more and more committed to the

    maintenance of vast tracks of distant territory and large number of subjugated peoples.

    ? The Berlin Conference in 1885 by giving Leopold II as the sole owner of the land and

    people of the DRC, legitimised the looting of the DRC‘s natural resources.

    ? This history is important if you want to frame correctly the debate on mining contracts

    revision in the DRC.

    ? Leopold II did not only profit alone in the DRC. Financiers of mineral extraction and

    rubber came from all over the Western world. Even though Leopold succeeded in giving

    Belgium an important victory when he was allowed to create the Congo Free State, which

    would become a Belgian colony later, the understanding was that he would serve the

    interests of all the capitalist powers. He created the Congo Free State administration

    ostensibly to facilitate international trade.

    ? The Berlin conference, to agree with Walter Rodney, was not only about land grab. It was

    more so about a detailed and elaborated political project that prepared Africa and in

    2 Legum Colin, Congo Disaster, United States, Penguin Books, 1961, p26

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    particular the DRC to a successive, systematic and sophisticated wave of resource pillage

    that continues today.

    ? It was already established at that time that the Congo Basin contained products of great

    importanceIvory, copper and rubber.

To the finance Minister’s statement this is what Marx so oppositely observed, “ wherever

    a merchant capital held a position of dominance, it stood for a system of robbery such

    that its development among trading nations was always invariably associated with

    plunder and piracy.”

    ? When Leopold II was tired and running out of ideas on how to keep the control of the

    DRC, after decades of looting, he passed the control of the Congo to the Belgium

    government.

    ? The colonial rule, in an effort to remain in control of the invaded territory, was in

    constant search for new formulas to legitimize its presence and reinforce its domination.

The post Independence

The tendency is for critics to blame the DRC‘s poverty, corruption, poor infrastructure, lack of

    skills, poor economic growth and other problems on the nature of the state, which I will do later.

    But these problems have also to do with the distortions of the international economic / trade

    system.

The dominant economic dogma post-World War II pushed for an open trade policy climate in

    Africa promising that countries endowed with natural resources would experience economic

    growth by exporting their raw resources as their comparative advantage. This is in spite of the

    fact that the newly independent countries adopted interventionist import-substitution

    industrialization policies.

We know now that not only were the promised benefits short-lived, but that resource-based

    economic activity remained subject to diminishing returns.

The problem is the opening of markets by developing countries entering the crisis-ridden global

    system leaves them prone to a speculative and unstable global regime, with fewer resources to

    cope with a crisis.

Independent Period

    ? The Western powers in collaboration with a local elite continued to plunder the DRC‘s

    resources.

    ? The DRC Foreign policy during this period was about regime security. Mobutu came

    to power with the backing of Western powers. Congolese leaders have enjoyed

    political and economic benefits from the illegal and uncontrolled external exploitation

    of the country’s minerals. Politically, they receive security of their regimes; and

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    economically, they benefit financially from the sell of the resources. In return, they i use the money to buy the opposition and civil society.</