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DRC: Independent Audit Of First Quantum Mining Firm To Be Launched
The Democratic Republic of Congo plans to audit the operations of First Quantum Minerals Ltd. in the country to examine “suspected wide-scale misconduct,” Bloomberg reported Aug. 31, citing Mines Minister Martin Kabwelulu. A body engaged in financial auditing will carry out the investigation, which will look into allegations that First Quantum illegally exported copper ore without fully declaring it.
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Sub-Saharan Africa economy: Strategic rise ViewsWire
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Sub-Saharan Africa economy: Strategic rise
FROM THE ECONOMIST INTELLIGENCE UNIT
July 13th 2010
Rising global competition for commodities is giving a new strategic importance to resource-rich Sub-Saharan Africa. China and other emerging industrialised countries are vying with the subcontinent's former colonial powers to acquire long-term stakes in mines, oilfields and other commodity assets. With unprecedented volumes of investment on offer, the stakes are high not only for resource companies seeking to expand in Africa but also for the region itself. The challenge for African governments will be to manage their commodities better to avoid a repeat of the boom-and-bust years of the 1970s-90s.
Natural resources are hardly a new story for Sub-Saharan Africa. For decades the region has depended on exports of commoditiesóoil, hard minerals and cash cropsóto fund economic growth, though often with disappointing results. The collapse in commodity prices in the late 1970s and the mismanagement of revenue inflows resulted in weak growth and rising poverty, cementing the belief that Africa's dependence on commodities retarded its economic development. However, soaring emerging-market demand for commodities in recent years, coupled with the increasing scarcity of hydrocarbons and hard minerals, has changed the picture. Sub-Saharan Africa has become a prime target for adventurous foreign investorsówith Chinese companies playing a particularly prominent roleówith the result that the subcontinent once again has the opportunity to benefit from its natural wealth.
Sub-Saharan Africa is one of the most commodity-rich regions of the planet. The subcontinent contains the majority of known reserves of many key minerals, including 90% of the world's platinum-group metals, 90% of the world's chromium, two-thirds of the world's manganese, and 60% of its diamonds. It contains 60% of the world's phosphates, 50% of the world's vanadium, and 40-50% of the world's gold. Sub-Saharan Africa also boasts one-third of the planet's uranium reserves, one-third of its bauxite, and 10% of all oil reserves (the bulk of which are concentrated in the Gulf of Guinea in West Africa).
Most of these resources are underexploited. Uneven development has resulted in a handful of countries dominating commodity exports. The most important by far, both in terms of the diversity of its commodity base and the volume of its exports, is South Africa. The subcontinent's other commodity giant is the Democratic Republic of Congo, which sits on over half of the world's cobalt reserves and 25% of its diamonds, as well as having large quantities of rare metals such as coltan (used in mobile phones). Nigeria and Angola dominate oil production. However, other countries are starting to develop their commodity resources, and several are set to become major producers in the near future. They include Guinea and Angola (iron ore), Ghana (hydrocarbons), and Guinea-Bissau (bauxite and phosphates).
Sub-Saharan Africa also boasts a large agricultural sector. Much of this focused on the production of cash crops for export to the West during the colonial period and in the first years after independence. Since the late 1970s Africa has lost global importance as an exporter of many cash crops. The main exceptions have been coffee, cocoa and tea, for which CÙte d'Ivoire, Ghana, Uganda and Kenya remain key global producers, and more specialised crops like cashew nuts (Guinea-Bissau) and vanilla (Madagascar). However, increased competition from Asian and Latin American producers, coupled with a decline in Africa's terms of trade, has eroded profitability. Africa also continues to export large quantities of timber, particularly to China, but poor forestry management is threatening the sector's sustainability.
A scramble for access
Major emerging markets are playing a key role in the development of the region's commodities sector. Since the early 2000s China has invested heavily in African commodities, reflecting the two-pronged strategy of China's state-owned oil and mining companies: first, acquiring access to reserves through long-term contracts; and second, purchasing stakes in local ventures whenever possible. According to the Chinese government, by end-2008 total Chinese investment in Sub-Saharan Africa amounted to US$26bn, including stakes in oil and gas concessions in Sudan and the Gulf of Guinea, copper mines in Zambia, iron concessions in Gabon, and ferrochrome and platinum mines in South Africa.
China is not the only player around. Chinese interest is increasingly being matched by investment from Indian or Indian-linked firms, notably the steel manufacturing giants Tata Steel and ArcelorMittal, which are acquiring stakes in large coal concessions in Mozambique. Brazil is also stepping up its investment. Given the expertise of Brazilian companies in construction, engineering and the oil sector, it is likely that these firms will provide stiff competition for contracts in the next phase of Africa's infrastructure expansion.
Competition looks set to be particularly intense in the Gulf of Guinea, which continues to grow in strategic importance thanks to the steady increase in its proven oil reserves (a result of better deep-water drilling technology). The region is already the focus of military co-operation programmes between African governments and the US, EU and China. Tensions between these powers could increase as each seeks to establish a foothold in the region. Such a situation could prove advantageous to countries in the Gulf of Guinea if they are able to play off competing powers against each other. However, past experience indicates that such competition and strategic alliances can be used to prop up unsavoury regimes. This also poses potential difficulties for foreign investors. China is learning the hard way that its resource grabs can expose it to reputational risks over human-rights and environmental abuses.
Reaping the benefits?
There are plenty of other challenges. The region exports a lot of its commodities in unprocessed form, thus missing the chance to add value to them. For example, Guinea-Bissau exports its entire cashew crop (over 90% of the country's exports) to India for processing. The creation of low-tech processing operations could capture more of the value of the crop, as well as creating significant numbers of jobs. However, efforts to develop processing industries in Africa have proved disappointing owing to the constraints of the business environment, poor management and competition from processors in India and China.
Broader challenges include managing capital inflows better and maximising the economic benefits of foreign investments. Progress is occurring, with improved local-content provisions in mining contracts, the imposition of tighter environmental standards and greater transparency over commodity revenues. However, greater efforts are needed. African governments must ensure that infrastructure development does not just support the exploitation and export of minerals but also facilitates trade and the movement of people and goods. Local workforces must be trained in new skills and not just used for manual labour. A large proportion of oil and mineral revenues need to be held outside the countries in question in order to prevent currency appreciation that could render other industries uncompetitive.
If African governments can realise these aims, there is a good chance that the subcontinent's natural-resource endowment could provide major benefits to the population. Otherwise, the next wave of commodity development will merely entrench poor governance and corruption and further stifle economic development.
The Economist Intelligence Unit
FROM THE ECONOMIST INTELLIGENCE UNIT
July 13th 2010
Rising global competition for commodities is giving a new strategic importance to resource-rich Sub-Saharan Africa. China and other emerging industrialised countries are vying with the subcontinent's former colonial powers to acquire long-term stakes in mines, oilfields and other commodity assets. With unprecedented volumes of investment on offer, the stakes are high not only for resource companies seeking to expand in Africa but also for the region itself. The challenge for African governments will be to manage their commodities better to avoid a repeat of the boom-and-bust years of the 1970s-90s.
Natural resources are hardly a new story for Sub-Saharan Africa. For decades the region has depended on exports of commoditiesóoil, hard minerals and cash cropsóto fund economic growth, though often with disappointing results. The collapse in commodity prices in the late 1970s and the mismanagement of revenue inflows resulted in weak growth and rising poverty, cementing the belief that Africa's dependence on commodities retarded its economic development. However, soaring emerging-market demand for commodities in recent years, coupled with the increasing scarcity of hydrocarbons and hard minerals, has changed the picture. Sub-Saharan Africa has become a prime target for adventurous foreign investorsówith Chinese companies playing a particularly prominent roleówith the result that the subcontinent once again has the opportunity to benefit from its natural wealth.
Sub-Saharan Africa is one of the most commodity-rich regions of the planet. The subcontinent contains the majority of known reserves of many key minerals, including 90% of the world's platinum-group metals, 90% of the world's chromium, two-thirds of the world's manganese, and 60% of its diamonds. It contains 60% of the world's phosphates, 50% of the world's vanadium, and 40-50% of the world's gold. Sub-Saharan Africa also boasts one-third of the planet's uranium reserves, one-third of its bauxite, and 10% of all oil reserves (the bulk of which are concentrated in the Gulf of Guinea in West Africa).
Most of these resources are underexploited. Uneven development has resulted in a handful of countries dominating commodity exports. The most important by far, both in terms of the diversity of its commodity base and the volume of its exports, is South Africa. The subcontinent's other commodity giant is the Democratic Republic of Congo, which sits on over half of the world's cobalt reserves and 25% of its diamonds, as well as having large quantities of rare metals such as coltan (used in mobile phones). Nigeria and Angola dominate oil production. However, other countries are starting to develop their commodity resources, and several are set to become major producers in the near future. They include Guinea and Angola (iron ore), Ghana (hydrocarbons), and Guinea-Bissau (bauxite and phosphates).
Sub-Saharan Africa also boasts a large agricultural sector. Much of this focused on the production of cash crops for export to the West during the colonial period and in the first years after independence. Since the late 1970s Africa has lost global importance as an exporter of many cash crops. The main exceptions have been coffee, cocoa and tea, for which CÙte d'Ivoire, Ghana, Uganda and Kenya remain key global producers, and more specialised crops like cashew nuts (Guinea-Bissau) and vanilla (Madagascar). However, increased competition from Asian and Latin American producers, coupled with a decline in Africa's terms of trade, has eroded profitability. Africa also continues to export large quantities of timber, particularly to China, but poor forestry management is threatening the sector's sustainability.
A scramble for access
Major emerging markets are playing a key role in the development of the region's commodities sector. Since the early 2000s China has invested heavily in African commodities, reflecting the two-pronged strategy of China's state-owned oil and mining companies: first, acquiring access to reserves through long-term contracts; and second, purchasing stakes in local ventures whenever possible. According to the Chinese government, by end-2008 total Chinese investment in Sub-Saharan Africa amounted to US$26bn, including stakes in oil and gas concessions in Sudan and the Gulf of Guinea, copper mines in Zambia, iron concessions in Gabon, and ferrochrome and platinum mines in South Africa.
China is not the only player around. Chinese interest is increasingly being matched by investment from Indian or Indian-linked firms, notably the steel manufacturing giants Tata Steel and ArcelorMittal, which are acquiring stakes in large coal concessions in Mozambique. Brazil is also stepping up its investment. Given the expertise of Brazilian companies in construction, engineering and the oil sector, it is likely that these firms will provide stiff competition for contracts in the next phase of Africa's infrastructure expansion.
Competition looks set to be particularly intense in the Gulf of Guinea, which continues to grow in strategic importance thanks to the steady increase in its proven oil reserves (a result of better deep-water drilling technology). The region is already the focus of military co-operation programmes between African governments and the US, EU and China. Tensions between these powers could increase as each seeks to establish a foothold in the region. Such a situation could prove advantageous to countries in the Gulf of Guinea if they are able to play off competing powers against each other. However, past experience indicates that such competition and strategic alliances can be used to prop up unsavoury regimes. This also poses potential difficulties for foreign investors. China is learning the hard way that its resource grabs can expose it to reputational risks over human-rights and environmental abuses.
Reaping the benefits?
There are plenty of other challenges. The region exports a lot of its commodities in unprocessed form, thus missing the chance to add value to them. For example, Guinea-Bissau exports its entire cashew crop (over 90% of the country's exports) to India for processing. The creation of low-tech processing operations could capture more of the value of the crop, as well as creating significant numbers of jobs. However, efforts to develop processing industries in Africa have proved disappointing owing to the constraints of the business environment, poor management and competition from processors in India and China.
Broader challenges include managing capital inflows better and maximising the economic benefits of foreign investments. Progress is occurring, with improved local-content provisions in mining contracts, the imposition of tighter environmental standards and greater transparency over commodity revenues. However, greater efforts are needed. African governments must ensure that infrastructure development does not just support the exploitation and export of minerals but also facilitates trade and the movement of people and goods. Local workforces must be trained in new skills and not just used for manual labour. A large proportion of oil and mineral revenues need to be held outside the countries in question in order to prevent currency appreciation that could render other industries uncompetitive.
If African governments can realise these aims, there is a good chance that the subcontinent's natural-resource endowment could provide major benefits to the population. Otherwise, the next wave of commodity development will merely entrench poor governance and corruption and further stifle economic development.
The Economist Intelligence Unit
Source: Global Forecasting Service
© 2010 The Economist Intelligence Unit Limited. An Economist Group business. All rights reserved.
Sub-Saharan Africa economy: Strategic rise Sub-Saharan Africa economy: Strategic rise ViewsWire
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The MasterBlog
© 2010 The Economist Intelligence Unit Limited. An Economist Group business. All rights reserved.
Sub-Saharan Africa economy: Strategic rise Sub-Saharan Africa economy: Strategic rise ViewsWire
________________________
The MasterBlog
Sunday, May 30, 2010
Tantalum Investing News » Tantalum: Congo Conflict Mineral » Print
Tantalum: Congo Conflict Mineral
February 12, 2010 @ 10:43 am In Feature Articles, Tantalum Articles
[1]
By Melissa Pistilli—Exclusive to Tantalum Investing News [2]
Most people today are familiar with the term “blood diamond [3]” and the gruesome reality the name invokes. Global pushback against the trade in conflict diamonds from regions steeped in brutal slavery and guerrilla warfare led to the adoption of the Kimberley Process [4]by those in the industry and in the global community actively trying to block sales of diamonds used to finance war.
Blood diamonds are just one story in a long history of violence linked with the exploitation of people and resources that has plagued humankind for millenniums.
Another example of this shameful side of human nature is taking place today in the Democratic Republic of the Congo (DR Congo). The minerals involved include gold, tin, tungsten and tantalum, which are used to fund murderous militias caught up in a war between two peoples that has spilled over the borders from Congo’s neighbours.
Congo Conflict Background
The 1994 Rwandan genocide [5] was the catalyst that pushed Zaire, later to be renamed DR Congo, into the deadliest conflict since WWII. After the overthrow of the Hutu regime in neigbouring Rwanda, over two million Hutus, including many of the militiamen who committed numerous atrocities, flooded over the borders of eastern Zaire to escape possible retribution from the Tutsi.
The fleeing Hutu militia members found allies with Mobutu’s government and soon began violently persecuting the Zaire’s Tutsi population. Of course, Rwanda’s new Tutsi government provided support for Tutsi militias in Zaire fighting the Hutu and Mobutu’s troops. The Tutsi also formed alliance with other Ugandan-backed groups and managed to overthrow Mobutu. It was then that Zaire became DR Congo.
However, the newly installed president Laurent Kabila was soon ousted by Rwanda after he failed to throw out the Hutu militia. Kabila sought the aid of Angola, Namibia and Zimbabwe and the region fell into a bloody five-year war known as the Second Congo War [6] in which over five million Africans perished.
The war supposedly ended in 2003, however the region of eastern DR Congo is still under its shadow. General Laurent Nkunda, a Tutsi warlord believed to have the backing of Rwanda had been set on eradicating the area of any Hutu members of the Democratic Forces for the Liberation of Rwanda (FDLR), who he claimed the DR Congo government was supporting.
In late 2008, Rwanda and DR Congo forces came together to fight the FDLR in North and South Kivu provinces and General Nkunda was exiled to Rwanda [7] where he lives under house arrest. Unfortunately, the move did not pay off and gruesome large-scale murders and rapes are still occurring at the hands of both rebels and government troops even with the area supposedly under UN peacekeeping operations.
Conflict Minerals in the Global Marketplace
Natural resources like tin, tungsten and tantalum have been branded with the moniker “conflict minerals [8]” because the militias enslave locals to mine the metals and then use the funds garnered from their sale to help finance their bloody operations.
Sadly, it’s become apparent that even the Congolese army is taking part in the exploitation. Several thousand of the army soldiers are actually former rebels once under the command of General Nkunda and are seeking to establish their control over the region’s mineral resources.
“They didn’t integrate into the army, they took it over and now control huge parts of [the region],” says an anonymous former diplomat [9].
Once extracted, the conflict minerals are then taken to trading houses where they are prepared for sale in the global market and purchased by companies willing to ignore the illegal and inhumane way the ore was procured. Eventually, the processed ore makes its way into everyday items we Westerners often take for granted like cell phones, handheld gaming devices, and laptop computers.
Rising Backlash and Organizations Taking Action
According to Global Witness [9], “the illicit exploitation of natural resources in [Congo], and the accompanying serious human rights abuses, would not have taken place on such a large scale if there had not been customers willing to trade in these resources.”
Concerned organizations like the Enough Project [10], created by the Center for American Progress [11], and Global Witness [12], who helped bring the blood diamond controversy to global attention, along with the United Nations and other governmental agencies are bringing increasing pressure on those in the tantalum industry to ensure consumer products become conflict mineral free.
In later commentaries we’ll discuss the specific efforts these organizations are making towards creating a global marketplace free of conflict minerals, what these efforts mean for the future of the tantalum industry and what ethical investing opportunities exist in this sector of the mineral resource market.
Article printed from Tantalum Investing News: http://tantaluminvestingnews.com
URL to article: http://tantaluminvestingnews.com/2010/02/12/tantalum-congo-conflict-mineral/
URLs in this post:
[1] Image: http://tantaluminvestingnews.com/files/2010/02/congo.jpg
[2] Tantalum Investing News: http://tantaluminvestingnews.com/
[3] blood diamond: http://en.wikipedia.org/wiki/Blood_diamond
[4] Kimberley Process: http://en.wikipedia.org/wiki/Kimberley_Process
[5] 1994 Rwandan genocide: http://en.wikipedia.org/wiki/1994_Rwandan_Genocide
[6] Second Congo War: http://en.wikipedia.org/wiki/Second_Congo_War
[7] exiled to Rwanda: http://news.bbc.co.uk/2/hi/7846339.stm
[8] conflict minerals: http://www.smh.com.au/news/technology/out-of-africa-the-blood-tantalum-in-your-mobile-phone/2009/05/08/1241289162634.html
[9] anonymous former diplomat: http://www.globalpost.com/dispatch/kenya/100118/congo-conflict-minerals-mining
[10] Enough Project: http://www.enoughproject.org/
[11] Center for American Progress: http://tantaluminvestingnews.com/wp-includes/js/tinymce/plugins/paste/v
[12] Global Witness: http://www.globalwitness.org/Copyright © 2010 Tantalum Investing News. All rights reserved.
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