Getting closer to responsible gold in Orientale and Kampala Gregory Mthembu-Salter, Phuzumoya Consulting

OECD/UN Group of Experts/ICGLR Conference May 4-6, 2015

Province Orientale, Democratic Republic of Congo

Soon to be divided into four…

Good news: Conflict levels in Orientale are

from their peak

• Cannot be because of conflict minerals initiatives in the province because…

• There have hardly been any…

• It means less Orientale gold is financing conflict

• Although…

Some gold in the province still does finance conflict… • Non-state

• Forces de Résistance Patriotique en Ituri (FRPI)

• Mai Mai Morgan

• Mai Mai Kumu

• State

• Forces Armées de la République Démocratique du Congo (FARDC) roadblocks

• FARDC commanders controlling pits

• (And politicians and government officials too…)

The permits making up ‘Concession 40’

Ituri, Province Orientale

The bad old days

Operation Artemis

On “Concession 40”…

• The permits are held by AGK, a joint venture

• Industrial mining stopped decades ago. AngloGold Ashanti was interested in re-starting but abandoned the idea five years ago

• There are estimated to be over artisanal miners digging for gold

• There is no sign of the gold trade financing

• The FARDC taxes transport at road blocks but no evidence that commanders control pits

• SAESSCAM and Division des Mines are largely absent because SOKIMO – a state owned company – is part of AGK

Criminal semi-industrial mining is a growing threat …

The Validation – Certification – Export Debate

• Province wants validations right away, but

• Validation teams are waiting for a traceability system

• CEEC has a system but it is too complicated and looks expensive

• There are practical measures that can be implemented like crushing and trading gold in the same centre de negoce

• But the most reliable route to certifiably conflict-free gold will be …

Negotiated agreements between title holders and artisanal miners Which also needs Congolese law to change

Zones d’Exploitation Artisanale (ZEAs)… • Have a role to play but…

• They are not a complete solution…

• They cannot replace Mongbwalu!

• Or Mukungwe!

• Or Musebe!

• Sometimes diggers won’t leave and cannot be moved and permit holders need to do a deal

Not disappearing any time soon

Photo taken in Musebe gold mine, Haut Katanga

The core of the agreements should be…

• Digger/Co-op/Trader implementation of

• In return for the permit holder…

• Facilitating artisanal production in agreed sites?

• Providing transport?

• Providing social services?

• Providing financing?

• Refining artisanal production?

• Purchasing the production?

• Allowing another recognised buyer to purchase the production?

What will the revised Mining Code say about this?

Moving to… Uganda

Historically a transit route for goods in and out of DRC, including gold… And why not?

The only companies ever sanctioned by the UN Security Council for financing conflict in the DRC are Uganda

In 2011, the Ugandan government tightened the rules…

• Gold exporters now had to produce to show where their gold had

come from…

• The

A Huge Drop in Recorded Gold Exports

0

100

200

300

400

500

600

700

2010/112011/12

2012/132013/14

Gold export (kg)

Regional Certification Mechanism (RCM) Implementation is moving forward

• BUT

• Not clear how RCM can impact on

•

Carrots and Sticks

Sticks • Tougher controls at

Entebbe Airport

• Ugandan police investigations of suspected gold smugglers

• New controls from customs authorities in receiving countries

Carrots • The Lodhias’ pilot project

proposal:

• They establish a company to buy traceable non-conflict gold from DRC

• Overseen by a third party

• They pay any taxes owed on this gold to the Congolese authorities

In Conclusion, what is to be Done? • Legal changes in DRC to enable agreements between artisanal

diggers and permit holders

• Multi-stakeholder negotiation of these agreements, especially in places like Concession 40

• Clarity on when and under what conditions can mine sites be validated in Orientale – what can be done without a traceability system in place first?

• Alongside RCM implementation, better carrots and better sticks in Uganda:

• Improve controls at Entebbe Airport and..

• What about the Lodhias’ proposal?