SARWatch launches ground-breaking research on the DRC gold trade: Congo's Golden Web

SARWatch launches ground-breaking research on DRC gold trade
Hundreds of millions of dollars worth of Congolese raw gold -- mined, processed and exported -- circulates in the shadow economy operated by criminal, corrupt and often violent elites. At the same time, other gold resources that could provide important funding for the development of the Eastern Congo and the country at large, or create urgently needed jobs for Congolese, remain locked underground, unexploited.
 
This is because mining companies that have acquired exploration licences are not prepared to invest in the industrial production of gold, and they find it more lucrative to speculate with their licences to increase the value of their shares on international stock markets than engage in full scale production.
 
With the notable exception of the Kibali project, gold production remains as the way it was during the time of Mobuto, dominated by an army of tens of thousands, perhaps hundreds of thousands, of artisanal miners. The raw gold they produce is exported, almost all of it, illegally, by eluding all systems designed to stop the export and end-use of conflict minerals – including UN sanctions, guidelines by the UN or the OECD, and other multi-stakeholder initiatives. As a consequence, the conversion of Congo's raw gold into investment grade gold bars for banks or jewelry production - the two main uses of gold - continues unchecked. 
 
SARWatch launches ground-breaking research on DRC gold trade
 
These are some of the highlights from Congo's Golden Web, the third and concluding report of the Southern Africa Resource Watch (SARWatch) Regional Monitoring and Research project which was initiated in 2011. The objective of this project was to explore the post-conflict security risks, and socio-economic and humanitarian impact of this industry, and establish why, seven years into the rule of an elected government supported with billions of foreign aid dollars, the benefits of Congo's gold have not trickled down to most Congolese. Most significantly, the study establishes that:
 
  • The bulk of Congo’s gold is still produced by artisanal miners under extremely inhuman and economically unsustainable conditions;
  • Most artisanal raw gold is exported illegally, bypassing all the systems designed to promote transparency and accountability;
  • Most industrial gold mining licence holders either delay operationalising or do not operationalise their licences for speculative reasons, and are thus not providing expected revenue, jobs and infrastructure improvements;
  • Most cases of diversion of tons of gold that have occurred in the recent past have not been prosecuted, and the DRC government has not sought compensation for these losses; and
  • As long as tons of Congo gold continue to enter international gold markets, governments around the world and their business and investor communities are complicit in the illegal exploitation and trade in DRC gold. 
 
This SARWatch report analyses all aspects of the commercialization of Congolese gold – including gold that is produced by industrial, semi-industrial and artisanal mining operations, and gold that is traded and refined by small merchants, well-capitalized trading groups and powerful refineries.
 
It provides detailed description of the methods of illegal exploitation, trading and smuggling, and how corruption at all levels of the Congolese government promotes these crimes. The magnitude of the problem is such that even with the creation of potentially powerful new state agencies and legal instruments, the effects will remain negligible. "The most important culprit," states Georges Mukuli, SARW DRC manager, "are Congo's national politicians. As long as they do not muster the will to stop these abuses, Congo’s mineral exports will not contribute to the country's growth and to the benefit of all of its citizens.” 
 
The international community should not assume that abuses of Congolese minerals are merely localized after-shocks of the Congo Wars of the past. So far, the accrued peace dividend benefits only the successors of the former militias: politicians, civil security forces, soldiers, local administrators, traditional leaders, merchants and international business people. They continue to wage economic war against Congolese artisanal miners, and their communities. "These daily challenges to the livelihood of tens of thousands of Congolese add up to a clear and present threat to international peace and security", says Enrico Carisch, author and lead researcher of the project. "Congolese that are again being robbed of their future may build the stock in the reservoir of desperate men from which militia leaders will recruit their next combatants for violent insurrection." 
 
The full extent of the evolving physical dangers was the subject of the first report, titled, From Conflict Gold To Criminal Gold (2012), describes how Congolese gold miners have not benefited from notable improvements in the broader Congolese economic and security context. The second report, titled, The High Cost Of Congolese Gold (2013) critically analyses the unrecognized social, gender and humanitarian dimensions of artisanal gold mining and their impact on the communities concerned. 
 
Recommendations
 
SARWatch has developed for each of its reports concise recommendations for  preventing future violence and confrontation, 
 
To regularize the commercialization of Congo gold, SARWatch recommends in this  report, Congo's Golden Web that the government of the DRC investigates lost revenue; enforce restitution; prosecute past, current and future violations of laws governing the production, trade and export of gold; audit state enterprises, joint-ventures and all licence holders to ensure maximum compliance with existing obligations; empower border control agents with lawful search and seizure measures; and launch a diplomatic initiative to secure support for restitution and international enforcement efforts.
 
In answer to the physical risks gold miners are exposed to, SARWatch recommends in its first report, , that the government of the DRC stop the criminal exploitation of the gold mining sector, provide adequate physical protection by deploying trained, paid and carefully supervised protection forces into the mining camps, ensure that racketeers are no longer able to monopolize all commercial exchanges in gold mining regions, and reorganize or close down SAESSCAM, the government agency that should assist artisanal miners but has failed abysmally to do so.
 
Finally, to mitigate the social, gender and humanitarian impact of artisanal gold mining, SARWatch recommends in its second report, , that gender-specific, technical and commercial support is provided to women and girls in artisanal mining communities that should include the provision of critical equipment, micro-credit, sub-regional value-chain analysis to identify more rewarding agricultural income opportunities, and a concerted consciousness-raising of the protection needs of women and girls that Congolese politicians must embrace and lead.

 

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