The Great Lakes region has an ‘illegal minerals’ problem

Attracting ‘proper’ mining companies could bring peace, say experts

COVER STORY | RONALD MUSOKE | Barrick Gold Corporation was until 2019 the largest mining company in the world. With operating revenue of US$12.922 billion (Uganda’s GDP is about US$50 billion), Barrick Gold is the kind of mining company that experts think could help end the problem of ‘illicit mineral trade’ if governments in the Great Lakes region allow it.

Cyrille Mutombo, the Country Director of Barrick Gold, the parent company of Kibali Gold which has since 2009 been operating from the far northeastern province of Haut Uélé in the DR Congo, made this point at a recent virtual meeting on illicit mineral exploitation organised by the International Conference on the Greats Lakes Region (ICGLR) Secretariat.

The webinar held on April 9 was titled, “ICGLR’s Fight Against Illegal Exploitation of Natural Resources in the Great Lakes Region.” It attracted independent experts and researchers, senior government officials, development partners, and players in the minerals private sector.

They were discussing ahead of a crucial meeting of the ICGLR Audit Committee which monitors all mining operations in the region scheduled for April 23-25 in Nairobi, Kenya. It is expected that top on the meeting’s agenda will be finding solutions to the persistent illegal minerals trade with a focus on strengthening what is called the “regional certification mechanism.”

“Attracting proper investors like Barrick in this region is something that can help the states,” Mutombo said. Mutombo shared the company’s experience of operating in the restive eastern part of DR Congo and showed how mining legally can bring economic prosperity, social development, and peace to a region.

He recalled a time in 2009 when the gold mines of the far northeastern province of Haut Uélé in DR Congo were still infested with rebels of the Ugandan fugitive Joseph Kony’s Lord’s Resistance Army (LRA). He said despite the province sitting on gold deposits, it was almost impossible to exploit the precious metal.

But the company executives persisted and went to work, he said. They constructed a modern mine, built road infrastructure and beefed-up security around the mining operation, he added.

“Just by the fact that we established the mine, we built the road, we constructed everything, it created a peaceful environment. And the LRA haven’t been operating in that region for many, many years.”

Today, Kibali gold mine which is jointly owned by global mining giants Barrick Gold (45% of shares), AngloGold Ashanti (45%) and Société Minière de Kilo-Moto (SOKIMO) is a US$3.5 billion mining operation with annual gold production reaching about 20 tonnes.

The company does not only employ thousands of Congolese (6500 employees by the end of 2024), it has also contributed close to US$$5 billion to the Congolese economy, US$2.3billion of which has gone to suppliers, while US$1.5 billion has gone into the Congolese treasury in form of taxes.

ICGLR’s mineral certification

Mutombo told the virtual meeting how, given the fact that the company operates in a conflict-prone region, it has benefited from the ICGLR’s regional certification mechanism. He explained that the company’s success has partly come from working closely with the state institutions. In getting the Congolese version of the ICGLR certificate, for instance, Kibali Gold had to approach the CEC (Centre d’Expertise et d’Evaluation du Congo).

“When we do our gold production, they are there to oversee that we do the production the correct way. They work with us. They come and oversee it. Once they’ve done that, they issue the initial certificates.”

The CEC also works with other state institutions including the OCC, (l’Office Congolais de Contrôle), and the Division des Mines.

“Once they oversee the whole process after the production of the gold bars, which we produce, then they issue us that certificate. When we have the ICGLR certificate, it puts us in a position to then export the gold,” said Mutombo. “The customs would then go ahead and issue us with an authorization to get that gold and send it out. And they do that in conjunction with the Division des Mines.”

The company then approaches DR Congo’s central bank (Banque Centrale du Congo), which then issues it with an export licence. “Once you have the export licence, it means you can get your gold out (of the country),” he said.

He said through all that process, there is also some payment notes that are issued. “Once you send out the payment notes and all these government institutions are through the process, then you are entitled to get your gold out of the country after being issued with a ‘certificate of transport.’

“Once it flies out, that’s the first part because the central bank has to continue following up because then, once you get the gold sold, the money comes. The central bank, through the forex regulation, the regulation of the exchange, they make sure how that money is utilized, how it comes back.”

“That way, they are able to trace all your payments. They can trace everything that is being done. And they make sure that you comply and abide with all the rules, specifically the ones that are related to the country.”

Mutombo said there is need for regional governments to promote mining enterprises that are compliant with the ICGLR mechanisms. “Kibali Gold is one of the best examples, just to show how this mechanism has been able to work,” he said.

“When you look at the issuing of the permits today, everyone gets issued with a permit but when you have a company like Barrick, a company that complies, that really has that kind of thinking, it is good to promote these types of companies to be operating in the region.”

“This is because when you look at the impact of just one single company, imagine having 10 companies like Kibali Gold in that region. It boosts peace,” Mutombo said.

Mutombo also thinks improving regulation of the mining sector across the region needs to be done very quickly. “We have spoken about the harmonisation of the internal country laws but we also need these laws to talk to each other,” he said, adding that there are many regulations in the region that appear to be contradictory.

“You have a process that has been established but when you approach the regulator or you try to apply it as you understand it, they oppose you with another law, which sometimes creates a lot of tension between us and the officials.”

“So, harmonisation is something that needs to be pushed very, very quickly to make sure that internal regulation of the different countries talk to each other and also talk to the other countries.”

We are in a region with close to nine countries. It would be good that these laws are not conflicting against each other, intra-country and extra-country as well. Once we have those two, they will clear up the whole mechanism.”

Formalizing artisanal mining operations

Mutombo explained that one other important aspect of the ICGLR mechanism entails formalisation of the artisanal and small-scale miners in the Great Lakes region. In the case of Kibali Gold, Mutombo said, the company has been “working a lot” with DRC’s Ministry of Mines and the Service d’Assistance et d’Encadrement du Small-Scale Mining (SAESSCAM), the Congolese government agency which regulates artisanal miners.

“As you know, sometimes these institutions fall short of means (resources). So what we did was, with our geologists, we identified some sites which had potential. Once we identified those sites, we approached government and they reviewed the whole process,” Mutombo said.

“The sites got formalised, and then all the artisanal miners that were working, instead of allowing them to work on our permits (licensed zones), which is not allowed by the law, we directed them through these artisanal sites.”

“That has reduced potential for tension, and that also helps us to be at peace with this community, especially in a region where you have conflicts arising all over the place.”

“When you look at a region like Haut Uélé, where we operate, and you add the Kivus, the number of artisanal miners we have, for instance, is way bigger compared to the number of zone artisanal, exploitation artisanal, or artisanal mining sites,” he said.

“So, the first thing that we encourage government to do is to have most or a lot of these sites. That creates or reduces tension between, for instance, the actors, the private sector, which we are, and also it creates another class, which is the middle class, to promote them into business.”

“That is very helpful because when you look at the reasons of war in the Great Lake region, these people come, the warlords, for instance, they easily get through these illegal mining sites.”

“They work, they fund, and then they get an entry point into this sector. And that is where government is very vulnerable, because it’s an open door, which adds up to instability. So, it is very important to understand that they have a big role to play into decreasing the number of these illegal sites.”

He also cites the ICGLR’s third-party audits, which the company initiated just three years ago in 2022 with its office in the Burundi. “They (auditors) came here (Kibali mining operation), and that’s something that also helped us to do our disclosure as a company, and auditing is part of that.”

Harmonizing regional mining regulations

But Mutombo also thinks improving regulation of the mining sector across the region needs to be done very quickly. “We have spoken about the harmonisation of the internal country laws but we also need these laws to talk to each other,” he said, adding that there are many contradicting regulations in the region that appear to be contradictory.

“You have a process that has been established but when you approach the regulator or you try to apply it as you understand it, they oppose you with another law, which sometimes creates a lot of tension between us and the officials.”

“So, harmonisation is something that needs to be pushed very, very quickly to make sure that internal regulation of the different countries talk to each other and also talk to the other countries.”

We are in a region with more than close to nine countries. It would be good that these laws are not conflicting against each other, intra-country and extra-country as well. Once we have those two, they will clear up the whole mechanism.”

Curing a perennial malaise

The ICGLR is a 12-member intergovernmental organisation established in 2006 to promote peace, security, democratic governance, economic development, and regional integration. Its members include Angola, Burundi, Central African Republic, Congo-Brazzaville, DR Congo, Kenya, Rwanda, South Sudan, Sudan, Tanzania, Uganda and Zambia.

Many of these countries are in the Great Lakes Region, a part of the African continent that is often cited as an example of the so-called “paradox of plenty” as it boasts plenty of high-grade minerals, yet, for many of the countries in this region, there is little to show for the mineral abundance other than poverty and armed conflict. Some of the minerals in the region that are most coveted on the international market are lithium, cobalt and the 3TG (tin, tungsten, tantalum and gold).

In an attempt to cure this perennial challenge, the leaders of the 12 ICGLR member states met 14 years ago and agreed to create a foolproof international system for certifying and auditing minerals that have been blamed for stirring-up conflict in the region. Many observers and experts say little has been achieved so far.

“The regional mechanism launched more than ten years ago does not seem to have worked well,” said Prudence Bararunyeretse, a professor at the University of Burundi, who specialises in monitoring due diligence in the mineral supply chain in the Great Lakes region. He said the harmonisation of political and regulatory frameworks is not yet effective.

Bararunyeretse also spoke at the virtual meeting organised by the ICGLR Secretariat. He said disparities observed in different countries, especially in terms of government mineral revenues and expenditures are among the causes of speculation and illicit mineral trafficking, especially tin, tungsten, tantalum and gold. He said the unclear supply chain has led to the securitization of these minerals.

The minerals from this expansive region have long suffered from the distrust of reputable international companies that are involved in the trade of these minerals. Since some of the companies are listed on the international stock exchanges, they have silently suspended supplies from the Great Lakes to avoid being indexed.

Quite often, the supply chains of these minerals has been found to be complex and opaque, with experts blaming the perennial instability and cyclical violence on these precious metals.

“It is not uncommon to hear that the countries of the ICGLR are ‘acquiring other neighbouring countries’ and (using) members of the same community, to promote illicit mining and extraction of resources in their territories,” he said. “This suggests that the cooperation and communication between the states themselves and between the states and the final actors of the supply chain is not in a good place,” said Prof. Bararunyeretse.

“Our countries are rich in natural resources but at the same time, the countries of the Great Lakes display very poor performance in terms of different (development) indicators, such as the index of sustainable human development, the index of perception of corruption, the index of fragility and the index of security.”

He added: “The countries do not fare any better in terms of attracting foreign direct investment, the mining transformation and the rate of electrification and road infrastructure that are essential for the development of the mining sector.”

“This is a situation that does not rate development based on the exploitation of these natural resources. So, we all realise that this wealth is also associated with the permanent insecurity that we continue to observe in the region, which creates a paradox between wealth, natural resources, and the well-being of the population, economic growth and sustainable development.”

Combating illegal mineral deals

In response to this persistent challenge of socio-economic inequality and the trade in conflict minerals, the ICGLR developed an international mechanism to stop the exploitation of natural resources known as the Regional Initiative against the Illegal Exploitation of Natural Resources (RINR).

The RINR consists of six tools namely, the regional certification mechanism, harmonization of national legislations, regional databases on mineral flows, formalization of artisanal mining sector, adoption of the Extractive Industries Transparency Initiative (EITI) and whistle-blowing mechanism.

At the core of the initiative is the ICGLR ‘Regional Certification Mechanism’ which focuses on four minerals namely, tin, tantalum, tungsten and gold referred to as “Designated Minerals” under the ICGLR mineral certification scheme.

The mechanism is aimed at ensuring that mineral supply chains do not provide direct or indirect support to non-state armed groups or security forces engaged in illegal activities and/or serious human rights abuses within and between ICGLR member states to eliminate support for armed groups that perpetuate or prolong conflicts and/or commit serious human rights abuses. So far, five of the 12 member states; Burundi, Uganda, Tanzania, Rwanda and DR Congo are already implementing the ICGLR regional certification mechanism.

Gerard Nayuburundi, the Regional Coordinator of the Natural Resources Unit at ICGLR which is based in Bujumbura, Burundi, told the virtual meeting on April 9 that since the “Regional Certification Mechanism” went into force, all minerals crossing border points should be accompanied by an ICGLR certificate.

“Otherwise, whatever is crossing member state borders are smuggled materials and they should be treated as such,” he said.

Nayuburundi said the four minerals; tin, tungsten, tantalum and gold have been given special attention because they have been difficult for the region to certify, especially gold consignments that come from artisanal and small-scale miners–thanks to its high value-to-volume ratio.

Philip Kirui, the Deputy Director of Mines and Head of the Licensing Function at the Directorate of Mines in Kenya’s State Department of Mining, who also doubles as the Chair of the ICGLR Audit Committee, said the ICGLR Audit Committee was established as a technical oversight body to ensure transparency, consistency and compliance within the ICGLR framework. He said in order to do the actual auditing on the ground of the mine site and the export process of these minerals, third party auditors are deployed.

He said the accreditation of these auditors is done by the audit committee through a procedure that is already developed as one of the tools in the manual. “We have auditors from across the globe and from the region who have expressed interest and they have been accredited to be able to carry out this auditing exercise,” he said.

The work of the committee is also to monitor the performance of those auditors, assign them the audit exercise, look at their work, review their reports, and to ensure that they meet the required standard.

Kirui said the committee is contributing to the implementation of this regional certification mechanism to give it the credibility and to make sure it meets the regional and international standard.

“Different member states have different capacities. As we’ve seen, out of 12 countries, there are only five countries, which have already implemented this mechanism. And the ICGLR, the Secretariat, and the various peer groups are working to ensure that all the member states eventually join and implement the regional certification mechanism,” Kirui said.

He added that the committee also ensures that the whole process of the regional certification mechanism and the exports of the critical minerals meet standards acceptable at the international level and that there is transparency in the mining activity in the region contributing to the economic development within the region.

However, the actual implementation of the regional certification mechanism is done at the member state level, meaning a huge responsibility falls among the member states to ensure that this tool is implemented.

“In general, the audit is on and it’s working and for the companies which have been certified, they can demonstrate that they are getting their commodities in a legal mine and they can show how the chain of custody of those minerals is carried out,” Kirui said.

Limited range of minerals

But Prof. Bararunyeretse says the fact that the ICGLR initiative does not take into account a wide range of mineral resources that occur in the Great Lakes, and chooses to narrow the resources to just the 3Ts and gold continues to be a source of problems in the region.

“The mechanism or initiative of the ICGLR does not clearly provide strategies and measures of correction or sanction in the context of our shared strategies. Local communities in mining areas often find themselves in a position of ignorance when it comes to the management of mining,” he said.

“This lack of education does not favour the fight against illegal exploitation of natural resources,” he added.

Jobs for the youth

At the same virtual meeting, Jacob Eyeru, the Chairperson of the Uganda National Youth Council and Representative at the ICGLR Youth Forum noted that the ICGLR initiative to stop or fight the illegal exploitation of minerals, is critical.

“The value of well-exploited and legally exploited minerals is always higher than the value of illegally exploited and traded minerals,” Eyeru told the virtual seminar.

He said many of the young people who have been driven to participate in the exploitation of the natural resources of the Great Lakes are in the informal areas of value chain.

“The reason why we’re not having highly skilled young people in the mining sector is because they do not see how they can get into that mining sector. When we talk about mining in the Great Lakes, many of the people in Zambia think about the Copper Belt, and that’s because of peace there,” he said.

“But for DRC where there is no peace, people are talking more about the war there, and the minerals being linked to the war as opposed to the opportunities that are provided by the minerals. That’s the biggest issue.”

Eyeru said mining in a controlled environment will also provide professional job opportunities and professional development opportunities for young people.

“Professionalising the mining sector in the Great Lakes region would have a ripple effect, starting from the mines, going all the way to the services and value-addition sector, up to the export or the marketing of those minerals,” he said.