Canadian firms dominate mining activities in Africa – and have a bad human rights record

Monday March 1 2010

Few issues have generated as much heat in recent African affairs as China’s foray onto the continent.

Much has been made of the dragon’s insatiable hunger for the continent’s mineral wealth.

The breadth of Chinese involvement has focused minds in the West and provoked much media hyperbole.

However, at the same time, the Middle Kingdom’s great rival from North America has been active as well, though its activities seem not to attract as much attention.

No, I’m not talking about the US. Rather, the other North American superpower — Canada.

Yes, Canada. Soft, unassuming Canada dominates mining and mineral exploration on the continent.

According to the Ministry of Natural Resources Canada (NRC), only South Africa has more mining assets and investments.

And while the Rainbow Nation’s interest is concentrated, it is just ahead of Canada in the African mining industry.

While South Africa’s gold pot is to be found largely within its borders, by 2007, Canadian companies were active in 35 African countries and Africa represented 17 per cent of the total $85.9 billion in cumulative Canadian mining assets.

This year, the total value of Canadian mining assets in Africa is expected to surpass $21 billion compared to just $233 million in 1989.

The Canadian government has actively supported this expansion.

Since the 1990s, under the influence of industry associations, the Canadian state has implemented a comprehensive strategy to support the expansion of investments and activities abroad.

Fiscal measures designed to attract mining interests include tax deductions for expenditure incurred abroad and exemptions for profits repatriated to Canada.

According to its 2007 annual report, Export Development Canada, the government’s export credit agency, has supported projects totalling $22 billion worth of exports and investments in Canadian companies in the extractive sector.

Endowed with both minerals and a long mining tradition, Canadians are not exactly lacking in expertise.

As of 2001, the sector accounted for 4 per cent of Canada’s Gross Domestic Product (GDP), with $64 billion in exports and $30 billion in capital expenditure, while employing a total of 400,000 people.

The year before, in 2000, there were at least 2,200 Canadian companies related to the mining industry.

So why do they want our minerals?

Could it be to power their manufacturing sector?

With a modest 2 per cent growth, Canada had been the exception to the trend of manufacturing job loss among developed countries over the past quarter century. But now they are playing catch-up.

Between 2004 and 2008, as Canada’s mining investment in Africa has exploded, their manufacturing sector imploded, shedding over 300,000 jobs.

Its share of total employment fell by close to one-third and when the US Bureau of Labour Statistics released a comparison of average annual growth rates in manufacturing output over the 2000-2007 period in 16 different industrialised countries, Canada was right at the bottom with real output declining at an average rate of 0.3 per cent per year. So, it is not like they have a voracious appetite for raw materials.

How about energy? Perhaps they need some of our oil and natural gas? Not a chance.

Canada is a net exporter of oil, natural gas, coal and electricity.

In 2006, the country produced 19.3 quadrillion British Thermal Units (Btu) of total energy, the fifth-largest amount in the world.

Not only is Canada the largest producer of hydroelectricity in the world, it also ranks third and seventh in global gas and oil production respectively.

Even as Canadian companies are busy signing oil exploration and extraction contracts in Africa, back home oil tycoons have invested more than $28 billion in Alberta’s oil sands and estimates are for that investment to mushroom to $117 billion in the next decade. So no, they don’t need our oil.

Why are they here then?

The reason is actually quite simple.

For one, minerals are relatively easy to find in Africa.

The continent hosts 30 per cent of the planet’s mineral reserves including 40 per cent of gold, 60 per cent of cobalt, 90 per cent of the world’s PGMs (Platinum Group of Metals) and proven oil reserves of over 117 billion barrels as at the end of 2007.

In Canada, the easy-to-find stuff has already been found. Companies are now developing low-grade projects with marginal economics and investors have reached a stage where they assume that mines will not be delivered on time and on budget.

A good example is British Columbia’s Galore Creek Project, a partnership between two Canadian mining entities, NovaGold and Teck Cominco, to develop what was supposed to be “one of the world’s largest undeveloped copper-gold deposits, with quality, long-life reserves and excellent geologic potential.”

It was halted after costs more than doubled and the estimated long-term copper price raised questions about its economic feasibility.

In some places in Africa, meanwhile, a company like First Quantum Minerals Ltd can get its Lonshi mine up and running less than a year after a discovery is made and there are highly prospective regions like the Central African copperbelt that have had no serious exploration for decades, or ever.

“You’re looking at virgin ground that’s almost untouched. It’s finally being explored properly,” says Jean Luc Roy, CEO of the copperbelt exploration company El Nino Ventures Inc.

Robert Lavalliere, vice-president of investor relations at Anvil Mining Ltd, the leading copper producer in the DRC with three major projects, notes the productive potential of open pit mines there is “three, four, five times” that of the rest of the world.

However, this is not universally true of the continent. The experience of Tiomin Resources Inc. in Kenya will suffice to illustrate this.

Money

That said, it is abundantly clear that Canadians are not here just for the minerals. They’re here for the money.

And with sky high global prices for raw materials, you can bet there’s lots of it to be made.

According to CorpWatch.org, 60 per cent of all the world’s mining companies are based in Canada, generating $50 billion a year for Canadians.

As everyone (except the African people, of course) fights for his piece of the pie, moral standards are being thrown to the wind.

Around the world, Canadians are generally regarded as a pleasant, soft-spoken people.

But being home to nearly two-thirds of the world’s mining and exploration companies, it is inevitable that there will be some rotten apples.

Each year, a significant number of these are accused of environmental and human rights abuses, often in developing countries where the government is weak or corrupt.

Their behaviour is so bad that in some places, according to the Toronto Star, the word “Canada” is so reviled that travelling Canadians mask their citizenship by wearing, of all things, American flags on their caps and backpacks.

The Canadian government has struggled for a decade with how to hold mining firms accountable for their actions overseas. So far its attempts have proved inadequate.

It has disregarded repeated calls for an independent investigation into the 1996 Bulyanhulu gold mine incident.

In 2001, eyewitness accounts, family testimony, photos and police videotape uncovered by the Lawyer’s Environmental Action Team (LEAT) of Tanzania corroborated long-standing allegations that employees of the Canadian-owned Kahama Mining Corporation Ltd (KMCL) in conjunction with the Tanzanian police, buried over 50 artisanal miners by bulldozing over the entrances to the shafts in which they worked at the Bulyanhulu gold mine in 1996.

In 2002 it ignored a United Nations report called on it to investigate the actions of seven Canadian companies accused of illegally exploiting resources from the Democratic Republic of Congo.

Two years later, 73 people were killed by the Congolese military, which used vehicles, supplies, pilots and drivers from a Canadian-Australian mining company to transport them to the site of the massacre.

According to MiningWatch’s Jamie Kneen, Anvil Mining had been forced to shut down production at their Dikulushi Mine when a so-called “rebellion” took place in a nearby village; a rebellion of “10 to 12” villagers that had nothing to do with mining. Congolese Armed Forces (FARDC), of the DRC government, provided with trucks and logistics by Anvil, proceeded to seize the town and then went door-to-door “raping and pillaging.”

As recent revelations from Uganda demonstrate, these companies are not above signing secret agreements or dumping toxic waste into rivers as they did in Tanzania.

Denis Tougas, director of the L’Entraide missionnaire (L’EMI) in Montréal, notes that “it’s a safe bet that Canada’s image as a moderate country and disinterested development partner in Africa is now thoroughly outdated.”