David McKay, executive editor
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Of cabbages and kings

Law of unintended consequences

Posted: Tue, 21 Oct 2008

[miningmx.com] -- THE DEMOCRATIC REPUBLIC OF CONGO (DRC) is its mining industry�s flagship basket case. Though among Africa�s richest sources of minerals, the legacy of its civil war has earned it the sobriquet �paradox of plenty� � little of its minerals wealth has been converted into lasting national wealth.

In 2005 the DRC�s government reported a contribution to gross domestic product by its mining industry of 0,24%. Compare that to the 25% contribution mining made to GDP during the Eighties. So it�s quite understandable Joseph Kabila�s government should introduce a new mining licensing system that has the development of the DRC�s fiscus at heart. Better still if the government can identify where there�s a trickle down effect to the Congolese people. As for standardising mining contracts � absolutely. If the DRC is to prove its legitimacy as an investment destination it needs to establish consistency through a uniform mining code. Transparency is another key element in order to successfully set down a fresh, consistent basis for future commerce.
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However, the implementation of the DRC�s new licensing system has failed to ensure that. In July, the Atlanta-based Carter Centre expressed its deep concern that DRC mining contracts would be renegotiated �without policy or procedures to guide that process or indication of whether requisite expertise will be secured�. Global Witness, the British non-governmental organisation, also raised the flag on transparency: without it, it argued, the credibility of the licensing system could not be improved. One of the problems raised has been the legitimacy of an inter-ministerial commission that reviewed the mining licences in the first place. What, say some commentators, qualified it to make such judgments? In its initial review the commission determined no mining contracts should proceed in their current form, while a further 37 required renegotiation. The suspicion is the commission�s inquiry was a bit of a sham. If that�s true it shows how good intentions beget poor consequences. There are other examples of that in our 2008 Green Book. South African mining�s attempts to make itself safer appear to have failed, at least so far. Having stopped mining at Rustenberg, Anglo Platinum�s section hasn�t been able to avoid further fatalities. Gold Fields has embarked on a similar strategy of not mining until it can guarantee safety. Hopefully, it will enjoy more success and, hopefully, Government interaction with SA�s mining industry will provide it with momentum to improve. Elsewhere we survey the flood of fresh legislation in SA�s mining industry to regulate the consequences of mining. But none of that can succeed unless there�s real, transparent change within the industry itself. So we�ve tried to pick out the lip service from the real intentions in the hope of identifying where sustainable mining will take place and where it won�t.

Jean-Louis Kayitenkore
Procurement Consultant
Gsm:   +250-08470205
Home: +250-55014140
P.O. Box 3867
Kigali - RWANDA
Blog: http://www.cepgl.blogspot.com
Skype ID: kayisa66

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