.

1. Freeport mcmoran
versus the people
of fungurume:
How the largest mining
investment in DRC has brought
poverty not prosperity
03

2. COPYRIGHT STATEMENT
© SARW, OSISA (2012)
This publication was produced by the Southern Africa
Resource Watch (SARW) and the Open Society
Initiative for Southern Africa (OSISA).
Copyright is vested in SARW and OSISA. This
publication can be reprinted in whole or in part as long
as correct attribution is followed.

3. How the largest mining investment in DRC has brought p OPEN POLICY 03 overty not prosperity
Contents
Freeport McMoRan versus the people of Fungurume:
The Tenke Fungurume concession
Impact of the Tenke Fungurume mine on local communities
Recommendations
Conclusion
03
04
08
08
01

4. TFM
TFM
“The inhabitants of Fungurume consider
this an unwarranted infringement on
their freedom to travel and a clear
indication that TFM has political
protection while they do not.”
02

5. FUN G U R U ME
L I K A S I
The Tenke Fungurume concession
The Tenke Fungurume Mining (TFM) company controls a 1,600
square kilometre mining concession in the Democratic Republic
of Congo (DRC). The company has three shareholders: Freeport
McMoRan Copper & Gold Inc., which operates the mine and holds
56 percent of the shares, and is the world’s largest publicly-traded
copper company; Lundin Mining (24 percent); and, the state-owned
Gécamines (20 percent).
03

6. ocated around 180km north-west of the city of Lubumbashi
in the southern province of Katanga, the Tenke Fungurume deposits
make up one of the most important reserves of copper and cobalt in the
world with abundant quantities of high assay ore. The TFM project, which
started in 2009, focuses on the extraction and processing of ore with an
average assay of 2.1 percent for copper and 0.3 percent for cobalt.1
The open cast mine operates with surface miners, mechanical loaders
and dump trucks and current production forecasts are 115,000 tonnes of
copper and 8,000 tonnes of cobalt annually – figures that a TFM senior
manager said were achieved in 2010, producing an income of nearly US$1
billion. Drilling, exploration and metallurgical trials are currently under
way to evaluate the total potential of the mining reserves more precisely.2
However, the reserves have been estimated at 119 million tonnes.
According to TFM’s brochure, the company plans to drastically scale up
production over the next five to seven years by developing a world-class
mine, which is capable of reaching an annual production of 400,000
tonnes of copper alone per annum. The investment injected into the
project is estimated at more than US$2 billion – the largest mining
investment to date in the DRC.
Impact of the Tenke Fungurume mine on local communities
A delegation consisting of two members of the Southern Africa Resource
Watch (SARW) and two representatives of the ad hoc Episcopal
Committee for Natural Resources of the Congolese National Episcopal
Conference (CERN/CENCO) visited Fungurume, which is located in the
TFM concession, in July 2011. The aim was to consult a wide range of
officials, members of institutions, groups and organisations, and other
interested individuals living in the concession area about the impact
of the TFM mine on their lives and livelihoods – and to provide local
communities with an opportunity to voice any concerns about mine-related
changes in and around the towns of Fungurume and Tenke.
L
1. TFM, summarised description taken from the management committee’s proposal to
the Board, June 2007,
2. TFM Information sheets
04

7. How the largest mining investment in DRC has brought p OPEN POLICY 03 overty not prosperity
Economic disempowerment
Previously, the main source of income in the
region was agricultural produce. However,
farmers have lost their fields – without
adequate compensation in most cases – and
now struggle to find good vacant land for
their crops because almost all the most
fertile agricultural land is located within the
concession area, and TFM does not allow the
former owners to farm there. Farmers have to
walk long distances to find an area where TFM
still allows farming and the yields from these
new fields are often mediocre, even though
TFM does provide them with some agricultural
products, such as fertilisers, as compensation
for their lost land. However, this programme is
only due to run for three years. So the question
raised by the farmers is what they will do then?
The same problem applies to artisanal miners,
who are denied access to the source of their
livelihoods. People living within the concession
even have trouble collecting stone or wood
for construction because everything – even
natural resources like rocks and trees – belongs
to TFM. As a member of the Federation of
Congolese Enterprises (FED) said, “It is as if
TFM has bought the minerals and people of
Fungurume: we are prisoners.”
This loss of traditional livelihoods has not been
compensated for sufficiently by the provision
of extra funds or jobs on the mine. Indeed, the
general expectation that TFM would employ
local labour and use local contractors does
not appear to have been met. According to its
initial programme, TFM intended to employ
4,500 workers at peak operations. It currently
has a staff of 2000 full-time workers and
about 1500 contractors. TFM claims that 98
percent of its workers are Congolese and that
it prioritises the hiring of locals. However,
this is disputed by the people of Fungurume –
and by both local administrators and elected
representatives – who argue that the mine
appears to prefer to hire workers from outside
Freeport McMoRan versus the people of Fungurume:
the Tenke Fungurume area. Even those local
people who have university degrees apparently
do not meet the requirements of the mine. An
example of the mine’s general attitude is that
it used to advertise vacancies on its website in
the full knowledge that very few inhabitants
of the region can access the internet. There
is now a TFM liaison office in Fungurume to
assist with recruitment but local people say it
has made little difference. And even when the
mine does recruit locally, it uses fixed-term – in
other words, temporary or casual – contracts.
The exclusion of local people from employment
at the mine raises a serious suspicion that TFM
is avoiding employing local people who might
be more likely rise up to demand better work
conditions and better wages than outsiders.
The situation regarding the use of local
contractors is equally unpromising. Back in
2009, TFM held a meeting with representatives
of small and medium-sized enterprises, which
attracted more than 200 local contractors.
However, businessmen in Fungurume complain
that their tenders for TFM contracts always
fail. None of the 18 economic operators, who
are members of the Federation of Congolese
Enterprises (FED) Fungurume, has been able to
conclude a sub-contract with TFM. Even when
they fulfil the contract conditions after the
call for a tender, local economic operators are
not selected and no valid reason is given. TFM
defends its position by saying that it has assisted
with the development and technical training of
more than 60 small and medium enterprises and
that it has supported the supply of goods and
services by local suppliers and contractors. But
local contractors flatly refute this.
It appears that the mine follows a policy
of exclusion in relation to Fungurume and
the surrounding area. It does not use local
businesses to provide goods and services and it
houses its workers brought from outside Tenke
Fungurume area in a hostel, known as Camp
Bravo, more than 10 km away from Fungurume
town. Camp Bravo was built by TFM to house
05

8. more than 1,500 employees – the majority of
whom are men. Fed, housed and transported
to-and-from the mine by the company, these
employees do not spend their money in
Fungurume town so there is no benefit to
the local economy. Instead, they send their
salaries home to their families in Kinshasa,
Lubumbashi, Likasi, Kolwezi and elsewhere.
The company should close Camp Bravo and
allow its workers – and their families – to live
in Fungurume, where they will support the
local economy.
Without the inf low of money from the mine,
the economy in Fungurume is stagnant. It
no longer has an agricultural base and has
insufficient resources to become an industrial
town. At the same time, the city has seen
its population more than triple from 30,000
to 95,000 in recent years (due in part to the
migration of people from the rural areas in
search of work). But despite the growth in the
population, formerly f lourishing businesses
have closed down for lack of customers –
and the majority of people are struggling to
scrape a living.
Mining taxes and misdirected
expenditure on social development
Since TFM was established in 2006, the
company claims to have paid US$391 million
to the government, including US$112 million
for social benefits and other related social
obligations; US$108 million for customs duties
and related taxes; US$143 million for royalties
and other tax obligations; and, US$28 million for
work permit, visas and other related payments.
Clearly this is a substantial amount of money
but it does not mean that this figure is fair or
sufficient. In particular, there are calls for an
adjustment in the number of shares held by
the state-run Gécamines – perhaps from the
current 20 percent to more than 30 percent.
“The people who have been
relocated have seen their lives
and livelihoods deteriorate
rather than improve.”
There are also justifiable demands for TFM to
publish the total profits that it obtains from the
sale of the ore.
TFM also claims to have spent US$36 million
on social responsibility projects, including
rehabilitating schools, upgrading the basic
health centre, providing taps, improving roads,
village relocation programmes, and the ‘re-establishment
of the means of subsistence’.
However, the general opinion of most of the
interviewees was that the people who have
been relocated have seen their lives and
livelihoods deteriorate rather than improve,
particularly as new means of subsistence have
not been created – and infrastructure promises
have not been kept.
As the team discovered when visiting
Fungurume, it is difficult to detect TFM’s
social contributions. Although taps have been
provided, they have not all been intelligently
sited in relation to their users. For example,
during the rainy season, some of them become
inaccessible for the families they were intended
to serve. The schools built by TFM are woefully
inadequate: in one case eight classrooms were
provided, whereas 48 had been promised.
While the hospital has been increased in size,
its capacity to treat patients has not been
improved because nothing has been done to
modernise or augment its equipment.
The mine has started a Social Development
Fund, which is allocated 0.3 percent of the net
06

9. How the largest mining investment in DRC has brought p OPEN POLICY 03 overty not prosperity
income of its metal sale. The Fund currently
contains US$6 million, which is apparently
intended to improve educational and sanitation
facilities in the area. When TFM announced the
creation of the Fund, it envisaged that it would
be administered by representatives of the mine
and the local community working together.
However, none of the interviewees knew who
manages the Fund or how that money is used or
how much has been spent over the years. The
community complains that it is not consulted
on projects that the Fund finances, which are
decided upon by TFM personnel.
Lack of consultation
Dealings between TFM and the population
of the Tenke Fungurume region involve an
almost complete lack of communication.
Although TFM has established a Community
Relations Office in Fungurume, its function
is restricted to receiving complaints and
submitting them to senior management at
the mine. The office manager could not even
answer simple questions without referring
the matter to her bosses in either Lubumbashi
or Kinshasa. Interventions made by TFM
to demonstrate social responsibility tend to
be designed and implemented unilaterally,
without any real consultation with the parties
most affected. The population of Fungurume
acknowledges that they do have occasional
meetings with TFM but that these are purely
informative since the decisions have already
been made. A particular source of grievance
is that TFM’s land compensation plan has
been poorly applied. As one inhabitant said,
“TFM does not consult and does not take
into account the populations’ points of view.”
Another described the relations between TFM
and the local population as like “An elephant
which passes through a village and does not
pay any attention to the barking dog.”
The power of TFM is illustrated by the
company’s decision to erect barriers on the
Freeport McMoRan versus the people of Fungurume:
national road to Likasi to control all the ore-transporting
vehicles that use the route. The
team that supervises each barrier consists of
two TFM employees, one mine policeman and
one state policeman – suggesting that these
roadblocks have the approval of the DRC
government. The inhabitants of Fungurume
consider this an unwarranted infringement on
their freedom to travel and a clear indication
that TFM has political protection while they –
the citizens of Fungurume – do not.
TFM’s close links to the authorities were
also demonstrated in 2010 when hundreds of
artisanal miners organised protests against
TFM, which they accused of preventing them
from mining on a few hills for their own
survival. The police intervened and many
people were wounded. It was clear during
the clashes that the authorities were firmly
on the side of TFM rather than the people of
the area.
There are also concerns about TFM’s
environmental impact. According to TFM,
the company adheres to risk management
strategies and complies with legal provisions
and voluntary commitments in order to
reduce the negative impacts of mining. TFM
is supposed to have invested more than US$50
million in environmental conservation. But
the TFM concession contains 292 hills and
what will happen to the environment of the
area when these are mined over the next 50
years. And what good are TFM’s claims if
local environmental services are not given
access to TFM installations since they
cannot possibly evaluate the environmental
impact without knowing more about the
company’s operations.
Furthermore, people living along the
Fungurume-Likasi road are inhaling dust from
the large vehicles transporting TFM’s ore.
The impact of this dust on human health is
considerable yet this situation has hardly been
addressed by the provincial authorities.
07

10. Recommandations
TFM
• TFM must improve its consultation with the local population to ensure that
social projects have a long-term positive impact on surrounding communities
• TFM must increase the transparency of the Social Development Fund and
directly involve the population in decision-making
• TFM must urgently close down Camp Bravo to ensure employees live with
the local community and to boost the local economy
• TFM must favour the emergence of a local middle class by granting sub-contracts
to local operators
• TFM must give the inhabitants access to fertile agricultural land for their
subsistence and encourage local agricultural production and co-operatives
• TFM must allow the inhabitants to collect local construction materials such
as stone and wood
Government
• Government should urgently rehabilitate the railways so that ore can
be transported by rail, which would lessen the impact on the health of
local communities
• Government must give the local administration the responsibility for many
issues rather than deciding on them in Kinshasa and Lubumbashi
• Government must immediately remove the barriers on the national road
Civil society
• Fungurume already has a number of bodies – such as FED, the co-operative
Association of Farmers, Stock Breeders and Forestry and Mining Operators,
and the Federation of Agricultural Associations of Congo – that could launch
a concerted campaign to hold TFM to account
• Local civil society must be organised and its capacity strengthened
• There is a need to strengthen the capacities of local communities so that they
can participate effectively in discussions with TFM and the government
Conclusion
At present, it appears that multinational
mining companies in the DRC are able to
serve their own best interests without any
supervision from the government, or any
concern for the socio-economic effects their
operations may have on local communities.
Although TFM produces documents that
promise substantial benefits to these
communities, very little has actually been
done to improve their lives. On the contrary,
in the three years since TFM started digging
up their copper and cobalt, the people of
Fungurume have experienced an increase –
not in prosperity – but in poverty.
08

11. The mission of the Southern Africa Resource Watch (SARW) is
to ensure that extraction of natural resources in southern Africa
contributes to sustainable development, which meets the needs of
the present without compromising the ability of future generations to
meet their needs.
SARW aims to monitor corporate and state conduct in the
extraction and beneficiation of natural resources in the region;
consolidate research and advocacy on natural resources extraction
issues; shine a spotlight on the specific dynamics of natural
resources in the region and building a distinctive understanding of
the regional geo-political dynamics of resource economics; provide
a platform of action, coordination and organization for researchers,
policy makers and social justice activists to help oversee and
strengthen corporate and state accountability in natural resources
extraction; and, highlight the relationship between resource
extraction activities and human rights and advocate for improved
environmental and social responsibility practices.
SARW focuses on 10 southern Africa countries but is also working
to build a strong research and advocacy network with research
institutions, think tanks, universities, civil society organizations,
lawyers and communities in southern Africa, the African continent
and beyond that are interested in the extractive industries as it
relates to revenue transparency, corporate social responsibility,
human rights and poverty eradication.

12. Claude Kabamba is the Director of the
Southern Africa Resource Watch (SARW).
Before joining SARW, he worked as the Chief
Research Manager of the Human Sciences
Research Council and the Research Manager
at the Electoral Institute of Southern Africa.
He has also worked at the Development
Bank of Southern Africa as a trade policy
analyst. Claude holds an MA in International
Relations (Political Economy) from the
University of Witwatersrand.
Georges Bokondu Mukuli has an LLB from
the University of Kinshasa. He has been
SARW-DRC Manager since 2008. He has
also worked in the DRC President’s office as
a legal and administrative adviser.
Henry Muhiya is the Secretary of the Ad-hoc
Episcopal Commission on Natural Resources
in the DRC. Previously, he worked for the
Episcopal Commission for Justice and Peace
in charge of its programme on reconciliation
and good governance.