International Criminal Court, The Hague, 24/9/2009

1.
The
Trade
in
Minerals
from
the
Great
Lakes
Region
Nicholas
Garre-
Resource
Consul2ng
Services
Limited
Interna7onal
Criminal
Court,
The
Hague,
24/9/2009

2. Personal
Background
• Personal
Background
• Nicholas
Garre-
• Director,
Resource
Consul2ng
Services
Limited
• Research
Associate,
London
School
of
Economics
• PhD
Candidate
(Poli2cal
Sciences),
FU
Berlin
• Regional
/
Sector
Work
Experience
• Extended
regional
field
research
(PhD;
LSE
Posi2on)
• Policy
work
(DFID;
World
Bank;
UNECA;
GTZ;
LSE;
Egmont;
EITI
etc.)
• Numerous
Publica2ons
(i.e.
Trading
Conflict
for
Development
etc)
©
Resource
Consul7ng
Services
Limited,
2009

3. RCS/RCS
Individual
Work
Areas
on
Eastern
DRC
• Experience
(since
2002
and
ongoing):
• Policy
advise,
strategy
advise
and
strategic
planning
• Support
and
devise
donor
interven2ons
• Research
and
data
collec2on
on
the
economy
and
poli2cal
economy
(regionally)
• Determine
the
effec2veness
/
conflict
sensi2vity
of
donor
ini2a2ves
in
the
mining
sector
• Anthropology
of
mining
and
conflict
where
appropriate
(e.g.
Bisie)
©
Resource
Consul7ng
Services
Limited,
2009

4. Trade
Overview
• Ar2sanal
&
small-­‐scale
mining
(ASM)
(excep2on
is
Orientale)
• Dominant
Minerals:
gold,
2n,
tantalum,
tungsten
(3T)
• In
rural
Eastern
DRC
most
oen
the
only
viable
livelihood
op2on
≈
1
million
dependents
regionally
(Great
Lakes
only)
• Main
hard
currency
earner
and
lifeline
for
import
dependent
economy;
convoluted
trading
chains;
low
transparency
• 3
T
Trade:
• from
Eastern
DRC
was
worth
US$
215
million
in
2008
• main
hard
currency
earner
for
Eastern
DRC
(smuggling
occurs);
significant
hard
currency
earner
for
Rwanda,
Burundi,
Uganda
• Gold
trade:
• almost
en2rely
informal
in
Eastern
DRC
• poten2ally
significant
hard
currency
earner
in
Rwanda,
Uganda
and
Tanzania
©
Resource
Consul7ng
Services
Limited,
2009

5. Conflict
Financing
• Localised
taxa2on
of
all
trade
(incl.
minerals
trade)
by
military
groups
(including
FARDC);
• How
much
do
military
groups
depend
on
mineral
trade
taxa2on
in
their
revenue
(informed
es2mate
based
on
qualita2ve
interviews):
• CNDP
≈
15
%
• FDLR
≈
75%
(large
majority
from
uncontrollable
gold
trade)
• FARDC
brigades
between
0%
and
≈
95%
(85th
brigade
un2l
2009)
• Other
income:
remi-ances,
drugs,
ca-le,
civilian
extor2on,
general
trade
taxa2on
(see
e.g.
UN
Report)
è
Military
groups
have
diverse
revenue
base;
FDLR
special
case
(remi-ances)
è
Likely
no
end
to
the
violence
(incl.
sexual
violence)
if
the
mineral
trade
was
interrupted
or
stopped
è
Likely
exacerba2on
of
conflict
dynamics
if
mineral
trade
was
interrupted
or
stopped
(think
livelihoods)
©
Resource
Consul7ng
Services
Limited,
2009

6. Advocacy
Dilemmas
– Different
exploita2on
pa-ern
to
DRC
wars
(1996
–
2003)
–
“loot
thy
neighbour”
is
an
outdated
analy2cal
lens
– Conflict
today
not
a
“resource
conflict”,
but
mul2-­‐dimensional
(land;
ethnicity;
power
etc.)
– Certain
advocacy
groups
push
the
line
that
Minerals
are
responsible
for
violence,
including
sexual
violence
è This
problema2c
but
sellable
proposi2on
precludes
construc2ve
engagement
with
the
minerals
trade
(i.e.
too
high
risk)
and
conflates
issues
of
security
and
issues
of
development.
©
Resource
Consul7ng
Services
Limited,
2009

7. Advocacy
Dilemmas
Insecurity
(presence
of
armed
groups)
is
the
problem,
not
trade.
Focus
on
minerals
diverts
a-en2on
away
from
need
for
security
sector
consolida2on
to
tackle
issues
of
insecurity
Focus
on
trade
control
measures
puts
cart
before
horse.
Need
some
level
of
formaliza2on
before
control
measures
can
be
implemented
effec2vely.
Need
for
long-­‐term
engagement
with
ASM
sector
and
investment
in
governance
structures.
©
Resource
Consul7ng
Services
Limited,
2009

8. The
Trade
Quan7fied
• The
Trade
Quan7fied
• Es2ma2ng
mineral
exports
is
difficult,
but
possible
• Requires
observa2on
and
sta2s2cal
analysis
of
exports
from
DR
Congo
and
Imports/Exports
by
neighbouring
countries
• The
Case
of
Tin
in
North
Kivu
• 2007
cassiterite
exports
from
North
Kivu
• Calculated
to
be
13,700
tonnes
(US$
37
mn)
• Official
data
is
10,175
tonnes
(US$
27.6
mn)
• ≈
35%
unrecorded
export
volume
è Fraudulent
exports
from
North
Kivu
are
substan2al,
but
less
than
previously
asserted
(≈
35%
instead
of
≈
60%)
©
Resource
Consul7ng
Services
Limited,
2009

9. The
Trade
Quan7fied
• Accumula7ve
Exports
from
the
Kivus:
• Accumula2ve
official
exports
13,656
tonnes
(2007);
18,216
tonnes
(2008)
• Factoring
35%
underrepor2ng,
realis2c
export
volumes
are
18,400
tonnes
(2007);
24,500
tonnes
(2008)
• Es2mated
total
export
values
are
US$
65
million
(2007);
US$
200
million
(2008)
–
Total
3T
exports
are
≈
US$
215
million
(2008)
• Gold
trade
is
≈
95%
unreported
• Accumula7ve
Minimum
Tax
Receipts
from
the
Kivus:
• Minimum
receipts
US$
2,012,995
(2007);
US$
4,362,102
(2008)
è Smuggling
rates
differ
by
mineral
and
are
significantly
higher
in
low
volume,
high
value
minerals
è This
suggests
that
the
trade
in
high
volume
minerals
is
easier
to
engage
with,
while
it
may
currently
be
impossible
to
engage
with
the
gold
trade
©
Resource
Consul7ng
Services
Limited,
2009

10. Sugges7ons
• Lessons
for
DRC:
è While
overlaps
exist,
plan
separate
(but
communica7ng)
interven7on
strategies
to
tackle
armed
conflict
and
develop
the
mining
sector
in
the
East
è Consolidate
Security
Sector
(build
func7oning
army,
police,
juidiciary)
and
consider
poli7cal,
but
also
military
solu7ons
to
obtain
the
monopoly
of
violence
è Engage
with
(formalise
and
reform)
the
ASM
sector
in
order
to
be
able
to
control
it
and
increase
its
development
benefits
è Accelerate
administra7ve
reform
and
ins7tu7on
building
to
overcome
governance
weakness
and
allow
for
sustainability
of
posi7ve
steps
–
this
must
include
the
establishment
of
accountability
mechanisms
è Create
the
necessary
structures
so
that
the
implementa7on
of
statutory
law
is
possible
and
implement
statutory
law
©
Resource
Consul7ng
Services
Limited,
2009

11. Sugges7ons
• Lessons
for
Region:
• Need
to
realign
regional
mineral
strategies
to
allow
trade
to
become
regional
good
• Rwanda
has
a
special
role,
given
its
emphasis
on
value
addi2on
• Private
companies
based
in
Rwanda
may
have
processed
at
least
3,000
–
3,375
tonnes
of
material
sourced
from
DRC
(2007)
• No
problem
sourcing
in
the
DRC
as
long
as
sourcing
has
been
undertaking
in
line
with
the
law
and
there
is
no
evidence
of
rebel
beneficia2on.
è Trade
can
benefit
the
development
of
the
DRC
and
the
region
è Need
for
regional
mechanism
that
ensures
adequate
taxa2on
è Need
for
value
addi2on
©
Resource
Consul7ng
Services
Limited,
2009

12. Next
RCS
Project
• Improving
Transparency
and
Broadening
the
Tax
Base:
• Four
month
research
project
• Focus:
Eastern
DRC,
Rwanda,
Burundi
• Goal:
Devise
Mul2-­‐Stakeholder
Driven
Transparency
Mechanism
Focussed
at
the
Export
Stage
è Increases
Regional
Development
Benefit
of
the
Trade
©
Resource
Consul7ng
Services
Limited,
2009

13. Thank
You!
For
further
details
email:
nicholasgarre-@resourceglobal.co.uk
©
Resource
Consul7ng
Services
Limited,
2009