R 051214Z APR 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTAT WASHDC 5919
INFO RUEHXR/RWANDA COLLECTIVE
RUCSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RHEHNSC/NS WASHDC
RUEAIIA/CIA WASHDC
RHMFISS/HQ USEUCOM AIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTHUK

UNCLAS SECTION 01 OF 02 KINSHASA 000403 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EMN EAID ECON ETRD CG
SUBJECT: UPDATE ON THE CPPER BELT'S ARTISANAL MINING 
 
REF: A. 06 KINSHAS 1590 
 
     ¶B. 06 KINSHASA 1500 
 
KINSHASA 00000403  001.16 OF 002 
 
 
¶1. (SBU) Summary. Artisanal mining in Katanga province 
continues to create security, financial and legal problems for 
mining companies. With support from the USG and other members of 
the international community, social development efforts are 
underway to attemptto address the myriad of issues artisanal mining 
poses and to assist the local mining communities. The programs are 
in their infancy, however, and thus have not yet had significant 
impact. End summary. 
 
¶2. (U) EconOff and USAID officers visited mining concessions 
from February 19-23 in Fungurume, Kolwezi, Dikulushi and 
Lubumbashi in Katanga province to speak with mining company 
managers about ongoing artisanal mining concerns and to see 
the progress of social development plans. Fungurume is the 
operations base for Phelps Dodge's Tenke Fungurume Mining 
(TFM) copper/cobalt project. (Note: Freeport-McMoran recently 
acquired Phelps Dodge. End note.) Australian company Anvil 
Mining (listed on the Toronto and Australian stock exchanges) 
runs a copper tailings project near Kolwezi and copper/silver 
mine in Dikulushi, northeast of Lubumbashi,  Katanga near 
Lake Mweru. South African company Metorex treats copper and 
cobalt tailings and is developing a copper/cobalt sub-soil 
mine on the outskirts of Lubumbashi. 
 
Artisanals 
---------- 
 
¶3. (U) Artisanal mining poses substantial financial, security 
and legal threats to the DRC's growing mining sector, as 
discussed in reftel A. Artisanal miners frequently trespass 
on mining concessions and extract ore without authorization, 
causing financial loss for companies. Further, mining 
accidents on the concessions are common, potentially imposing 
liability on the concession-holders.  Artisanal miners also 
pose security risks to the mining companies, primarily 
because of their occasionally violent resistance to removal 
or exclusion from mine sites, as in Anvil's case (reftel A). 
The number of artisanal miners, their communities around the 
mines, and the accompanying risks, continue to grow as word 
spreads of the development of the mining projects and social 
infrastructure programs. For example, Pact Congo (Pact) and 
Anvil staff told EconOff one village near the Anvil 
concession in Kolwezi has swelled from 60 residents to 6,000. 
Unable to find other work, some of these persons resort to 
artisanal mining.  TFM and Anvil officials say they can 
potentially employ only a fraction of those people.  For 
example, Anvil currently has about 600 employees, 36 of whom 
are expatriates. 
 
¶4. (SBU) Mining officials with whom EconOff met in February 
said they have seen no appreciable change in the numbers of 
artisanal miners on their concessions, but that the 
surrounding communities have grown in the last six months, as 
have the accompanying risks discussed above.  TFM officials 
said although they continue to tightly control access to 
their concession, and thus have few illegal diggers on-site, 
artisanal miners have been gathering in significant numbers 
near the north border of TFM's concession, seeking jobs and 
access to the mine sites. (Note: TFM removed many artisanals 
from the concession shortly after obtaining rights to it in 
¶2005. End note.) TFM officials say this is creating a 
potentially serious security risk. TFM also faces ongoing 
local pressure to employ local residents, although it has 
thus far managed to diffuse any serious violence.  TFM's 
social development director said that as part of the 
company's effort to prevent security incidents, staff are 
repeatedly informing local communities that the project will 
employ only a fraction of the job-seekers.  TFM currently has 
about 1000 employees, most of whom are Congolese. It plans to 
employ no more than 2000 during the peak construction phase, 
and less than half that figure once mining begins. 
 
¶5. (SBU) Anvil Mining is struggling to resolve more pressing 
concerns the artisanal miners' presence poses in Kolwezi.  At 
the time of EconOff's visit to Anvil's Kolwezi site, at least 
several hundred artisanals were trespassing daily onto the 
concession. Tension between Anvil and artisanal miners has 
increased since at least April 2006, when a conflict 
escalated into violence, resulting in the deaths of three 
persons (reftel A).  Anvil has since alternated its policies 
between trying to exclude artisanal miners from the 
concession and allowing them free entry. Anvil also 
experimented with purchasing tailings directly from the 
 
KINSHASA 00000403  002.2 OF 002 
 
 
miners on its concession, but the effort was a financial and 
logistical failure. Anvil managers say, regardless of their 
approach, the miners continue to collect and sell thousands 
of tons of high grade copper and cobalt tailings to 
unauthorized traders and that the complicity of police and 
other local authorities in the illegal trade has hampered the 
company's efforts to stem the theft. Anvil estimates its 
weekly loss at USD 250,000, and its official production was 
50 percent below target as of late February. 
 
¶6. (SBU) Metorex and the London AIM-listed Nikanor are also 
trying to find ways to address their artisanal mining issues. 
A Nikanor manager told EconOff 4,000 to 5,000 artisanal 
miners are on its Kolwezi concession.  Metorex, operating the 
Ruashi Mine, says it regularly has 2,000 to 3,000 artisanal 
miners on its concession, including an open pit that has been 
the site of at least one fatal cave-in (reftel B).  The 
general manager said about 2,000 artisanals entered the 
Ruashi mine in February after Chemaf, an Indian-owned trading 
and mining company, ejected the same miners from one of its 
concessions.  Ruashi's managers would not take EconOff to 
their mine site, suggesting it was not safe to do so.  Pact 
Congo project manager told EconOff he had tried to visit the 
Ruashi mine the same week and that large demonstrations of 
artisanal miners prevented his entry.  Dempsey admitted to 
EconOff the company has not yet figured out how to resolve 
these problems. 
 
Social development 
------------------ 
 
¶7. (SBU) To try to mitigate the risks posed and relieve some 
of the pressure on the growing communities, mining companies 
and NGOs, with USG support, have launched social development 
projects over the last three to four years.  Initially, 
mining companies launched these efforts on their own in an ad 
hoc fashion, building schools, wells and medical clinics as 
they deemed necessary. In the last one to two years, NGOs 
such as Pact have worked jointly with some mining companies 
to help make these projects sustainable and to develop a more 
comprehensive strategy.  Pact is working with Anvil and TFM 
to build bridges, additional wells and covered village 
marketplaces, develop a brick-making operation, small-scale 
farming, micro-enterprises (such as bakeries and sewing) and 
literacy programs, and to involve the communities in the 
management and maintenance of these projects. Through USAID, 
the USG is contributing USD 3.5 million over a five-year 
period to Pact's projects, against USD 8 million that Anvil, 
TFM and U.K.'s development agency (DFID) have pledged.  Other 
companies, such as Metorex and Toronto stock exchange-listed 
First Quantum (FQ), have sought Pact's guidance on specific 
artisanal mining issues; FQ is also considering formalizing 
the relationship. 
 
Comment 
------- 
 
¶8. (SBU) The diverse social, economic and security issues 
surrounding artisanal mining communities in Katanga province 
will not be solved in the near future.  Even short-term 
solutions will require the expenditure of substantial sums of 
money and continued support from the GDRC and international 
community.  Though the mining companies' motivation to find 
solutions is no doubt due primarily to shareholders' 
financial and legal interests, their engagement on the issue 
is welcome. End comment. 
MEECE