Millions of dollars in revenue vanish in Congo’s(1) “cobalt rush”

Press Release – 29/09/2004

At a time that the international community is providing billions of dollars in aid to the Democratic Republic of Congo (DRC), the state is losing vast quantities of revenues due to an appalling lack of control over the mining sector, according to a new report released today by Global Witness.(2)

“Rush and Ruin: The devastating mineral trade in Southern Katanga, DRC” exposes the dynamics of the rush to exploit copper and cobalt in southeast DRC. The report shows how the illegal mineral trade is contributing to the ruin of the DRC’s economy, the environment and the livelihoods of thousands of Congolese people. The current “cobalt rush” in Katanga, driven by record-high international cobalt prices, has little benefit to either the DRC economy or the Katangan population.

The DRC is now slowly emerging from a devastating conflict, which has been partly fuelled by the country’s enormous natural resource wealth.(3) “It is crucial that, during this transitional period, the DRC government and the international community work together to ensure that the DRC’s vast resource wealth be used to consolidate peace and promote economic development,” said Corene Crossin, Campaigner at Global Witness.

In July 2004, Global Witness’ report “Same Old Story” mapped out the nature and history of resource exploitation in the country. Now, Global Witness’ investigations reveal that on-going corruption and smuggling in Southern DRC are leading to the loss of millions of dollars in revenue every month for the country, indicating that the same factors that helped plunge the DRC into violent conflict remain intact.

“Rush and Ruin” calls on the donor community to work together to ensure that the DRC can start to capture revenues from natural resources more effectively. Initiatives to combat corruption and smuggling must be introduced if the country is to benefit from its huge natural resource wealth. “This is the only way that the DRC will be able to capture its own wealth and begin economic and social rehabilitation,” says Crossin.

Rather than benefiting from the high cobalt prices, caused predominantly by China’s huge demand for the metal for use in mobile phone batteries, the social and economic situation in Katanga has deteriorated in recent years. Deprived of reliable sources of income, some 60,000 young men and boys work in appalling conditions as artisanal miners, gathering mineral soil by hand for as little as US$1 a day. In contrast, new foreign companies “cashing in” on the trade and buying soil from the miners, are making huge profits by exporting raw minerals to China and elsewhere.

The report urges the international community to pay close attention to mining in Katanga as analysts warn that the disproportionate sharing of windfalls from the cobalt rush amongst the local population could spark a resurgence of historical Katangan secessionist sentiment.

“Rush and Ruin” also calls on the DRC government to firmly commit to making transparency, anti-corruption and accountability priority areas in the run up to the general elections, scheduled for June 2005.

Contact: Corene Crossin on +44 20 7561 6395 or Emily Bild on +44 20 7561 6381.

Notes for the editor:
(1) The Democratic Republic of Congo, or the DRC.
(2) Global Witness is an investigative non-governmental organisation that focuses on the links between natural resource exploitation and conflict, and was co-nominated for the Nobel Peace Prize in 2003.
(3) The links between ongoing violent conflict and the exploitation of natural resources including gold, diamonds, timber, ivory and coltan are well-documented in a series of United Nations Security Council Expert Panel Reports published between 2001 and 2003, as well as numerous non-governmental organisation reports

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