MINING NEWS
Mining company funds armed men in eastern Congo gold rush while state loses tax windfall
Armed groups in Shabunda territory , eastern Democratic Republic of Congo , received gi�s of arms and cash from a Chinese mining company and made up to $ 25,000 per month extorted from local miners during a recent two-year gold boom . In just one year , up to $ 17 million of gold produced by Kun Hou Mining , the Chinese-owned company , went missing and was likely smuggled out of Congo into international supply chains , Global W i t n e s s r e v e a l s t o d a y ( http :// www . globalwitness . org / river-ofgold-drc ). At the same time , the Congolese state lost out on tax revenues on up to $ 38 million of artisanal gold produced per year during the gold rush , due to smuggling and misconduct by provincial authorities . �e gold rush focused on the Ulindi River reached its peak in 2014 and 2015 and continues to this day . Evidence gathered by Global Witness also shows a provincial authority colluded with armed groups in illegal taxation of miners while another altered official export documents so gold looked as though it was coming from legally-operating mines . Global Witness ' investigation reveals the extent of the problems in eastern Congo ' s artisanal gold sector . Eastern Congo has seen an uptick in gold production in recent years , the revenues from which could have been used to address the region ' s desperate poverty but have instead o�en funded armed groups and corrupt officials . Most of eastern Congo ' s artisanal miners - around 80 % - work in the gold sector . Recent international reforms have aimed to stop Congo ' s mineral wealth funding armed groups . Global Witness warns today that the Congolese government needs to hold companies and government officials involved in such abuses to account in order for these reforms to work . A r m e d g r o u p s , k n o w n a s R a i a Mutomboki , received at least two AK-47 assault ri es and $ 4,000 in cash from Kun Hou Mining , which operates mechanised gold dredging machines along the Ulindi River in Shabunda territory , South Kivu province of eastern Congo . In addition , the armed men taxed artisanal miners op e r at i ng l o c a l ly-made d re d gers extracting gold along the river . Local authorities also collaborated with the Raia Mutomboki , through a tax sharing deal . �e taxes collected by authorities appear to have disappeared , depriving Congo of much needed revenue which could be used for health and education . “ �ere were over 500 cases of malnutrition reported in Shabunda town in 2014 and yet the signi cant revenues generated by this gold boom bene tted armed men and predatory companies instead of the Congolese people ” said Sophia Pickles , Senior Campaigner at Global Witness . “ �e Congolese government must enforce its own laws to ensure that companies in its gold sector do not produce or trade gold that has funded armed groups . Any company breaking these laws must be held accountable for their actions . Provincial mining authorities that fail to properly govern the minerals sector must also be held liable .” Global Witness ' research shows that almost half a million dollars ' worth of Kun Hou ' s gold was exported to a Dubai company through official channels . �e rest of the company ' s estimated $ 17 million of gold production is likely to have been smuggled out of the country . Global Witness has also found evidence that mining officials in the provincial capital , Bukavu , deliberately falsi ed documentation to obscure links to Shabunda . Officials changed the gold ' s origin on official export documents to show instead it came from the handful of legally-operating artisanal mines in South Kivu . �is pattern has been repeated with other mines in the province . As a result , it is much more difficult for international buyers to be sure that gold has not funded armed groups . “ Provincial authorities overseeing Shabunda ' s boom have , by their actions over t he past two ye ars , directly undermined international and the national government ' s efforts to reform eastern Congo ' s artisanal gold trade ,” said Pickles . “ States have a responsibility to ensure that companies do no harm , including checking supply chains for links to con ict and human rights abuses – Congo and the United Arab Emirates have dramatically failed in this respect .” Global Witness ' s report River of Gold also shows that :
· South Kivu ' s provincial government and mining authorities continued to support Kun Hou Mining despite repeated legal violations by the rm and repeated r e q u e s t s f r o m C o n g o ' s n a t i o n a l government in Kinshasa to shut down its operations .
· Mining officials in Shabunda town working for SAESSCAM , a governmental body mandated to support artisanal miners , ran an illegal taxation racket in areas where the local dredgers operated ,
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