The Role of Conflict Minerals, Artisanal Mining, and Informal Trading Networks in African Intrastate and Regional Conflicts
Peter G. Chirico and Katherine C. Malpeli
The relationship between natural resources and armed conflict gained public and political attention in the 1990s, when it became evident that the mining and trading of diamonds were connected with brutal rebellions in several African nations. Easily extracted resources such as alluvial diamonds and gold have been and continue to be exploited by rebel groups to fund their activities. Artisanal and small-scale miners operating under a quasi-legal status often mine these mineral deposits. While many African countries have legalized artisanal mining and established flow chains through which production is intended to travel, informal trading networks frequently emerge in which miners seek to evade taxes and fees by selling to unauthorized buyers. These networks have the potential to become international in scope, with actors operating in multiple countries. The lack of government control over the artisanal mining sector and the prominence of informal trade networks can have severe social, political, and economic consequences. In the past, mineral extraction fuelled violent civil wars in Sierra Leone, Liberia, and Angola, and it continues to do so today in several other countries. The significant influence of the informal network that surrounds artisanal mining is therefore an important security concern that can extend across borders and have far-reaching impacts.
The concept of “conflict resources” gained public and political attention in the 1990s, when details emerged that diamonds were being mined and traded by rebel groups in exchange for training, supplies, and weapons, thereby perpetuating several African conflicts. Conflict resources may be defined as, resources “whose control, exploitation, trade, taxation, or protection contributes to, or benefits from the context of, armed conflict Le Billon (2008)”. Natural resources, such as diamonds, have been particularly susceptible to exploitation by rebel groups. Alluvial diamonds (those that have eroded from their primary source rocks) have a high value-to-weight ratio[i], are easily transportable, are spread over a large geographic area, and are located far from government control, which makes them a highly “lootable” commodity (Le Billon, 2001a; Ross, 2003). The capacity for natural resources to fund and sustain violent conflict is exemplified through the historical cases of conflict diamonds in Sierra Leone and Angola. The present day situations evolving in the Democratic Republic of the Congo (DRC) (gold) and the Central African Republic (CAR) (rough diamonds) are current examples of natural resources fueling conflicts (UNSC, 2014a; UNSC, 2014b).
Eastern Sierra Leone is home to rich diamond deposits. In 2012, the country exported approximately 550,000 carats of diamonds (roughly $160 U.S. million in value), with production in past years exceeding one million carats (Kimberley Process Statistics, 2012). Diamond smuggling became rampant by the late 1980s and profits were frequently siphoned to politicians of the ruling party (Silberfein, 2004). Civil war instigated by the Revolutionary United Front (RUF) erupted in 1991 and persisted for a decade, killing an estimated 50,000 people and displacing one million. The war was funded in large part by the illegal sale of diamonds (Smillie et al., 2000). Silberfein (2004) highlights the global nature of the conflict, pointing to the fact that numerous regional and international actors were directly or indirectly involved in the Sierra Leone civil war and benefited from the diamond trade. By 1997, the Liberian government was backing the RUF and providing training in guerrilla warfare tactics, weapons, and even fighters from Liberia and Burkina Faso. This support was compensated with proceeds from diamond sales. Liberia also acted as a conduit from which smuggled diamonds reached the international market, as did Gambia and Burkina Faso. Furthermore, the arms that entered the country originated from other nations. More recently, it has come to light that Al-Qaeda purchased diamonds in Liberia that had been mined by the RUF (Silberfein, 2004). The case of conflict diamonds in Sierra Leone exemplifies the large scale and international nature that mineral smuggling networks can attain.
Angola, the world’s fourth largest producer of diamonds by value, is a second prominent example of conflict resources. Immediately following independence from Portugal, a power-struggle evolved between the People’s Movement for the Liberation of Angola (MPLA) and the National Union for the Total Independence of Angola (UNITA). As a result, the country endured a prolonged civil war from 1975 to 2002. Angola’s lootable alluvial diamond deposits were exploited heavily by UNITA, beginning in the late 1970s, to purchase weapons and store wealth. At first, UNITA raided existing industrial and artisanal mine sites, but in 1983 the group began purchasing mining equipment and mining themselves (Le Billon, 2001b). It is estimated that UNITA was generating between $50,000 and $4 million per month from diamonds by the late 1980s. The total value of diamonds produced under UNITA control between 1992 and 2000 is estimated to be between $3 billion and $4 billion. Diamonds were trafficked to the international market via numerous countries, including the DRC, Republic of the Congo, Zambia, Burkina Faso, Côte d’Ivoire, Togo, and Rwanda (Global Witness, 1998; Le Billon, 2001b).
Resources traded through informal networks are a concern not only because they represent a loss of revenue to the state, but also because network actors may include criminals or armed groups, as was the case in Sierra Leone and Angola. Due to their roles in prolonging or renewing conflicts by funding terrorist and criminal networks, conflict resources are seen as a domestic and international security threat (Le Billon and Levin, 2009).
International Initiatives Aimed at Reducing Conflict Minerals
Because of the significant role that diamonds played in sustaining the civil wars in Sierra Leone and Angola in particular, several international initiatives have been created to reduce the trade in conflict minerals. Since the early 1990s, the United Nations Security Council (UNSC) has worked to address the issue of conflict resources through the implementation of commodities sanctions and expert panels. To address concerns regarding conflict diamonds in particular, the UN ratified the Kimberley Process Certification Scheme (KPCS) in 2002. The KPCS seeks to protect legitimate diamond trade by monitoring the production, exportation, and importation of rough diamonds throughout the world. The Kimberley Process (KP) currently has 54 participants, representing 82 countries[ii], the international diamond industry, and several civil society organizations. Both the KP and UNSC have acted to suspend the export (but not the production) of rough diamonds in several countries due to conflict concerns, most recently in Côte d’Ivoire from 2005 to April 2014, and in CAR from May 2013 to present. In 2001, the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas was introduced. Although focused on the responsible sourcing of tin, tantalum, tungsten, their derivatives, and gold, these non-binding recommendations can be utilized by any company that wants to avoid contributing to conflict.
Artisanal and Small-Scale Mining
While the role of mineral resources, particularly diamonds, in funding conflicts has decreased since the early 2000s, situations wherein the illegal trade of minerals contribute to violent conflicts continue to emerge. The potential for lootable resources to fund conflicts is directly linked to the informal nature of many mining activities. Lootable resources such as alluvial diamonds and gold are often exploited by artisanal miners operating quasi-legally. Artisanal and small-scale mining, or ASM, is a complex and dynamic activity upon which millions of people depend worldwide. In Africa alone, an estimated 9 million people are directly involved in the sector, and an additional 54 million indirectly depend on ASM for their livelihoods (ILO, 1999). ASM is principally defined by the fact that miners use simple tools to exploit deposits, rather than the large-scale mechanized equipment of industrial operations (see figure 1). Artisanal miners also lack the financial and technological means to conduct exploration work to determine whether a site contains minerals and instead operate largely by guesswork and past experience when selecting sites to mine. ASM, therefore, provides a highly unpredictable, yet important source of income to millions of people who would otherwise be unemployed or dependent on subsistence agriculture.
Figure 1. Photo of artisanal diamond miners digging a pit in Ghana (Photo courtesy of Peter Chirico).
While small in scale, ASM can be an important economic activity from which governments can benefit. In many cases, artisanal miners exploit deposits that are too small for large-scale industrial mining companies. Artisanal miners therefore are responsible for the extraction of minerals that otherwise would not be mined, thus contributing to foreign exchange earnings through exports (Hilson, 2002). Many mineral-rich developing countries have begun to recognize the vast revenue reserve that ASM represents and there is a general trend towards the legalization and formalization of the ASM sector. However, these efforts have been fraught with challenges in many sub-Saharan African nations, and often miners continue to operate in the realm of quasi-legality. The permits and licensing fees that accompany ASM formalization represent substantial financial burdens to the average artisanal miner, so many chose to forego the permitting process (Hilson and Maponga, 2004; Maconachie and Hilson, 2011). Furthermore, the process of registering miners requires that substantial personnel and logistical resources be expended by under-resourced mining ministries. ASM is also exceptionally difficult to monitor and regulate due to the lack of formal record keeping, the transient nature of miners, and the vast territories over which mineral deposits are located and mining occurs. In such situations, miners find little incentive to register and become ‘legal.’
Informal Trading Networks and Revenue Loss
Each country with a legal ASM sector has established a particular flow chain, from mine to export, through which extracted minerals are intended to travel. These flow chains include registered miners, authorized buyers and buying houses, government mining ministries, and exporting companies. However, in many cases, an informal system for exploitation and trading emerges. In this parallel system, unregistered miners circumvent the legal flow chain and sell to an unauthorized buyer. Following this initial sale, the minerals may remain within the country, be trafficked across the border and sold as another country’s exports, or sold to a non-state entity, such as a rebel group.
Informal trading networks are typically based on relationships between miners, traders, and creditors that have been built over time, sometimes generations, through repeated interactions. Some scholars have argued that the personal relationships that define these informal networks are central to economic life in the absence of efficient markets or in weak states; however, others argue that they are unfavorable to economic development, due to their close ties with poverty and predation of the worker (Geenen, 2011). In either case, informal agreements are prevalent within ASM communities.
Characterizing the trading networks used for artisanally-mined commodities can be difficult, as the boundaries between the legal and illegal, and the formal and informal spheres are often blurred. Miners and traders may straddle international boundaries and may only comply partially with one or the other state’s laws. Furthermore, there are several different points along the flow chain at which illegal activities and revenue loss occur. For example, a registered buying house may only declare part of its production to avoid paying extra taxes, or state agents may levy non-official taxes on production (Geenen, 2011). Alternatively, commodities can enter the illegal flow chain at a much earlier stage, such as when miners sell to unregistered traders, or take their production across an international border to sell to a geographically-closer buying center or to get a better price.
The amount of revenue that is lost through informal networks is partly related to the scope of the country’s mining operations. Each artisanal mine site falls along a continuum that ranges in terms of its physical size, the number of operating miners, and the amount of financial investment (see figure 2). At one end of the continuum are small sites that consist of one or two self-financed miners who work independently or with family members and earn income by selling the minerals they recover. At the other end of the scale are large operations employing thousands of diggers who are separated into teams, with each team supported by an investor who supplies them with equipment, pays them a wage and a proportion of production, and acts as the sole buyer for all recovered minerals. It is these large operations, with significant financial investment, that are of particular concern, because they represent the largest amount of revenue loss to governments when production is sold outside the legal flow chain. For example, in the DRC, estimates of annual illegal gold exports range from $120 million to $1.24 billion (The Enough Project, 2012; UN Group of Experts, 2009). Considering that approximately $30,000 worth of gold can fit in a person’s pocket, it is not difficult to see how such a significant amount of revenue can circumvent the legal production-export chain undetected. Though small sites have lower production levels than larger operations, it is difficult for governments to locate and account for production from these sites. Furthermore, it is not uncommon for a country’s artisanal mining sector to be composed of thousands of small sites, the revenue from which can quickly add up and can represent a significant loss to governments if production does not follow the official flow chain.
Figure 2. (A) an artisanal diamond mining site in Guinea with a large number of workers and significant financial investment, indicated by the presence of earth-moving equipment (B) a small site operated by a few individuals with minimal financial investment. (Photo A courtesy of Mamadou Diaby; photo B courtesy of Peter Chirico).
Modern Examples of Conflict Minerals
The Democratic Republic of the Congo
The potential negative implications of informal minerals trade networks are clearly discernible in the DRC. Eastern DRC is host to rich deposits of gold, as well as tin, tungsten, and tantalum—known colloquially as the “three T’s”. These minerals and their derivatives are exported globally for the manufacturing of consumer electronics products. Eastern DRC is a notoriously volatile region, having been in the midst of conflict since the mid-1990s. The conflict has been highly dynamic, with multiple armed groups evolving and disintegrating over several decades. At one point, the conflict involved nine countries, and for that reason was referred to as the “Great War of Africa”. Throughout the conflict, armed groups and criminal networks within the Congolese army have fought to control mines for both personal profit and to fund their causes, and continue to do so today (The Enough Project, 2012; UNSC, 2014b). In 2003, the UN Panel of Experts for DRC emphasized the link between natural resources and conflict in the DRC, concluding that “Without the wealth generated by the illegal exploitation of natural resources, arms cannot be bought, hence the conflict, which almost always involves grave human rights abuses and large-scale population displacement, cannot be perpetuated” (UNPoE, 2003, para. 59).
To address such concerns, a provision was included within the 2010 Dodd-Frank Wall Street Reform Act requiring U.S. companies to make information about their supply chains for the three T’s and gold publicly available. This was an attempt at ensuring that conflict minerals from the DRC and neighboring countries are not used in their products; however, following Dodd-Frank, many companies stopped purchasing minerals from the region altogether, and the smuggling of minerals from eastern DRC still continues. Traders cooperate with corrupt mining and military authorities to smuggle minerals into neighboring countries, including Rwanda, Uganda, and Burundi, by road or by plane. Soldiers and rebels profit from ASM by collecting illegal taxes from artisanal miners, demanding miners to hand over their production, or simply searching for gold themselves (UNGoE, 2013). Of the three T’s, smugglers are reported to prefer tantalum and tungsten ore because of their lighter weight and higher profit margins compared to tin ore. This preference is reflected in the production levels of tin, which have fallen in comparison (UNGoE, 2012). Recent reports also suggest that armed groups and criminals are focusing more on gold over the three T’s, because of gold’s exceptionally high value-to-weight ratio and current market price (UNGoE, 2013).
Other initiatives have sought to address the conflict resources concern and help stabilize the region. In 2006, the International Conference on the Great Lakes Region (ICGLR) adopted the Protocol Against the Illegal Exploitation of Natural Resources. The aim of this protocol was to put in place rules and mechanisms for preventing the illegal exploitation of natural resources that constitute a threat to security and stability within the African Great Lakes region. As a result, the Regional Initiative against the Illegal Exploitation of Natural Resources (RINR) was launched in 2009, outlining actions needed to break the link between mineral revenues and rebel financing in the region (UNECA, 2013).
The Central African Republic
CAR is a second example of a country experiencing a conflict linked to minerals (UNSC, 2014a). CAR is the world’s 12th leading producer of rough diamonds in terms of value, and diamonds represent 40% of the country’s total export revenues. In March 2013, the Seleka rebel coalition overthrew the Central African government, following a three-month long march on the capital (see figure 3). While recent events follow a turbulent history of political instability in the country, the period since the 2013 overthrow has been marked by a high level of violence. Of particular concern is the fact that CAR’s eastern diamond deposits are located at the heart of the most recent conflict. The international community has voiced concern that the country’s diamonds may become the latest example of a conflict resource. As a result, the KP suspended CAR in May 2013 due to the absence of required internal control systems over the diamond sector in the wake of the Seleka takeover and the possibility that illicit diamonds were being introduced into the legal supply chain (KPCS, 2013).
Figure 3. Map showing the progression of Seleka rebel group movements in CAR from December 2012 to March 2013 in relation to the locations of diamond deposits.
Evidence of significant investment has been observed at several artisanal mine sites in eastern CAR. Newly-constructed dam-like structures built in river courses, known as “barrages”, are visible in satellite imagery (see figure 4). Barrages enable miners to access diamond deposits located within the river bed and represent large scale investments ranging from tens of thousands of dollars to over $500,000 for materials, labor, and operations. By analyzing multiple dates of satellite imagery, it was possible to determine that one of these sites developed during the height of activity and fighting by the Seleka rebel coalition in CAR’s most recent conflict. Given the large amount of financing required to sustain such an operation, this example raises questions as to the relationship between diamond mining and rebel activities during periods of conflict.
Figure 4. Photo of a barrage in eastern CAR in 2007 and satellite image of a newly-constructed barrage in eastern CAR in 2013.
Though ASM activities are small-scale, collectively these operations and the revenue they generate represent a large and complex informal economy with significant national and regional implications. The current lack of state control over the ASM sector throughout Africa allows minerals to be illegally traded with relative ease, and governments lose much needed revenue that could be directed towards social and economic development. Many state authorities and international development organizations are beginning to recognize the economic potential of ASM and are seeking to harness revenues generated from the activity through formalizing the sector. There is also a growing body of literature that complements such formalization efforts, exploring whether diamonds and other minerals can be transformed from a security concern to an economic development opportunity (Hilson, 2002; Maconachie and Binns, 2007; LeBillon and Levin, 2009). Proponents of this theory maintain that formalizing ASM will improve the credibility and stability of the sector, decrease illegal activities given adequate support, and increase mineral production and therefore foreign exchange earnings and exports. At the same time, when governments focus only on implementing and enforcing licensing schemes, they fail to address the socio-economic concerns associated with ASM. When the larger issues surrounding ASM as a livelihood are ignored, miners can remain trapped in poverty, have difficulty affording licensing fees, and may be prone to engaging in illicit mining activities (Machonachie and Hilson, 2011). International development organizations are beginning to implement programs to address the poverty cycle and other issues surrounding ASM as a means of supporting formalization efforts. However, many challenges remain for government efforts to regulate the artisanal sector and minimize the activities of illicit trading networks.
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[i] Several types of resources that do not have a high value-to-weight ratio have also been identified by the United Nations Security Council as contributing to conflict, including timber in Liberia (UNSC Resolution 1521, 2003) and charcoal in Somalia (UNSC Resolution 2036, 2012).
[ii] The KP membership status of the four countries profiled in this article are as follows: Angola, member since 2003; Sierra Leone, member since 2003; DRC, member since 2003; CAR, member since 2003, suspended as of May 2013.