Tanzania is best known to foreigners for its national parks, Mount Kilimanjaro and the beautiful beaches of Zanzibar. It is also, however, Africa’s fourth largest gold producer. And, as a neighbor of the Democratic Republic of the Congo (DRC), it is covered by Section 1502 of the US Dodd Frank Act on conflict minerals.
Some basic facts first: officials estimate that 60% of all gold from the DRC and its adjoining countries is mined in Tanzania. According to the website “Gold Mining in Tanzania”, there are six large scale gold mines in the North West of the country. The mines are operated by well known companies such as Barrick Gold Corp and AngloGold Ashanti. In 2010, Tanzania produced 44.6tons of gold worth US$1.77billion and representing something between 40-60% of the country’s total export revenues.
Most importantly though, there is no conflict in Tanzania. It is understandable and logical then that the country has tried to reassure foreign buyers that its gold is conflict-free. In an article entitled “Tanzania no longer on conflict mineral list” the Commissioner of Mines even claimed that the US Government agreed to enact additional legislation in favor of the DRC’s “conflict-free” neighbors. He seems to have gone a step too far with this statement, as only a couple of days later the same newspaper published another article, mentioning that the Tanzanian Government had contacted the US Government “trying to establish possibilities of exempting Tanzania”. In this effort the country is supported by the World Gold Council, an association counting among its members some of the gold mining companies operating in Tanzania.
Would an exemption be justified?
On the one hand side, Tanzania is clearly not a conflict-affected area. Its decision-making centers and tourist hubs are located far away from the troubled regions in the DRC. In addition to providing much needed export revenue, the mining industry has created thousands of jobs in a region where employment opportunities are few. Large corporations have invested in communities living in proximity of the mines. As an example, the annual report of 2007 published by AngloGold Ashanti mentions that the company spent $80’000 on controlling Malaria in the mine village. Campaigns for the prevention of HIV/AIDS, study assistance programs, free medical service for employees and their families as well as a training centre are other areas the company invested in. Preventing Tanzanian gold from entering international markets (albeit an unintentional consequence of the US legislation) will thus not only lead to job losses but will hurt entire communities.
On the other hand side, focusing exclusively on the country’s domestic gold production would not be painting a complete picture. The port of Dar es Salaam is one of only two major access points for Congolese material to international markets (the other one being the port of Mombasa, in Kenya). As recently as February 2011, 2.5tons of smuggled gold was impounded in the Kenyan harbor of Mombasa. An official of the Kenyan Revenue Authority investigating the crime was shot dead. Although Tanzanian officials claimed that they were unaware of any seizure of material in the port of Dar es Salaam, reports indicated that the country was involved as well in the smuggling. The incident demonstrates the need for more transparency and controls, ensuring the legitimate gold from Tanzanian mines does not serve as a cover-up for smuggling rings to export gold that is not conflict-free.
The increased focus on mining in East Africa should be seen as an opportunity to move forward, rather than a threat of moving backwards. Tracking gold in an industrial mine is not only possible, but certainly easier than doing so in the context of informal, artisanal mining in a conflict-affected area. Given the value of the commodity, it appears unlikely that there are no controls in place already over the amount of gold extracted from the mines and where it is subsequently sold and shipped to. As a matter of fact, the World Gold Council’s (WGC) Conflict-Free Standard and Chain of Custody Standard establish a system tailored to the needs of large-scale gold mining operations, allowing companies to keep track of their material by means of a chain of warranties. Similarly, the chain of custody standard of the Responsible Jewelry Council (RJC) includes provisions on conflict-free gold, allowing mining corporations to issue Statements of Provenance for their material.
The implementation of a chain of custody standard should go hand in hand with the respect of fundamental human rights and decent working conditions. While the WGC only refers to companies' commitments to respect basic human rights, the RJC chain of custody standard would require participating companies to be members of the Council. Membership requires companies to implement a set of social, environmental and community-related standards ultimately aiming at establishing better working conditions. Among those standards are provisions related to the use of security at mining sites.
A recent example at the North Mara mine operated by Barrick Gold Corp. illustrates the need for improvement of conditions at the mine sites: In May of this year, seven persons were fatally shot at the mine as, according to Barrick, “a large group of intruders […] stormed the ore stockpile at North Mara, with the intent of stealing ore.” Only two weeks later, the media reported allegations that about ten women had been arrested and sexually assaulted by police officers and company security guards. (The media article and Barrick’s statement can be accessed here and here).
As with most cases, the problem is that one size does not fit all. The challenges in the Tanzanian gold industry are different from the issues faced by miners in the DRC. A bag-and-tag system will not help addressing them. However, the country is in a much more comfortable position as multi-national companies are more likely to have the capacity to establish the certification systems necessary to ensure Tanzania’s domestic gold continues to be exported and is clearly distinguishable from any smuggled conflict material. Rather than trying to get an exemption from the requirements of Dodd Frank, Tanzania should take this opportunity to press forward, making sure its gold industry continues to benefit communities while becoming more transparent and safer for its employees.