Sustainability

The DRC : Working in an Emerging Democracy

The mining sector is expected to play an important role in the recovery of the DRC from war and social disruption in the late 1990s and early 2000s. The return of peace and democracy has encouraged a new stability in the country and miners are working to re-establish an industry with the capacity to create a sound export base for the DRC economy.

Anvil, as one of the first companies to take up development and production after five years of war, has highlighted the potential to establish successful mining operations in Katanga. The Company has also developed a blueprint for maximising local employment and benefits from mineral production.

One of the key factors in the DRC recovery has been the strong international support for democratic and administrative processes.

Initial peace agreements brokered by South Africa led to the establishment of a transitional Government in 2003. Backed by the European Union and the United Nations, the transitional government oversaw the drafting of a new constitution, which was ultimately supported by more than 80% of parliamentarians.

Presidential and parliamentary elections, the first elections in 40 years, were held in the DRC on July 30, 2006 under the guidance of the European Union Electoral Observer Mission (“EU EOM”) and MONUC, the United Nations mission to the DRC. Joseph Kabila was declared the winner of the Presidential election on November 15, 2006. Throughout 2006, DRC voters went to the polls to elect parliamentary, regional and local representatives.

Local enthusiasm for the democratic process contributed to high voter turnouts and generally orderly polls.

During the transitional period, the World Bank and the International Monetary Fund have returned to the DRC to support new business development and economic activity. This support has included the introduction of political risk insurance. At the same time, the National Government has adopted modern mining legislation to provide some transparency and security for potential investors.

The changes are generating new interest in the widely recognised economic potential of the region. From 2005 to 2008, Congo projects raised close to $3 billion on Canadian and UK Stock Exchanges. Anvil alone has raised more than $400 million during this period.

The trend is likely to accelerate as more companies establish successful operations.

Approximately 93% of Anvil's employees are nationals and local evidence shows that the multiplier effect of direct employment is approximately 10 to 1, highlighting the strong flow-on effect of major resource projects. Locally based engineering, construction and service companies have played an important role in developing new projects for Anvil and the relationships are likely to strengthen as service sector capabilities increase.

In the long term, the DRC’s future lies in a diverse broadly based economy capable of competing on world markets. In the short term, the mining sector in Katanga is likely to be the key factor in kick-starting the recovery.

The Kilwa Incident
Kilwa is a town of approximately 40,000 people in the Congolese province of Katanga in the Democratic Republic of Congo (DRC), about 50km to the south of Anvil’s Dikulushi copper and silver mine. Anvil holds a 90% beneficial interest in the Dikulushi mine and the remaining 10% equity is indirectly held in a trust by the Company for the economic, social and infrastructure development of the Dikulushi region.

In October 2004 a rebel group seized control of Kilwa, with a stated aim of a take over of Katanga Province.  The Forces Armées de la République Démocratique du Congo (“FARDC” – the Congolese Army) immediately moved to quell the rebellion.

Anvil was the only organization in the Kilwa area with significant logistics, including a functioning fleet of mining trucks used for the open pit operations at that time. The Governor of Katanga directed Anvil to provide some of these trucks to the army in order to transport troops.  Anvil complied under force of DRC law.  Similarly, the Governor directed that Anvil allow the plane it chartered to evacuate its staff from an airstrip north of the Dikulushi mine, to transfer soldiers into the area.

The FARDC swiftly took back control of the town from the rebels, but accusations followed that it had been heavy-handed in its response and that war crimes had taken place. The United Nations later stated that 73 people died in the events surrounding the Kilwa Incident.

Whatever the exact circumstances of that conflict, it was clearly a tragic event for the people of Kilwa and had a terrible effect on many members of the community, including Anvil employees.  At the time, Anvil moved quickly to assist with the provision of food and basic necessities.

The Kilwa Incident, including the use of Anvil’s equipment, has been thoroughly investigated. A Congolese Military Court cleared the company and its employees of any wrong doing, a decision that was later upheld by the High Military Court¹. The Australian Federal Police (AFP) also investigated the matter, concluding that Anvil had no case to answer.²

For our part, Anvil has entered into a Protocol Governing Interaction between Anvil and the Province of Katanga, which has been signed by the Governor of Katanga Province at that time.  This ground breaking agreement formalizes guidelines on appropriate circumstances for the provision of logistics and it is a further step by Anvil to better protect its employees and the local communities in which it works. We are also proud of the independent audit of our DRC activities by Emeritus Professor Jim Freedman based on the OECD Guidelines for Multinational Enterprises (2000) and the OECD Risk Awareness tool for Multinational Enterprises in Weak Governance Zones (2006). This audit indicates that the Company is 82% compliant on the set of 21 parameters used by Professor Freedman. This audit report is unique in the mining industry and can be found in the Community section of this website.

In addition, following an independent review funded by the World Bank, Anvil has undertaken a comprehensive three year program to implement the Voluntary Principles on Security and Human Rights and to further imbed those principles into the culture of the Company.

It is disappointing that accusations and continuous and repetitive allegations from certain NGOs about Anvil’s involvement in the Kilwa Incident resurface. Our response at Anvil is to press ahead with the partnership work we are doing to help promote the development of the DRC and to continue our programs of social investment which have brought meaningful jobs, clinics, schools, water wells and other infrastructure to some of the poorest communities in Africa. To date, only in the vicinity of our mining operations, the Company has invested over $18 million in social projects identified as priorities by community representatives. More details on our social programs in the Katanga Province can be found also in the Sustainability / Community Development section of this website.

^{1. Reference, Press Release, June 28, 2007
2. Reference MD&A, third Quarter 2007, item 7, p.15}