9. A Mining Superpower
“Under neoliberal economic conditions, resource extraction in Africa by transnational mining and oil companies occurs in conditions reminiscent of early colonialism … In fact, over time, the more a country depends on natural resources, the lower its economic growth.”
– Kairos’1
It may not be part of the self-image of most people in this country, but Canada is a mining superpower. Canadian-based companies are to extracting minerals what the Swiss are to making expensive watches. With mines in at least 35 African countries, Canadian companies operate over 700 mineral projects across the continent.2
Canadian firms regularly exchange African mineral assets among themselves and a number of companies based and traded here have taken on African names. African Queen Mines, Tanzanian Royalty Exploration, Africa Oil, Lake Victoria Mining Company, African Aura Resources, Katanga Mining, Société d’Exploitation Minière d’Afrique de l’Ouest (SEMAFO), Uganda Gold Mining, East Africa Metals, Timbuktu Gold, Sahelian Goldfields, African Gold Group and International African Mining Gold (IAMGOLD) are all Canadian. With a mere half percent of the world’s population, Canada is home to half of all internationally listed mining companies operating in Africa.3
Since the late 1980s Canadian mining investment in Africa has grown nearly 150 fold. In 1989 Canadian mining companies had $233 million invested on the continent, which rose to $6 billion in 2005. By 2011 Canadian mining investments in Africa had surpassed $31 billion.4 Canada, not China, is the leading international resource investor in Africa.
Canadian mining companies have been the main beneficiaries of the World Bank’s push to promote capitalist mineral extraction in Africa. But in their quest for profits Canadian businesses have squeezed out domestic miners and solidified the colonial economic pattern whereby foreigners export the continent’s raw materials while African countries import value added products.
The International Council on Mining and Metals found that 16 African countries depended on minerals for more than 25% of their exports in 2010 (a number of other African countries were heavily reliant on energy exports). Of these 16 nations, eight relied on minerals for over half of their exports and three relied on minerals for more than three quarters of their exports.5 A 2015 African Development Bank study discovered even greater dependence. It concluded that 24 African countries relied on mineral products for three quarters of their export earnings.6
The dependence on resource extraction has grown across the continent. Between 2002 and 2012 more than two thirds of African export growth was in minerals, oil and gas.7 (Less dominant than their mining counterparts, more than a dozen Canadian oil and gas firms operate across the continent.)
In a 2014 speech at a World Bank forum on the Africa Mining Vision, Canada’s international development minister celebrated the continent’s dependence on raw resource exports. Christian Paradis lauded the continent for exporting $382 billion worth of minerals, oil and gas in 2011 and suggested that extracting and exporting minerals drove Canada’s development. “Canada owes much of its economic growth to extractive industries. Canada’s own history is an example of how natural resources can create jobs and drive government revenues that help build a diversified economy and strong society.”8
But, contrary to what Paradis and other officials say about mining’s role in Canadian economic development, focusing on raw mineral exports ensures “underdevelopment” not development. Or, as Digging to Development? A Historical Look at Mining and Economic Development explains: “The statistical evidence clearly undermines the proposition that investments in mining can set a nation on the path of sustained development.”9 The Oxfam America report challenges the World Bank (and Canadian government) promulgated notion that extracting minerals played a major part in the US, Australian or Canadian economic rise.
Between 1890 and 1914 metal and metal ore exports represented 3% of exports and 1% of GDP in Canada.10 This rose to an average of 9% of exports and 3% of GDP from 1918 to 1940. In more recent times, Canadian metal and metal ore exports barely represented one-twentieth the value of automotive exports.11 Simply put, Canada’s economy has never been remotely as reliant on mining as many African countries are today.
Equating Canadian mineral economics with African mineral dependence is even more absurd than the export percentages alone suggest. In Canada mineral extraction spurred significant technology and skills development as well as associated industries. But, aside from South Africa, few African countries are hubs of mineral technology development or provide the engineering, legal and financial services mining companies usually require and much of the refining work and profits leave the continent. And, while Canadian mining companies do employ tens of thousands of Africans, corporate mining is capital, not labour, intensive. Based on data acquired from US affiliate firms, the United Nations Economic Commission for Africa found that manufacturing foreign investment was 17.5 times more labour intensive than mining foreign investment.12 Additionally, Canadian companies suppress a great deal of mining employment since they regularly displace labour-intensive (though often dangerous) artisanal mining and regularly take land from farmers.
A report titled “Blessing or Curse? The rise of mineral dependence among low- and middle-income countries” found that countries dependent on minerals generally have a lower GDP per capita and worse institutional governance.13 Another report, “Poverty Reduction or Poverty Exacerbation?”, confirms this analysis. It notes: “Countries highly dependent on oil and mineral exports tend to grow more slowly, face lower living standards, and suffer higher levels of corruption and violence than resource-poor countries. In addition, oil, gas and mining projects can have significant negative economic, social, and environmental impacts on directly affected communities and ecosystems.”14 The latter paper concludes that focusing on mineral exports does not simply fail to alleviate poverty it may make it worse. A longer-term study by the World Bank notes that “data on real per capita GDP show that developing countries with few natural resources grew 2-3 times faster between 1960 and 1990 than natural-resource-abundant countries.”15 Yet the World Bank and IMF have pressured African governments to expand their focus on extractives, enabling foreign companies to exploit them. In 1992 the World Bank published a “Strategy for African Mining” that declared “the main objective of donor intervention in African mining — whether through technical assistance or investment financing — should be to facilitate private investment and help reduce the country and project-related risk for the private investor.”16
The structural adjustment process forced more than thirty African governments to rewrite mining codes to facilitate foreign ownership and exploitation of their mineral resources.17 A World Bank promoted reform in Burkina Faso, for instance, reduced mining income taxes by twenty percent, dividend withholding taxes by fifty percent and capped the government’s share of mining ventures at ten percent.18 David Black and Malcolm Savage explain in Mainstreaming Investment: Foreign and Security Policy Implications of Canadian Extractive Industries in Africa: “Beginning in the 1980s with the imposition of structural adjustment programs (SAPs) on much of the continent, African countries were strongly encouraged to liberalize their mining codes to attract foreign investment. Canada has played an active role in advocating liberalization of Africa’s mining sector.”19
Ottawa championed these legislative reforms through both support for the IMF/World Bank and more direct avenues. Gwendolyn Schulman and Roberto Nieto write: “Canadian cash, technocrats and know-how have also been involved in rewriting mining codes in Malawi, Ghana, Mali and the Democratic Republic of Congo (with, in this last case, civil war as a backdrop).”20 The authors of Imperial Canada Inc., Alain Deneault and William Sacher, cite Botswana, Zimbabwe, Guinea and Zambia as other African countries where Canadian aid shaped mining legislation.21 In Violence as Civility: Race, Mining and Canadian Neocolonizers in African States, a PhD thesis based on interviews with Canadian mining executives operating across the continent, Paula Butler explains: “It became apparent from interviewees’ anecdotes that Canadian state and private actors have played significant direct roles in numerous African countries in reforming and rewriting their mining laws. While this is a postcolonial context in which formal power (vis-a-vis foreign investors and foreign states) is held and exercised by African governments, which do have some room to manoeuvre, the interview data indicates extensive access to information on the part of Canadian companies and Canadian diplomatic personnel about African host country law reform processes, as well as an unusual ability to directly or indirectly influence change. One interviewee stated that his private mining company had made an offer to a host African state to re-draft its mining legislation, and had paid for a Canadian lawyer to do so. Indeed, direct involvements by Canadians, and/or the use of Canadian mining law as a model, were reported for a number of countries.”22
Canadian aid enhanced the legislative environment for mining companies as well as their knowledge of Africa’s terrain.23 Ottawa provided funds to gather geological data in Tanzania, Angola, Cameroon, Niger, Uganda, Kenya and elsewhere.24 Long time West Africa-based freelance journalist, Joan Baxter, describes a chance encounter with Canadian geologists in her 2008 book Dust From Our Eyes: an Unblinkered Look at Africa: “Another CIDA employee I met one evening in Bamako [Mali] told me his work with CIDA had been a long-term project to map the mineral resources of Zaire, now the Democratic Republic of Congo. When we spoke, he was on a two-year sabbatical from CIDA, working with Canadian mining companies that had taken out concessions in that country. In the 1980s in Burkina Faso, I had met a team of Canadians who were flying in an odd looking plane so full of antenna and wires that it resembled a flying catfish. When I asked the crew what kind of plane it was they told me it was for mapping the underground riches of Burkina Faso, whose gold is now being mined today by foreign — and several Canadian — companies.”25
As the biggest donor nation to African mining initiatives, Canada finances a multitude of projects facilitating resource extraction. Ottawa’s contributions are considerable. In the educational sphere, CIDA sponsored the Zimbabwe School of Mines, a mid-1990s government-industry collaboration, and financed a Senegalese school for geomatics (combining geography and information technology to map natural resources), which received an added $4.92 million in 2012.26 Two years later Canada put up $18.5 million for an extractives skills training centre in Mozambique and in 2015 Ottawa announced $12.5 million for the Project Strengthening Education for Mining in Ethiopia.27 The initiative was to work with Ethiopian universities “to develop more industry driven geology and mining engineering undergraduate programs.”28
Ottawa pledged $20 million in 2012 for the Extractive Industries Transparency Initiative (EITI) and the Extractive Industries Technical Advisory Facility.29 Former British Prime Minister Tony Blair launched EITI in 2002 under the guise of improving standards for disclosing payments by resource companies to governments. The EITI, however, doesn’t publish what companies’ are required to pay, making it easy to overstate costs or understate revenues to reduce taxable income (see Chapter 15 for more detail). Prominent Nigerian author and activist Nnimmo Bassey criticized the EITI for “tend[ing] to portray the resource extracting companies as clean while the host governments are dirty and have to struggle to achieve the status of being EITI compliant.”30
The World Bank established the International Extractive Industries Technical Advisory Facility (EI-TAF) with the stated goal of improving governments’ capacity to negotiate and implement regulatory frameworks for managing natural resources. The World Bank argued that “the ultimate objective of the EI-TAF is to assist countries in the sustainable development of the extractives sector, to facilitate private investment that is positive for development and to ensure that countries — and ultimately their citizens — benefit from the exploitation of their natural resources.”31
The biggest donor to the EITAF, Ottawa is the reason the facility developed relations with the University of Calgary’s School of Public Policy. Established with a $4 million donation from James Palmer, one of Canada’s leading oil and gas lawyers, former Secretary of State Condoleezza Rice launched the initiative in 2009 at a $500-per-plate dinner.32
In another endeavour to help governments negotiate mining contracts, Canada’s international development minister announced $10 million in funding for the African Legal Support Facility at a 2014 World Economic Forum conference on Extractives and Sustainable Development. The African Legal Support Facility is the first initiative undertaken by the Extractives Cooperation for Enhanced Economic Development (EXCEED) initiative. The Department of Foreign Affairs, Trade and Development budgeted up to $25 million per year for a program it described as “a new funding mechanism to expand Canada’s involvement in areas of high development impact in the extractive sector in Africa.”33
EXCEED partnered with the African Minerals Development Centre (AMDC) and Canadian International Institute for Extractive Industries and Development (CIIEID) with a mandate to advance “strategic partnership arrangements with leading international and Canadian institutions” to help “African countries to maximize the benefits of their own resource wealth.”34 Launched in December 2013, AMDC advises governments on the management of their mineral resources and implementation of the African Union’s Africa Mining Vision.35
The Africa Mining Vision grew out of the African Mining Partnership, which was set up to implement the mining chapter of the New Economic Partnership for Africa’s Development (NEPAD). The Canadian backed NEPAD calls for “[improving] the quality of mineral resource information” and “[creating] a regulatory framework conducive to the development of the mining sector.”36 But NEPAD’s mining chapter says little regarding the negative social and environmental impacts mining often has on local communities or the need for African governments/communities to maximize income from non-renewable resources.37
Secondary mining powerhouse Australia joined forces with Ottawa to fund AMDC. Canada, however, was the primary source of the centre’s funding and announced a $15.3 million contribution in 2014.38 In addition to the two governments, some mining companies publicly supported AMDC. A press release from a Brazilian-Canadian mining company noted: “Vale supports African Mineral Development Centre launch in Mozambique.”39
Ottawa promoted a partnership between the centre and the Canadian International Institute for Extractive Industries and Development as part of its effort to shape AMDC’s direction. In 2014 CIIEID signed a letter of intent “with the AMDC to cooperate in policy and regulatory frameworks, geological and mining mapping information systems, governance and participation and building human and institutional capacities.”40
The Stephen Harper government commissioned CIIEID, a University hosted think tank, to provide mining related services to developing countries. In 2012 Ottawa committed $25 million over five years to an institute jointly housed by the University of British Columbia, Simon Fraser University and Université de Montréal. A number of mining companies also pledged millions of dollars to support CIIEID programming.41
In June 2013 then International Development Minister Julian Fantino told a Mining Association of Canada meeting that CIIEID “will be your biggest and best ambassador.”42 Drawing from the minister’s statement, Mining Watch concluded: “CIIEID will promote extractive industry growth, not poverty reduction.”43
According to the government, its support for the African Minerals Development Centre, Canadian International Institute for Extractive Industries and Development, Extractive Industry Transparency Initiative and Extractive Industries Technical Advisory Facility was part of its Building the Canadian Advantage: Canada’s Corporate Social Responsibility Strategy for the Canadian International Extractive Sector. The government’s corporate social responsibility strategy also had the goal of increasing the public funds available for mining companies’ social responsibility initiatives. In 2012 CIDA declared that they designed their partnership with mining corporations to “improv[e] the competitive advantage of Canadian international extractive sector companies by enhancing their ability to manage social and environmental risks.”44
The Conservative government ploughed millions of dollars into mining companies’ corporate social responsibility projects. One example of the “aid” was a $4.5-million grant to Lundin for Africa, the philanthropic arm of mining giant Lundin Group of Companies, for its operations in Ghana, Mali and Senegal.45 In 2012 Ottawa also put up $5.6 million for a project between NGO Plan Canada and IAMGOLD near the company’s mine in Burkina Faso. (See Chapter 10 for more details.) But, the public paying for what should be mining companies’ social responsibility didn’t begin with the Harper Conservatives. In the early 2000s, for instance, CIDA put up $1.4 million for a Placer Dome program to aid hundreds of South Africans the Vancouver company laid off.46
The aid agency’s motivations extend beyond projects directly related to mining operations. Ottawa directed funds to countries hospitable to foreign mining firms and areas where Canadian companies sought resources. In an internal report titled “Reviewing CIDA’s Bilateral Engagement” the aid agency points to over a dozen countries where its work was partly motivated by Canadian mining companies.47 This 2013 report, for instance, acknowledged that the Congo is of “strategic interest” because Canadian extractive companies have billions of dollars invested there.48
While the Harper regime strengthened the linkage, governments have long delivered aid with mining interests in mind. In Player, Partner and Friend: Canada’s Africa Policy since 1945, Grant Dawson points out that an early motivation in dispensing aid was that “it would (hopefully) also dissuade their governments from nationalizing extractive industries (including, without compensation, Canadian firms), and make the states ‘trade and investment ready’. ”49
Tying development aid to mining interests is one of many ways Ottawa supported Canadian mining firms in Africa. Crown Corporation Export Development Canada (EDC) provided hundreds of millions of dollars in export finance and risk insurance for mining projects in Madagascar, Zambia, Ghana, Eritrea, Mauritania, Congo and beyond.50 EDC’s “Africa team” promoted the sector at South Africa’s Mining Indaba 2013 Conference and the Prospectors and Developers Association of Canada Convention.51 In 2015 Canada’s export credit agency opened an office in Johannesburg, its first on the continent, to facilitate market information work.
In 2014 the federal government announced the launch of branch offices of a professional society, the Canadian Institute of Mining, Metallurgy and Petroleum, in Senegal and Burkina Faso. A press release stated: “The opening of a second office [in West Africa] allows Canada to further share best practices with the region and will make the knowledge and experience of Canadian miners, geologists and managers more available to their African counterparts.”52 Supported by the Canadian Trade Commissioner Service, the Canadian Institute of Mining, Metallurgy and Petroleum sought to create the Institut Minier Ouest Africain.53
More than two dozen Canadian diplomatic and trade missions promote mining interests on the continent.54 According to Africa’s Blessing, Africa’s Curse: The Legacy of Resource Extraction in Africa, “Canadian diplomatic missions in Africa spend much of their time making sure that mining companies and host governments are brought together and the companies are much praised by Canadian officials.”55 In addition to arranging meetings between local politicians and Canadian businesses, Canadian missions organize conferences and lobby local governments for mining sector reform. A 2002 East Africa Standard article headlined “Relax Mining Laws, Urges Canadian Envoy” reported on a speech by Trade Commissioner Ronald Rose, who called for Kenyan mining sector reform.56
Top Canadian officials aggressively promoted mining under Stephen Harper’s leadership. As a Canadian Press journalist put it: “Harper ramps up a strategy to give Canadian business an edge in Africa’s lucrative and expanding resource industry.”57 A host of mining executives accompanied International Trade Minister Ed Fast during a series of visits to the continent and International Development Minister Christian Paradis attended various African mining forums. For his part, former foreign minister John Baird visited African countries partly based on where Canadian resource companies sought business.58 “Canada is keen to explore opportunities to realize the full economic potential of trade with Kenya and the East African Community, especially for Canadian natural resource companies, which are becoming leaders in the Kenyan mining and oil and gas industries,” a statement from Baird noted after he visited Nairobi in 2013.59
Harper was steadfast in his mission to support Canada’s corporate mining behemoth. When leaders from Tanzania, South Africa and Benin visited Ottawa in 2013 he used the opportunity to promote mining interests.60 During a trip to Senegal in 2012 he met seven Canadian business representatives, five of whom worked for resource firms or trade associations.61 On a visit to Tanzania in 2007 Harper gave audience to more than 10 Canadian resource firms. The prime minister described the meeting as an opportunity to discuss “the general business climate [and] what the government of Canada can do to assist in building our investments here.”62
Harper personally promoted Canadian mining companies and simultaneously blocked legislation to regulate an industry notorious for abuses in jurisdictions with weak legal structures. In early 2007 a pan-Canadian roundtable launched by the previous Liberal government crossed the country interviewing a wide array of social actors about Canadian mining. Upon conclusion it offered 27 recommendations to better address the human rights and environmental effects of Canadian companies operating abroad. The core suggestion was for government to withhold financial and political support from companies found responsible for significant social or ecological abuses.
Even though the Mining Association of Canada helped formulate the 27 recommendations — and tepidly agreed to them — other powerful forces opposed the plan. Barrick Gold, which operates some of the most controversial mines in the world, the Prospectors and Developers Association of Canada and the Canadian Chamber of Commerce lobbied the Conservatives to reject the roundtable’s recommendations. They found a sympathetic ear.
When it became clear the Conservatives would not act on the roundtable’s recommendations, Liberal MP John McKay introduced An Act Respecting Corporate Accountability for the Activities of Mining, Oil or Gas Corporations in Developing Countries (Bill C300). Under Bill C300 companies that failed to adhere to (relatively lenient) standards of social responsibility would lose the support of Canadian embassy officials and taxpayer-funded agencies such as Export Development Canada.
Controversial private members bills are rarely adopted, however, this one made it to its third reading before the House of Commons. Once the mining industry realized Bill C300 had a chance of becoming law they launched a ferocious lobbying campaign.63
On October 27, 2010, the House of Commons voted 140 to 134 against Bill C300. The voting ran along party lines with almost every Conservative MP voting against it and the opposition parties voting in favour. But 13 Liberal MPs, four from the NDP and six Bloc members failed to show up for the vote (one independent opposed the bill and another abstained).
The Conservative government blocked efforts to withhold diplomatic and financial support from companies found responsible for significant abuses abroad and they also opposed legislation that would allow those victimized by Canadian companies to seek redress in Canadian courts. Canadian law makes it extremely difficult to bring criminal or civil suits against Canadian companies responsible for major environmental and/or human rights violations abroad, which suited Harper just fine. The government refused to support legislation, modeled on the US Alien Torts Claims Act, to allow lawsuits against Canadian companies for major human rights violations, infringements of labour rights, or ecological destruction abroad.
In their most significant support to Canadian mining corporations in Africa, the Harper Conservatives negotiated Foreign Investment Protection Agreements (FIPAs) with 15 African countries. As an indication of how these bilateral investment treaties were driven by mining interests, the government signed or announced a number of African FIPAs at mining conventions. During the 2014 Prospectors and Developers Association of Canada conference in Toronto a Globe and Mail article headlined “Trade Pacts to Spur Mining Investment” reported: “Canada is signing an investment protection agreement with Cameroon and launching negotiations with Kenya as it pushes to secure better rights for Canadian mining companies in Africa.”64
FIPAs give corporations the right to sue governments — in private, investor-friendly tribunals — for pursuing policies that interfere with profits. Under the Canada-Benin FIPA, for instance, a mining company could sue if Benin required a portion of the company’s products to be purchased domestically. It notes: “A Contracting Party may not condition the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Contracting Party or of a non-Party, on compliance with the following requirements: (a) to achieve a given level or percentage of domestic content; (b) to purchase, use or accord a preference to a good produced in its territory, or to purchase a good from a producer in its territory.”65 (In August 2013 Tanzania passed legislation requiring large mining companies to eventually procure 80 percent of their goods and services locally. Yet the Canada-Tanzania FIPA, which came into force four months later, effectively prohibits local procurement rules.)
The ability to sue — or threaten a suit — dissuades a national government from siding with a community opposed to a mine. As the Council of Canadians points out, “Canadian mining companies are using FIPAs with developing countries to claim damages from community opposition to unwanted mega-projects.”66
At a broader level the aim of a FIPA is to counter “resource nationalism”. Having benefited from two decades of privatizations and loosened restrictions on foreign investment, mining companies fear a reversal of these policies. These concerns can be somewhat alleviated by gaining rights to sue a government if it expropriates a concession, changes investment rules or requires value added production take place in the country. Writing in Canadian Dimension Paula Butler notes: “Canada appears keen to negotiate FIPAs with some of the most economically and politically vulnerable but resource rich African countries before they develop a taste for resource sovereignty.”67
The deputy head of Africa forecasting at political risk firm Exclusive Analysis, Robert Besseling, told the Toronto Star in 2013 that resource nationalism was Canadian miners’ top concern. The paper described “a trend toward what some call resource nationalism that’s seen a number of African governments — after opening doors to foreign investors — begin to reverse or revise regulations. Under pressure from civil society groups and labour unions, governments are driving a harder bargain or changing the rules of the game part way through.”68
Any government that increases resource royalty rates or nationalizes extractive industries is a threat to Canadian mining interests. Yet, large numbers of Africans believe natural resources should be publicly held, or at minimum, heavily taxed. Some simply want minerals to remain underground. Ottawa’s “goal” in signing FIPAs with African countries, note Paula Butler and Evans Rubara, “is to prevent control of mining policy throughout the continent from falling into the hands of nationalist, pro-African, pro-community political forces who will promote a vigorous ‘resource nationalism’ agenda.”69
Or, to put it even more bluntly, Ottawa’s goal is to make sure mining policy stays in the hands of mining corporations.