Investing in the Congo

Marketplace Staff Jul 27, 2006

KAI RYSSDAL: It’s been 40 years since there’s been a free election in the Democratic Republic of Congo. That’s before its name was changed to Zaire. And then changed back to Congo 10 years ago. The US and other foreign investors are watching Sunday’s balloting closely. Because whoever wins, rebels or the government, would control Congo’s enormous mineral wealth. If the country can return to law and order, investors stand to make tens of millions of dollars. But, Suzanne Marmion reports from Eastern Congo, that’s a big if.

SUZANNE MARMION: Men in the mineral trading town of Goma scoop metal ore into sacks.

[sound of shoveling]

This is wolframite. It’s used for everything from light bulb filaments to tank armor. The men say they don’t know what it’s for — they just put it through a grinder, and out the other side comes money.

Congo’s rich soil also produces tin, coltan, diamonds, gold. Even the uranium used to bomb Hiroshima came from here. But it was copper that drew American mining company Phelps Dodge to southern Congo. The booming trade in electronics worldwide means there’s a demand for a lot of wire, so copper prices have increased.

Phelps Dodge spokesman Ken Vaughn says a new mine under construction for the company will yield at least $250 million worth of copper a year, thanks to global demand for dwindling copper supplies.

KEN VAUGHN: Most of the future development in copper and other metals are going to have to come in parts of the world that are a little more challenging than perhaps other parts.

Challenging is an understatement when you’re talking about Congo. It’s a volatile country, with a horrific history of bloodshed over its resources. The trouble dates back to the 1880’s when King Leopold II of Belgium lobbied the world for the sole right to own Congo. He said he wanted to develop the country. Privately he called Congo a slice of “magnificent African cake.”

Political scientist Herbert Weiss says Leopold would stop at nothing to exploit Congo’s resources. Most famously, he used mercenaries to terrorize villagers into collecting rubber.

HERBERT WEISS: If they didn’t achieve their quota, hands were cut off and that sort of thing.

“That sort of thing” included massacres and starvation when regular farming work came to a halt. Leopold’s rule decimated the population. Belgian historians conservatively estimate that 4 million people died from unnatural causes. Outside scholars say it was 10 million, or half of Congo’s entire population.

After Leopold, colonialists exploited the country. Then came the voracious dictator Mobutu Sese Seko. The war to overthrow Mobutu gave rise to rebel conflicts and the ongoing power struggle over Congo’s mines that continues even today.

Alexis Kanyenye is the deputy president of Congo’s National Human Rights Commission. He says that rebels still control many mines in the east.

[Sound of Kanyenye speaking in French]

Kanyenye says the government is offering rebels more than $100 each if they disarm, but they earn a lot more looting the mines. To think they’d give that up is a dream.

Even in southern Congo, where the government is in control and not the rebels, mines are being plundered. Kanyenye says highly positioned members of government in the capital Kinshasa are responsible.

[Sound of Kanyenye speaking in French]

Kanyenye says politicians are selling off state mines for suspiciously low prices. And buyers illegally export minerals without paying taxes.

Edward Mwangachuchu says it’s time for the Congolese people to start benefiting from their resources. He’s running for legislative office in Goma on that platform. He is a mine owner, but with a difference. He says his mine is legal, and he gladly pays his taxes to invest in Congo’s future.

EDWARD MWANGACHUCHU: The students will go to school, we will build school, we will build hospitals, because we can have that.

Mwangachuchu says Congo should be one of the richest countries in Africa. He sees himself as one of a new breed of mine owners in a changing Congo.

Like the American company Phelps Dodge, he hopes the upcoming election will bring stability. He worries that continued rebel fighting to control the mines could jeopardize his business.

But I also spoke to another entrepreneur in Goma who comes from a prominent rebel mining family. He refused to speak on tape, but told me he doesn’t expect the election to change how his family runs its mine. He says the leaders have always been corrupt. It’s not as if the next government is likely to spend any tax revenues on the people.

In Goma, Congo, I’m Suzanne Marmion for Marketplace.

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