Democratic Republic of Congo

Democratic Republic of Congo

Global Communities is currently implementing an artisanal mining initiative funded by the United States Agency for International Development (USAID). The program is being implemented in partnership with Levin Sources, a UK-based consultancy and social venture group that has been at the forefront of responsible mining and sourcing for more than nine years; we will also collaborate closely with Chambers Federation, an impact investment firm that brings unique expertise in issues surrounding the export of responsibly sourced minerals from the DRC.

The goal of the project, known as USAID’s Zahabu Safi (Clean Gold) Project – is to establish a conflict-free artisanal and small-scale mining (ASM) gold supply chain originating from eastern Democratic Republic of the Congo (DRC). The five-year, $11.9 million program builds on recent successes achieved by donor-funded initiatives to export responsibly produced gold to jewelry buyers in North America and Europe. According to DRC mining law, artisanal miners are required to be members of a cooperative in order to engage in legal mining activities in designated artisanal mining sites, also known as artisanal mining areas (ZEAs). But while there are currently a number of registered ASM cooperatives, many tend to exist in “name only” and are not functional.

Via USAID’s Clean Gold Project initiative, the Global Communities consortium will work to strengthen selected ASM cooperatives by examining their business and governance structures, strengthening the commercial relationships between these cooperatives and key “anchor institutions in the surrounding sites and creating the necessary export or other commercial incentives to ensure that they can sustain operations independently without continuous donor funding. Moreover, this actively seeks partnerships with the private sector with a goal to achieve at least $4 million of investment into the project-supported supply chain.

Global Communities has gathered leading experts in the DRC artisanal mining sector to support implementation of this initiative. With a focus on the eastern region of DRC, Global Communities will provide overall strategic guidance and will used proven tools to improve the governance and business operations of ASM gold cooperatives. Levin Sources will work to promote increased co-investment in conflict-free, traceable ASM gold in the supply chain through targeted private sector engagement. We will also work with leading private sector actors, including Fair Congo, as we endeavor to expand the range of intermediaries engaged in the export of conflict-free, traceable ASM gold from eastern DRC; But in addition to the partners listed above we will look to work with other firms/development programs to support ASMs implement effective traceability and due diligence systems that are well aligned with regional and international standards; Improved traceability and due diligence systems is often identified as a critical bottleneck for the ASM gold sector, one that continues to present serious challenges, particularly for small-scale miners with limited or even no equipment and minimal organization.

The program will face important challenges given current incentives for illegal activity in the ASM gold sector, where local system of taxation, corruption and other market constraints has meant that economic returns from the purchase of gold through illicit channels far exceed legal ones; At present, many local traders are willing to purchase gold at higher prices, and then smuggle it out illegally and avoid taxes, making illegal trade highly profitable. The new Global Communities initiative will strive to provide commercial incentives for mining and exporting gold responsibly, in compliance with OECD Due Diligence Guidelines for the sourcing of minerals from Conflict-Affected and High Risk Areas.

The partnership aims to contribute to the broader US government goal of reducing instability in the DRC – which has more than 1,100 minerals worth nearly $24 trillion – by providing commercial opportunities to artisanal miners by linking them to responsible gold buyers in international markets or by strengthening local partnerships between ASMs and established institutional investors/anchor institutions within the DRC. Artisanal gold is a key source of income for armed groups and criminal networks in the DRC. It is worth noting that gold is one of the most commonly smuggled resources from the DRC; with more than 95 percent of the DRC’s artisanal gold smuggled into adjoining countries. While miners in the DRC extract up to 16 tons of artisanal gold each year, only 1-2 percent is exported legally. The initiative also contributes to USG strategy to address the linkages among human rights abuses, reduction of armed groups and mining of conflict minerals in the Great Lakes Region of Central Africa. We will work to strengthen the ability of DRC based groups to both understand and comply with disclosure requirements of publicly traded companies about where they source minerals.