Trade in Congolese gold: A dilemma

Dieumerci a gold trader from Iga Barriere in Ituri province 25km from Bunia town buys gold from local miners for $15 a gram and sells it on for $20. Mongbwalu in Eastern Congo is home to one of the world's richest gold fields yet the people live in extreme poverty, working by hand and have endured years of conflict. Courtesy Photo

Kinshasa, DR Congo | By Edward Ronald Sekyewa | In a bid to find a lasting solution to the political problems in the Democratic Republic of Congo (DRC), the United Nations (UN) is looking at, among others, the sources from which the different rebel groups in Congo derive their finances and is bent on making sure that these sources are blocked.

In most of the reports compiled by the UN to this effect, it has been noted that the illegal trade in Congolese minerals is one of the biggest sources of income for rebel groups.

Congo being a mineral-rich country, trade in minerals in that country is as old as the the country itself and has been carried out since time immemorial.

There are different small rebel groups in Congo at the moment, and they are scattered in different areas of that country, for example in North Kivu area where the FDLR (Forces Democratiques de la Liberation du Rwanda) rebels have their headquarters and where several rebel outfits operate.

Only a few active Mayi-Mayi rebels continue to operate in this area after having been extremely weakened by the Congolese government forces. After the surrender of Warlord Gedeon in May 2006, a large majority of the Mayi-Mayi rebels were demobilised and disarmed and they chose to re-integrate into civilian life.

The FJPC ( Front Populaire pour la Justice au Congo ) which emerged in Ituri in 2008 after the unsuccessful demobilisation, disarmament and reintergration process is now defunct, and its leader, Sharif Manda is said to be taking refuge in a neighbouring country.

Generally speaking, the strength of the armed rebel groups throughout Ituri is very limited due to the considerable presence of the Congolese army (Forces Armees de la Republique Democratique du Congo – FARDC) in the region where it is deployed in military operations against these small groups. This is a view that is shared by several other international organisations which have researched in Congo lately.

The UN assertion that these rebel outfits are sustained because of the trade in Congolese minerals led to the sanctioning of some companies by the same international body which were trading in the same. They were were accused of abating rebellion in Congo through their business contacts in the region. Major focus was put on gold trade.

The most readily available minerals in Congo are gold, diamonds, coltan and cassiterite and it is these, according to the UN reports, that are keeping rebellion in Congo alive.

However, a trip to Congo in different areas where gold is dug tells a different tale. This Reporter traversed different areas like Bunia, Mongbwalu, Isiro, Watsa, Durba, Tora, Libumbi, Injani, Moku, Ngangazu, Dubele in search of an insight into the controversy sorrounding gold trade in that country. In these areas, gold is just a source of livelihood for the masses and their lives rotate around this precious metal.

In the western world, the term “Gold-digger” is normally applied to people, especially women, who go for rich men because of their monies and other assets but in the jungles of Congo, it means exactly that; Gold digging. People in these areas wake up early and head direct to their goldmines and dig for gold.

This is an activity that they have done all their lives. According to them, digging up holes in search for gold is similar to cultivation in other cultures or countries. Instead of tilling the land to grow cassava or potatoes, they dig for gold. That is what mother nature gave us, you take what nature has given², Midi who digs for gold told this reporter in Isiro referring to gold-digging instead of cultivation for a livelihood.

The story is not different in other areas where gold is dug. During the rainy season, most of the gold miners are inactive because the mines get filled with water and their walls are softened therefore anyone who dares to go to the mines risks being buried by the crumbling soils. In the same sense, the supply of gold is low during this period and the situation changes when the dry season comes.

The amount of gold extracted varies and one is never sure of the amount to be got, neither is there a guarantee that one will get any gold anyway.

Some gold mines are organised like camps with their own authorities including a chief and “Bede” (soldiers guarding the camp). The Bede have their commander and any other forces can only access these camps after clearance from Bede. Gold dug from these camps goes through the chief before it is sold to the traders.

Mongbwalu, for example, is a big gold collection centre but the gold itself is dug from many camps outside the town. The same applies to other towns like Ariwara which is a few kilometres from Odramacako, Uganda’s border point with Congo in Arua.

Gold traders travel from as far as Isiro to come and sell their gold in Aliwara and from the proceeds, they buy all sorts of goods which they take back with them. A small gold dealer from Isiro can spend more than two weeks on the way from there to Ariwara and vice-versa.

Jurua, a gold dealer in Ariwara town told this reporter that he buys a gram of impure gold at 70,000 Uganda Shillings (appr. 32 US Dollars) and a gram of pure gold at 75,000 Uganda Shillings (appr. 35 US Dollars). Gold here is also measured in Tolles, whereby 12 grams make 1 Tolle.

There is another crude method of measurement using special match-sticks where 12 match-sticks make a gram. Asked whether I too can buy the gold from him, Jurua said that it is only a question of money. I can get you 1000 grams (1 kilogram) in 7 days if you have the money, Jurua emphatically asserted. I was able to set up a gold supply chain in Ariwara, which brought me to a conclusion that anyone with the required money can actually trade in Congolese gold irrespective of his or her country of origin.

Andama, a Ugandan who buys gold from Ariwara and sells it in Kampala told this reporter that whereas 12 grams make 1 Tolle in Congo, in Kampala it is 10 grams which make 1 Tolle so that the traders’ profits are the remaining 2 grams.

“There is a lot of intrigue in this trade. One trader may accuse another of dealing with rebels which will land one into prison. This they do in order to frustrate one out of business so that they control a bigger market,” Andama told this reporter.

On how the gold leaves Congo, Andama said that no checks are made for gold from Congo to Uganda. This reporter went in and out of Congo on several occasions and was never checked for gold or any other minerals and could have bought from Congo a good amount of gold and brought to Uganda. From Congo, gold is transported in dust form and it is in Uganda or Burundi that it is melted into bars.

The Congolese authorities at the border point were only interested in the amount paid to them as entry fee to their country and on the way back, they just wave one through to re-enter Uganda. “The Congolese officials at the border point will arrest you for trying to bring a bottle of Primus beer out of Congo but they have never arrested anyone for carrying gold,” Andama told this reporter.

He added that of course whoever deals in gold through the different border points hides it safely either in the car or motor-bike. Besides, when border officials check the cars, they basically look for arms or other smuggled items like beer, but never for gold.

On the Ugandan side, the border officials are basically interested in security and other related issues, the Uganda Revenue Authority (URA) officers at Vurra border point in Arua are interested in tax collection and the security agents there only look out for arms and other items or characters that could cause insecurity in the country.

On the occassion of this reporter’s visit to Vurra border point in Arua on the way to Aru town in Congo, a Congolese soldier, Ikwa Dieu-Donne, was intercepted by the Ugandan security agents carrying a sack of money in the bus carrying other passengers.

The soldier claimed that he was taking the money to Bunia and it was salary money for a Congolese battalion there. What however was so surprising was that this lone soldier was moving with such a lot of money without any security detail.

David, a Ugandan security agent at Vurra border point could not let the Congolese soldier proceed without any form of security to safeguard the Congolese money, and a Ugandan police officer was dispatched to escort the money until Goli border point and to make sure that the money leaves Ugandan soil.

“What if that Congolese soldier jumps off the bus and disappears somewhere in Uganda with money meant to pay Congolese soldiers? That could cause diplomatic problems and that money could fuel insecurity and cause inflation in our country,” David explained to this reporter.

All through the Congolese excursion, it clearly came out that gold and its trade in that country is a normal activity. It is just unfortunate for the Congolese government that it has not come out strongly to control and streamline this trade.

That gold trade is sustaining rebellion in Congo is a view that has lost ground on the basis that most of these rebel groups are so meager and others have been annihilated and are obliterate. Besides, it is not only gold that is traded in Congo.

There are so many other items from which rebel groups could benefit and most of them are imported items from overseas as well as neighboring countries. This reporter has not come across any gold mine owned by rebels. The combination of a strong customary power structure, explicit grievances and the formation of tribal fighting units may very well have convinced the political and military powers in Kinshasa to firmly establish their authority in the different areas in order to nip the scattered rebel groups in the bud.

The north of the orientale province holds many precious minerals and other natural resources that seem to attract some Congolese national forces (FARDC) units especially those that do not participate in the Rudia 2, a military operation by the Congolese forces against Kony,s LRA rebels. Some of these units are known to have positions at mining sites near Isiro, Niapu, Watsa and Durba.

In Bukavu which is another hotspot for Congolese gold, it was ascertained that the gold from there leaves Congo to Burundi where the trade is actually not different from what goes on on the other bordering countries to Congo.

In the region, it is only Rwandese border officials that do thorough checking, and that explains why Rwanda has not been favoured by gold traders in the region.

The bustling city of Butembo has several gold mining sites in its vicinity and has several traders dealing in gold. This city, which is seemingly in constant expansion, is a very important trading centre for imported consumer goods and luxury products.

Back in Uganda, trading in gold is legal and any one who wishes to engage in this trade pays for a licence of about 1000 US Dollars and there is an export royalty of 0.5 percent on gold in this country while Congo has a 5 percent royalty which makes Uganda more favourable for gold traders. There are 20 registered companies trading in gold in Uganda.

In Tanzania, the port city of Mwanza has often been pointed at as a major conduit for Congolese gold. On an excursion in Mwanza, this Reporter was able to find out that gold is actually traded in that city. However, it was not easy to ascertain whether the gold that is being traded in Mwanza is from Congo or mined in Mwanza.

It should be noted that Mwanza region, which has a total of of 8 districts, is now a big producer of gold after foreign investors decided to invest in the mining sector in that region. The 8 districts that make up Mwanza are Misungwi, Sengerema, Kwimba, Ukerewe, Geita, Magu, Nyamagana and Ilemela.

Out of these districts, it is in Geita where gold is being mined. Big companies like Geita Gold Mines Limited invested massively in the sector beginning from the year 2000, and gold production in the region became very lucrative leading to an increase in the volumes of the precious mineral, for example, before Geita Gold Mines Limited invested in the industry, the region was producing only about 6 kilogrammes of gold but 4 years later after the massive investment, the production sky-rocketed to over 32 kilogrammes. The trend is moving upward after surveys indicated that there are more deposits of the mineral in the region.

The Tanzanian government is determined to obtain optimum benefit from the mining sector, especially gold and has put in place the necessary legal and fiscal framework to attract as many investors in this field as possible. On top of the large scale gold mining by Geita Gold Mines in Geita district, artisanal gold mining is also taking place.

These small scale miners are also basically found in the areas of Nyarugusu, Nyamtondo, Lwamgasa, Mgusu, Nyakagwe and Iporamosa.

Trade in gold in Mwanza is well organised and is under supervision by the responsible authorities jst like any other businesses in the area.

The Regional Commissioner for Mwanza, Eng. Dr. James Alex Msekela told this Reporter that the trade in gold in the region is a business that has attracted big investment in the region and directly contributing to the development of Mwanza.

“We have experienced development in Mwanza taking leaps and bounds due to the big foreign and local investments in the gold industry in this region and in that respect, our government has been able to provide the basic and necessary infrastructure to the population in Mwanza,” Dr. Msekela told this Reporter.

When asked to comment on the allegations that Congolese gold is being traded in Mwanza, Dr. Msekela said that due to the fact that the region is not far away from the Congolese border and due to the poor or lack of administration structures on the other side of the border, the possibility of Congolese gold finding its way into Tanzania cannot be totally ruled out.

“Traders will always want to do their business in an area which they find conducive and beneficial to their interests, therefore if Congolese gold traders decide to sell their gold in Tanzania because of the favourable conditions in our country, I do not see anything wrong with that,” he asserted.

On the possibility that Congolese gold is keeping rebellion in the neighbouring Congo alive, Msekela said that gold are rebellion are two different issues that have to be handled differently.

“Much as Congolese rebels could in any way benefit from the gold trade, no one deals with them here. Nor do we uphold the notion of rebellion in part or totality, so the onus is on the Congolese authorities to make sure that rebellion in that sovereign country is contained and eliminated once and for all,” he concluded.

However much this Reporter tried, it was not possible to find a gold trader in Mwanza who could admit to trading in Congolese gold, but all claimed to be dealing in Tanzanian gold. An Israeli trader who did not want his name to appear in this report told this reporter that Congolese gold trade there is not wide spread due to the presence of gold in that region, but it exists at some levels.

Amir, a Lebanese gold trader trader, concurred that the trade is mainly in local gold but sometimes Congolese gold also finds its way on the regional market.

In Dubai

In the 2009 UN report compiled by a panel of experts from the Security Council about the continued trade in illegal Congolese gold, it was stated that congolese gold is smuggled from Congo to Uganda via either road or air transport. From Uganda, it was stated in the report that the gold then finds its way to Dubai where it is handled by Mr. Jigar Kumar, who was reported to be an employee of the Asia Exchange Centre (AEC) in Dubai and a close associate to both Vaya and Lodhia. The two, Vaya and Lodhia, are mentioned in the UN report as being the major culprits in as far as trade in illegal gold is concerned.

This prompted this Reporter to fly to Dubai, United Arab Emirates (UAE) to find out the truth behind the 2009 UN experts’ report.

My first priority was to find Mr. Jigar Kumar in an attempt to qualify the assertion in the UN report. When contacted for a comment about whether their company has an an employee by the names of Jigar Kumar, the AEC Deputy General Manager in charge of operations Mr. A. G Laxman said that they have never employed anyone by the names of Jigar Kumar. “Jigar Kumar is not and has never been an employee of AEC,” Mr. Laxman told this reporter.

AEC being a huge company with over 16 branches in the UAE and several in Dubai, I sought for the assurance that Mr. Kumar was indeed not an employee of AEC, and asked him the question why the UN panel of experts would state in their report that he was an AEC employee when he is not.

“I have been working in this company for a couple of years but I have never talked to any UN people seeking any clarification from our company and they never consulted with us like you have done before going ahead to write malicious things about our company,” Mr. Laxman fumed.

He further told this reporter that his company does and has never dealt in gold business. “We are dealing in money exchange and remittances, and I do not know why the UN picked on us because we are not anywhere near gold business”,,he said adding that they have taken up the matter with the regulatory authorities in UAE to seek redress.

“We have written this letter to the Deputy Governor of the UAE Central Bank challenging that UN report and he has already been handed a copy,” he said waving a copy of the letter.

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As a result of the UN report, Mr. Laxman said that they have lost some business. “One of our bankers in Vienna, Austria saw that report and asked us to close our accounts with them because they had the impression that we are part of the racket that is benefitting from illegal gold trade”, he lamented.

In Uganda, the government through its policy of encouraging foreign investors to venture into different sectors of the economy, has raised the confidence of those willing to expend their monies in the gold sector.

A multi-million gold refinery owned by a Russian investor was recently commissioned in the country, and the major source of raw material for this refinery is Congo. The amount of gold produced in Uganda alone is at the moment very minimal, but the availability of the mineral in the different parts of the country has been ascertained, and is awaiting exploitation.

At the opening ceremony of the refinery, the company’s managing director said his aim was to create a legitimate trade in gold. “We shall require import and export licence for the gold that we shall refine,” Yuri Bogoroditskiy told the press.

According to the authorities interviewed in the course of compiling this report, gold trade in the region can not be stopped. Instead, it is the need for regional streamlining of operations in this sector that is still wanting. It is a big industry from which millions of lives in the Great Lakes region derive their livelihood.