Manganese: Burkina Faso's New Resource Curse
By Rob Prince
Manganese mining is a linchpin of Burkina Faso's corruption and oppression.
A Nationalist Impulse?
Just a few months after a long-lasting and corrupt government was swept from power , in March of this year (2015), in Burkina Faso, the country's transitional Minister of Mining and Energy suspended a major mining contract with Pan African Minerals at Tambao , forcing the company to stop operations there. Missing from most press explanations as to why the suspension order was issued was the growing local opposition to Pan African Minerals' practices. On February 17, 2015, a march in protest was initiated by people in the vicinity of Markoye, the town closest to the mine, seeking Tambao mine operation stoppage until further notice. More than 3,000 local people participated. They opposed the company's environmental practices (explosions, dust) as well as the fact that the company had reneged on its promise to employ at least fifty locals in the work there and to involve the local community more in the mines' plans. They demanded that the operations of the mine be completely shut down until these issues were resolved.
The February 17 protest was under the leadership of the region's youth, JUDECOM, "Jeunesse Unie pour le Développement de la Commune de Markoye" (Youth United for Markoye Development), a local social action group that has won the support of many. More than 3,000 people participated in the demonstration which resulted in some property damage to the mine. The mine management fled. From all appearances, it was primarily in response to this local mass action that the new transitional government of Burkina Faso decided to suspend the mine's operations.
Then, just a week ago, on December 18, the suspension was lifted. It is not clear how many of the local concerns were addressed and/or corrected by either the Burkina Faso government or Pan African Minerals. A new government, the result of recent elections, headed up by the country's new president Roch Marc Christian Kabore , is to be installed on December 29, and this might have been a key factor in the reversal. No doubt the temporary suspension played well with the country's current wave of nationalist fervor which swept long-time ruler and close ally to France, Blaise Compaoré, from power.
Was the suspension a part of a new wave of economic nationalism suggesting that the post-Blaise Compaoré Burkina Faso government was about to take tighter control of the country's resource production, mined overwhelmingly by foreign mining companies? Or was it something a bit more cynical on the part of the country's transitional Minister of Mining and Energy? Was the new energy minister just showing that he now is the "new boy on the block" who needs to be wined, dined and otherwise well-greased in exchange for mining contracts as others had been before him? If so, it would not be the first time that a new African political leadership, and especially its minister of mining and energy, was bought off, lured by foreign bank accounts, European shopping sprees and some of the world's finest and highest-paid prostitutes.
Time will tell but the turnaround is rather curious. 1
While the changes at the top are real and the result of a national movement to sweep Blaise Compaoré and his clique of minions from power, it remains to be seen just how much these political developments will translate into the economic and social sphere. Burkina Faso remains, despite Compaoré's departure, very much within a French economic sphere of influence and one in which the United States, through AFRICOM, which has a major intelligence gathering station in Ouagadougou, has growing influence. Foreign corporate penetration of the economy remains extensive. Not to denigrate the genuinely democratic wave that has swept the country -- it is refreshing and wholesome -- but still one must ask: how much "elbow room" for new economic initiatives, relevant to the country's future well-being, will take place in this environment?
Whatever the political changes bring, Burkino Faso also remains a land-locked, drought-ridden, terribly poor country characterized by extreme economic and social hardships that most Americans would find inconceivable. Ranked among the ten poorest countries in the world for decades, it has been unable to climb out of the poverty that plagues it, this despite considerable natural resource wealth. Almost the entire population -- more than 80% -- lives below the poverty line with an unemployment rate hovering around 65% . Nearly 45% live on less than $1 a day. Ranked 184 of 187 countries on the Human Development Index in 2013 , with a 65% Muslim population, Burkina faso also ranks among the lowest educationally with the lowest literacy rate in the world -- under 20%.
It's a classically peripheral economy, 2 its productivity based largely upon the export of two products: cotton and gold -- both activities rely heavily on child labor. An estimated 1.25 million children under 14 -- some as young as five -- are active workers. Many are forced to work up to 18-hour days, seven days a week. Children working in the cotton industry are exposed to chemicals and pesticides, while those in the gold mining industry must break rocks, carry heavy loads and work with dangerous chemicals such as mercury.
The Tambao Manganese Mine
So after a period of nine months, the Tambao mine is reopening . 3 An order lifting the suspension was released by by Boubacar Ba , the country's transitional Minister of Mining and Energy. Run by Pan African Minerals , 4 a unit of the holding company, the London-based Timis Corporation, according to the Burkina faso government, the activities of the Tambao mine 5 were suspended in March. The Tambao mine produces some of the world's highest-quality manganese. According to Ba, the original suspension order was a result of the company's failure to carry out promised social and economic improvements in exchange for a twenty-year lease to mine Manganese there. No mention in any of the government statements was made concerning the February 17 angry demonstration at the mine, although almost certainly this was not just a "contributing" factor to the suspension, but the main factor. The main owner of the Timis Corporation is Frank Timis, the Romanian-Australian resource tycoon.
At the time of the original agreement between Pan African Minerals and Burkina Faso, now deposed President Blaise Compaoré was still in power. In the tradition of that master scoundrel metals/commodities trader, Marc Rich , it appears that Frank Timis was introduced to the president through the former's friendship with Compaore's wife, Chantal Compaoré , who, at least according to one source received rather large financial rewards for her lobbying efforts . As a part of the agreement, Pan African Minerals had committed to building a railroad line from the Tambao mining area to the capital, Ouagadougou.
An agreement was thus reached between Compaoré and Pan African Minerals, but in so doing, the Burkinan president rather cavalierly broke an existing agreement with an Indian mining company to develop Tambao. The latter are suing. Hmmm…and would a long time player like Blaise Compaoré have agreed to essentially void the contract with an Indian based company -- that could cost him as much as $30 million in damages, if there wasn't something in all this for him as well? So the question begins to take shape…just what arrangements were made between Frank Timis and the Compaorés in an agreement described as "opaque" by the local media months later? No doubt that Timis had his eyes on Tambao for some time. He had earlier ingratiated himself to the Compaoré couple by offering to pay for the damages done in Oaugadougou during an unsuccessful 2011 coup attempt against the then existing government, covering the bill for the government and some of the local businesses that had been trashed as a result .
Besides the local opposition to Pan African Minerals' practices, there were other serious issues between the company and the Burkina faso government that needed addressing. According to the officials in Ouagadougou, Pan African Minerals reneged on the railroad construction that would have completed a spur from Kaya in the Tambao region to the capitol. The project also involved negotiations between Pan African Minerals and the French transportation giant with interests all over Africa, Bolloré which had let the Ouagadougou to Abidjan railroad relapse into disrepair. Burkina Faso and Ivory Coast had also signed an agreement on a rail link and this one is what Boubacar Ba expects Pan African Minerals to follow through on and build.
Pan African Minerals owns 90% of the Tambao mine with the government owning the remaining 10%. The mine was evaluated in 2014 to contain over 100 million tons of manganese and was described by Frank Timis himself as "the largest manganese mine in the world." The former Burkina government of Blaise Compaoré
hoped to develop the mine so as to diversify the country's economy away from its dependence on two products -- gold and cotton production. It was estimated that the development costs to get the mine running would exceed $1 billion with funding for the project coming from Timis, Canadian asset management firm Dundee and CD Capital.
There was another issue. The transitional government that came to power after massive, nationwide demonstrations forced the country's president, strongman and strong French ally, Blaise Compaoré, to flee the country. The new Minister of Mining and Energy, Boubacar Ba, has pledged to review some of the country's mining contracts "saying that exploration contracts had been awarded in an opaque manner." Key in the review process was the Tambao mine. Ba went on to say that among the foreign mining companies that had exploration contracts, many of the had simply sat on their tracts without developing them, or, in many cases, selling these contracts for profits to third parties. " We're going to put a stop to that" Ba said. (Nous allons mettre fin à cela.)
Pan African Minerals insists that the suspension was illegal and that it will seek compensation for losses incurred during the suspension . It cites what it considers its loss of income as a result: at the time of the first feasibility study to see if the mine would be profitable a ton of manganese sold for $500. When the suspension took place it had dropped to $250 a ton and now, nine months later with the demand for commodities slowing as a result of China's economic slowdown, it stands at $125 a ton.
Can Pan African Minerals help be an engine for Burkina Faso's economic development? Hard to tell: The reports on the company's chief owner, Frank Timis, are contradictory. Known for his foul mouth and with a history of unscrupulous business dealings on the one hand (both of which he blithely brushes off), on the other, there are African sources that sing his praises and those of Pan African Minerals.
In 2012, Frank Timis, the Timis Corporation's chief officer. became "the richest Romanian" with a networth of £1.34 billion ($2.13 billion). Despite a rocky career and different estimates of is current wealth (another source suggests he is only worth $1.3 billion, not $2.13 billion) he has made his money on mining and oil over what has been a rocky career of boom, bust and boom again. Timis' early years are not clear. He insists that he left Romania as a teenager and walked across a number of borders secretly until he arrived in Italy from whence he went to Australia. A much less dramatic version suggests that he entered Australia as an apprentice.
He began his rise to wealth and power through a trucking company in Australia which consisted of only one truck. It went bust in 1986 after he tried to withhold information necessary to list it on Toronto Stock Exchange as "Global Resources" in order to raise money to build his empire. Oh yes, minor detail: While in Australia, to where he had immigrated after leaving Rumania, he was twice convicted of possession of heroin with an attempt to supply and fined $27,000 Australian dollars. He admits he used the stuff but denies he ever sold it.
Today his wealth comes primarily from three companies, Pan African Minerals, being one. The other two are African Petroleum and International Petroleum. Controversy has followed his rise to power every step of the way. While heading up UK-listed Regal Petroleum in 2009, company was fined nearly $1 million by UK authorities for issuing misleading statements about its oil reserves. The fine concerned a Regal oil discovery off the coast of Greece the reserves of which were grossly exaggerated (and thus temporarily encouraged enthusiasm concerning the company's stock). Timis owns two Bombardier Challenger 604 jet airplanes.
On the other hand there is considerable enthusiasm, for Timis' plunge into the West African mining has elicited support and excitement from others. An article in the Standard Times Press of Sierra Leone was filled with praise and seemed unconcerned with the dark side of Timis' record. It begins "the African mining landscape is about to change for the good." It is particularly enthusiastic about the promised rail line between Burkina Faso and the Ivory Coast ports, which it claims will "support growth in foodstuff and livestock industries and support the establishment of the largest manganese mine in the world." Sierra Leone has its finger in the pie as a good many of the 15,000 construction workers on the rail project will be Sierra nationals.
It remains to be seen if this project is all it is cooked to be. If so, it could, as the Standard Times Press article suggests, stimulate economic development not just in Burkina Faso but throughout West Africa. Again, time will tell if it is all it is cracked up to be…or yet another neo-colonial chimera benefiting the few at the expense of the many.
- Mining in Africa -- which should help fuel development and lift poor nations out of poverty but rarely does -- is often a cynical business. In fact few forms of economic activity are more exploitative to the environment, more corrupt and pay less dividends to the country's involved than mining, oil and gas development. This despite the promises always made but rarely kept by the multinational corporations involved, some of the world's most powerful, to deliver on infrastructural and other forms of development in exchange for the rights to tear out the region's resources.What should be an economic blessing becomes -- and usually remains -- what has come to be referred to in the literature as "the resource curse." The Wikipedia definition explains it well "The resource curse, also known as the paradox of plenty, refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources." Not only is there less development, but more often than not -- as the mineral or energy source -- is the main, or one of the main, sources of national income, a struggle for political power gels around which faction, network, or grouping can dominate with the main reward for power being control of the profits that come from the resource. The resource curse is a situation that also encourages corruption; in fact corruption is endemic to it. Corruption is often quite easily achieved through a simple, yet well-tested mechanism: bribery. The bribes go to heads of state -- often the biggest crooks in the country -- mining and energy ministers, key figures in the military. It includes cash payments, European or other offshore bank accounts, drugs, sex galore, shopping sprees in Paris, Geneva, London. It seems to work quite smoothly. Scratch the surface of mining gold or diamonds -- or as in the case of Burkina Faso (which also has gold deposits) -- manganese, and one is likely to find much more than extracting a resource. High-level intelligence, often carried out by economic actors, complex networks that bring together political, corporate leaders from places like the United States, France, Britain and the like -- one of which is referred to as "Francafrique." And where there is resource exploitation, the arms trade, international drug cartels, global money laundering are not far behind.Keep in mind that the main benefactors of these corruption networks are not compromised African (or other) leaders so much as the mining companies themselves and the politicians in the wealthier countries that they are connected to. While the attention given to African political leaders is real, that of their taskmasters (for that is what they are), in whose payment they are employed, is many times greater.
- A peripheral economy, as defined by World Systems' Theory is one that produces a few unprocessed raw materials for shipment to core (richer) countries where those materials are refined, made into final products and sold. The actual production out of the ground of the raw material is the least profitable part of the commodity chain (in general).
- Manganese -- on the one hand, a common enough metal, on the other its uses are poorly known to the general public. It is not found in nature as a "free" isolated element, only in compounds and then more often than not in combination with iron. It is a metal with important industrial metal alloy uses, particularly in stainless steels and aluminum. The biggest reserves of manganese are found in South Africa (24%), Ukraine (22%), Brazil (17%), Australia (15%) and India (7%). In terms of which countries are mining the stuff, the world's most important producers are, in descending order, China (34%), South Africa (17%), Australia (16%), Gabon (8%), India (7%) and Brazil (6%). The African continent alone produces some 28% of the world supply with Ghana joining South Africa and Gabon. Because it is considered a strategic metal, that is, one necessary for the building of fighter jets, missiles etc, its political importance cannot be underestimated. There is no known substitute for manganese in its many applications. Because it it is not produced in any sizable quantities in the United States, access to foreign markets is critical.
- Pan African Minerals, a wholly owned subsidiary of the holding company Timis Corporation, has, like many companies, a rather complex ownership history. Going back only to 2005, in that year Timus Trust bought 30% of the shares of the Sierra Leone Diamond Corporation (SLDC) via the Trust's Bermuda-registered Timis Diamond Corporation Limited. At the time SLDC held mineral rights over fully one third of the area of Sierra Leone in the northern part of the country that included both important diamond fields and iron mines.The company was also exploring for other minerals in the area: uranium at Lovetta, and for gold and base metals in the Sula Mountains, Gori Hills and Nimini Hills. In August 2007, the SLDC was renamed African Minerals, LTD and listed on Alternative Investment Market, a sub-market of the London Stock Exchange. Three years later, African Minerals hit it big announcing the discovery of a 10 billion ton iron site at Tonkolili. The site is recognized as the largest iron ore find in the past twenty years and propelled Timus into the billionaire ranks.
- The political history of the Tambao mine is quite complicated -- see below.
- Important supplies of high quality manganese have been identified at Tambao, northern Burkina Faso, near the border with Mali and Niger. The potential has been estimated at 20 million tons at least, some estimates go as far as 50 million tons. It is, obviously, in the interest of Burkina Faso, one of the poorest countries in the world, to develop these resources in order open the region and improve the standard of living of its population. Proper economic development will attract foreign direct investments. However, so far little or no progress has been made regarding the development of the mine and into the Sahel region. A first attempt to develop these important resources was made by a Nambian/Dubai consortium which signed an agreement with the Burkina government (Ministry of Mining) on 3 April 2007 on the exploitation of the Tambao manganese supplies. A feasibility study, carried out by Weatherly as a contractual obligation, was presented to the Burkina government in September 2008. However, from that moment on the Burkina government had refused, without giving any reasons for its decision, to recognize the rights of the consortium, and initiated discussions with other interested parties with regard to the exploitation of the Tambao manganese. In view of this situation, Weatherly in August 2011 initiated an arbitration procedure at the Tribunal of the International Chamber of Commerce (ICC) in Paris. The ICC Tribunal decided in October 2012 to go ahead with the arbitration, in spite of objections raised by the Burkina government with regard to the competence of the ICC Tribunal in this case. The ICC Tribunal issued an explicit warning to the Burkina government that any further implementation of the agreement of the exploitation of the Tambao mine would be entirely at the own risk of the government, pending the outcome of the arbitration procedure.
Article: Courtesy Foreign Policy in Focus.
Africa - "Manganese: Burkina Faso's New Resource Curse"