Blog Entry

New Investment Agreements Show Canadian Commitment to Africa Mining Vision a Hollow Promise

Jamie Kneen

National Program Co-Lead

The Canadian government’s big announcement for this year’s Prospectors and Developers Association conference (PDAC) wasn’t the automatic renewal of tax credits for “flow-through” shares – a $100 million dollar a year subsidy for exploration companies – or even a creative new way of diverting international development aid money to support Canadian mining projects in the developing world. No, it was a pair of investment agreements, one with Cameroon and one with Zambia.

According to Foreign Affairs and International Trade, Canadian mining investments in Cameroon are relatively small, some $35 million in 2011 – basically a few gold, iron, and uranium exploration projects – while those in Zambia were worth over $6 billion, some 20 percent of all Canadian mining assets in Africa. A large portion of that belongs to First Quantum Minerals, who jumped to attention to announce it was “proud to support” the Zambia agreement.

But wait; with $6 billion already invested, what exactly is the need for further promoting and protecting investment? First Quantum itself has been operating in Zambia for 16 years. Though it has been accused of serious environmental violations and tax evasion, so far it has not suffered any meaningful challenge to its investments. Zambia is a relatively stable and democratic country – unlike the Democratic Republic of Congo next door, where First Quantum was accused (and eventually cleared) of making improper payments to government officials in the late 1990s, and more recently lost its leases altogether, despite the Canadian government’s best efforts to get them reinstated.

Clearly investment agreements are not necessary for developing countries to attract investment. Especially in the mining sector, there seem to be lots of investors willing to gamble with human rights and the environment and invest almost anywhere (Eritrea, for example) if they think the return on investment will be high enough. No, it seems to be more a matter of providing investors with more security and more formal backing to make it easier for them to get financing for their projects – and to protect them from political and policy changes by giving them recourse to international tribunals without having to go through national courts, restricting ‘host’ governments’ ability to make new regulations or change policies that might affect the investment.

Could it be that First Quantum is worried about its Kalumbila Trident/Sentinel mining project in Solwezi, Zambia, where its surface lease on 518 square kilometres was just annulled by the government? (It had actually tried to acquire 950 square kilometres of land – 95,000 hectares – in what looks more like a land grab than a mining operation; the lease was cancelled because it was vastly larger than the local chief actually had the right to sign over.) Or is it worried about the Zambian government possibly trying to collect greater royalties, or actually collecting the taxes it is owed?

Zambia, like other African countries, has committed to implementing something called the Africa Mining Vision, a detailed policy document developed by the UN Economic Commission for Africa and adopted by the African Union in 2009. The Vision lays out a range of conditions and criteria that must be implemented in order for mining to contribute to development, including more equitable distribution of revenue and benefits, but also to fully integrate mining into national economies and prevent human rights and environmental violations.

The involvement of the Canadian government clearly highlights the official hypocrisy of proclaiming Canada’s support for the Africa Mining Vision – even to the extent of funding the African Mineral Development Centre to the tune of $15.3 million over three years, more than double the Australian contribution – while continuing to pursue trade and investment policies that run completely counter to the objectives of the Vision. In other words, even if the Centre is effective in delivering on its promise of promoting increased economic and social linkages for mining, it will be up against not just immense economic and political pressure from mining companies and Canadian diplomats, but also structural barriers erected by investment agreements and long-term mining contracts.

Some countries have already found out the hard way that Canadian mining companies are not shy about using international trade and investment agreements to threaten law suits to counter government decisions they don’t like (as in Mexico, Peru, and Costa Rica – for both the Bellavista and Crucitas projects) or actually take governments to court (as in El Salvador and even the United States).

African countries face many profound challenges in improving people’s lives and in strengthening their own democratic governance. But instead of safeguarding and supporting African governments’ ability to develop and implement policies to benefit their own people, the Canadian government continues to support economic and legal impunity for our multinational mining corporations.