At What Cost?
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Blood and Treasure

Why one of the world's richest countries is also one of its poorest.

The company would not score high in any social-responsibility sweepstakes. During the war years, lucrative mining concessions changed hands many times between companies eager for future profits and warlords happy to sign contracts. Despite a United Nations embargo on dealings with rebel groups, AngloGold Ashanti made payments to the warlord who controlled Mongbwalu some six years ago, also providing him and his entourage rides in company planes and vehicles, and a house on its concession. While spending millions of dollars prospecting, it has made only small contributions to a local hospital, schools, a soccer tournament, and the like, keeping at arm's length a coalition of local groups and churches lobbying for this desperately poor community. "Of everything we've put in our list of demands and grievances," says Richard Magabusini, an elected chief who is a member of the coalition, "nothing has been done. They keep saying, 'We're just prospecting. We'll look at all this later.'" AngloGold Ashanti prefers to deal instead with a collection of more pliable community representatives it has assembled, rather like a company union.

Another point of tension with people here is whether the company will dig a large open-pit mine or sink shafts to tunnel underground. For gold deposits nearer the surface, the company almost certainly will do the first, which is far cheaper; people who live here want it to do the second, for open-pit mining strips away fertile topsoil, leaves a huge gouge in the landscape, and can pollute rivers and streams. Here, it would also require moving an entire village. "We have our ancestral secrets in our communities that must not be disturbed," says Chief Magabusini. "We are categorically demanding that they not move people."

As the company takes its slice of the African cake, only a tiny percentage of the proceeds from those 2.5 million ounces of gold is likely to stay in Congo—and even then, much of what does will probably leak into high officials' private bank accounts. AngloGold Ashanti mined more than $1.5 billion worth of gold in neighboring Tanzania between 2000 and 2007, but only 9 percent of that money has remained in the country as taxes or royalties. Where do the profits go instead? A good chunk comes to the United States, for even though the company is based in South Africa, its largest single shareholder—hedge fund billionaire John Paulson—lives on the Upper East Side and summers in the Hamptons. He owns 12 percent of the company, and a number of other Americans have shares.

 

THE BIG MONEY in gold mining comes to those who can afford to dig massive mines and build refineries to process the ore. But those who cannot, an estimated 70,000 to 100,000 people in Congo's northeast—including some 10,000 children—dig for gold literally by hand, much the way men did in California in 1849. Sometimes, risking great danger in the hope of richer ore, these freelance miners slip into abandoned, partly flooded underground mines with rotted roof supports and hack out new tunnels. Health and safety regulations are in long-forgotten law books only, and no one even records the number of miners maimed or killed each year. Many of them will be thrown out of work as industrial mining starts up again.

Gold miners in MongbwaluGold miners in Mongbwalu pound rocks to dust in metal buckets; nearby, a South Africa-based company is gearing up for mining on a much grander scale.

Even at 8:30 on a Sunday night, the dirt streets of Mongbwalu, bordered by open sewage ditches with small plank bridges across them, are filled with rubber-booted miners and lined with people and businesses wanting a share of whatever pittance they have earned: gaudily dressed prostitutes, cafés, a bar with a picture of Jesus on the wall, and dozens of shops that buy gold and sell miners what they need—a raindrop-size silvery globule of mercury in a plastic baggie goes for the equivalent of 75 cents.

We enter one shop, which a sign proclaims as La Grâce à Dieu—Chez Johnny. A big man in his late 30s chewing a toothpick, Johnny sits behind the dimly lit counter dealing with a procession of men coming in to sell gold. On a handheld scale he can weigh gold flakes, the occasional tiny nugget, and amalgame, the gold dust separated by mercury from crushed rocks that is 80 to 90 percent pure. From here the gold will quietly find its way across Congo's porous border with Uganda, on to refining in Dubai, and into the voracious world market. More than 97 percent of Congo's gold leaves the country without ever being taxed, according to one recent estimate by the Ministry of Mines.

The weights Johnny uses to measure gold are kitcheles—penny-size coins that date from 40 or 50 years ago, when Congo still used coins. Now, after decades of headlong inflation, only bills are in circulation. Each seller is paid with a big brick of them, since even the very largest bill is worth less than $1. The person Johnny is buying from when we come in, a stocky, silent man of perhaps 40 who doesn't want to say where his gold came from, looks too old to have mined the metal himself, Van Woudenberg and Bisubu think; he's probably a middleman who spent the day buying from miners. He walks off with a wad of bills about three inches thick, worth some $60.

Most of the men who sell gold to Johnny spend some of their earnings in his store, buying soft drinks, rice, biscuits, toilet paper, sardines, flour, or lanterns, all arrayed on shelves behind him. He also sells mining supplies, of which the most important, for the equivalent of $5 apiece, are shovel blades—you cut your own handle in the rainforest. A blade lasts two months, less if you're digging in rocky soil. But, as always seems to be the case in Congo, the shop's profits are going elsewhere, for this is not Johnny's own business, he explains; its patron, or owner, is in Butembo, many hours away. He calls Johnny every morning on his cell phone—there are no landlines here—to tell him the price to pay for gold that day.

 

THE NEXT MORNING we jounce and bump a half-hour farther into the hills, past the village of round thatched huts that will vanish if AngloGold Ashanti digs its open-pit mine, to the small town of Pili-Pili. From its one sweltering, sunbaked street we descend another half-hour, on foot now, steeply downward into a valley, past flame trees with red blossoms, butterflies flitting about blue flowers, and grass that reaches higher than our heads. On a patch of land most of the way down is a camp where hundreds of miners live, divided into teams of up to 15 men, in huts whose walls are reddish mud packed around interwoven sticks. The overhanging roofs are grass thatch; sometimes a blue plastic sheet with a UNICEF emblem—from aid supplies to refugee camps—is thrown on top for additional rainproofing. All food, drinking water, and mining tools are carried in. On the walls of the camp chief's dirt-floored hut are two large Inauguration Day posters of Barack Obama.

It's only about 10 in the morning, but the tropical sun is already broiling. Farther down the trail we stop to talk to a young miner with a gentle smile and intelligent eyes, walking back uphill to Pili-Pili. His name is Alex, and he is 22. He says he had to drop out of high school two years ago for lack of money, and has been mining ever since. "There is no work in Congo. We suffer a lot." He and the friend who is with him, he explains, are cascadeurs—a word that normally, as French film buffs know, means movie stuntman, but here it means someone working odd corners, who does not belong to one of the teams. Alex shows us a small plastic bag of sand, with tiny flecks of gold in it, which, he estimates, the two of them can sell in Pili-Pili for the equivalent of $1. That's their usual take for an entire day, and they are delighted to have found this much so early. They bid us a warm goodbye and continue up the trail.

The bottom of the valley and the side of the opposite slope are dotted with clusters of men in their teens and 20s. Miners usually have to buy their places on these 15-man teams, often going into debt to do so. We talk to one group, whose members say they started work by lantern light at 3 a.m., to get as much as possible done before the midday heat. Shovels are their only visible hand tools, and with them they have gouged an indentation perhaps 20 feet wide and 20 deep out of the side of the hill. At the bottom of it, they've also dug a tunnel about 3 feet high, with just enough room to enter on hands and knees, extending 12 or 15 feet into the earth, as far as you can go without danger of the tunnel collapsing, for they believe the dirt farther back has a higher concentration of gold. A man-high mound of red dirt from all their digging is piled up next to the stream that runs along the valley bottom, and now two of the men turn to another task: one tossing shovel-loads of dirt and the other pouring pans of stream water into the upper end of a homemade chute of boards. Mud flows down the chute, across a patch of woolen blanket crossed by leafy twigs, which slow down the flow and give the heavier gold a chance to sink to the blanket, where the specks will stick and can be carefully removed.

A majority of these men, they tell us, with smiles and laughs as we ask each in turn, are former militia fighters from rival groups. But now this past seems forgotten as they all focus on finding enough gold to survive. They say that on an average day the team finds $30 to $50 worth to divide 15 ways. Off the top, 30 percent (plus a hefty initial fee before the team could even start working here) has to be given to the patron who has the mining rights to this site, plus gold miners face a bewildering variety of other fees, the largest of which is about $3 per week per miner in payoffs to the army or police, as protection against harassment. What's left, for the average Ituri miner and his family, is roughly $40 to $60 a month.

Finally we head up the trail again, wanting to climb back to Pili-Pili before the sun reaches its zenith. A miner coming down who passes us wears a T-shirt that has found its way here from somewhere; across the chest is printed STAYTRUEDREAMTRUE. Passing back through the miners' camp, we stop to chat for a moment about how hard the work looks and how meager the rewards. One man says simply, "We're on automatic."

Back in Pili-Pili, on the street we run into Alex and his friend, the cascadeurs. They've sold their dollar's worth of gold from this morning, he says, and with it bought a breakfast of green beans. Now they're about to head back down to the valley again to try to find enough gold to buy dinner.

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