Robbing the Poor to Give to the Rich

Human Rights Abuses and Impoverishment at the MIGA-Backed Bulyanhulu Gold Mine, Tanzania

Submission to the Extractive Industries Review of the World Bank, Maputo, Mozambique, January 13-17, 2003

INTRODUCTION

In August 1996 the Tanzanian government authorities in collaboration with a Canadian-owned company called Kahama Mining Corporation Ltd., (KMCL) forcibly removed hundreds of thousands of artisanal miners, peasant farmers, small traders and their families from an area called Bulyanhulu in Shinyanga Region, central-western Tanzania. The removals were the culmination of a two-year struggle pitting the miners and the company over the control of gold deposits at Bulyanhulu. Within days of the operation to remove the miners, serious allegations emerged that over 50 artisanal miners were killed after they were buried alive in mineshafts when the authorities and company officials decided to backfill the shafts. KMCL was then a wholly-owned subsidiary of Sutton Resources, based in Vancouver, Canada.

The Bulyanhulu area is a collection of many villages and minor settlements. It is located approximately 127-km southwest of lakeside city of Mwanza and about 850 kilometers northwest of Dar es Salaam. It is 45 kilometers south of Lake Victoria and 42 kilometers by road from the railhead at Isaka to the south (KMCL, 1998a). Kakola town is the area’s largest settlement within the 52 square kilometers license area that now forms part of the Bulyanhulu Gold Mine. As the most populous center of the artisanal gold mining boom that began in Bulyanhulu in the 1970s, the town survived the destruction visited upon the area in July and August 1996. Eight of its satellite settlements and localities namely, Stamico, Kabale, Namba Tatu, Namba Mbili, Namba Tisa, Bariadi, Bushingwe and Mwabagikulu were razed to the ground.

In March 1999, Barrick Gold Corporation, another Canadian mining giant acquired the Bulyanhulu deposits through its acquisition of Sutton Resources and its Tanzanian subsidiary. In August 2000, the Multilateral Investment Guarantee Agency (MIGA), the World Bank Group’s political risk insurance arm, announced that it had issued a guarantee totaling $115.8 million to Societe Generale S.A. as “an agent for a syndicate of international banks” for their non-shareholder loan investment to KMCL.¹ According to the announcement, a portion of MIGA’s guarantee would be reinsured by private insurers, later identified as being the Lloyd’s of London and Munich Re of Germany. A few months later, MIGA’s guarantee had risen to some $172 million, making it “the largest amount issued to date for a single contract”, according to a World Bank press release.² Canada’s Export Development Corporation (EDC) is co-insuring the project with MIGA, with a slightly higher exposure. The MIGA and EDC guarantees will cover the investment against the risks of transfer restriction, expropriation, and war and civil disturbance.

Barrick Gold has since built an ultra-modern underground gold mine at Bulyanhulu, which was opened amid great fanfare by Tanzanian President Benjamin W. Mkapa in July 2001. Though vehemently denied, the allegations of the 1996 killings have persisted to this day and have become the subject of a bitter international dispute involving the Bulyanhulu communities, NGOs and governments in Tanzania, Canada, the United States and Western Europe and the World Bank Group. This submission argues that the Bulyanhulu Gold Mine is a premier example of all that is wrong with the World Bank Group’s support of the corporate mining investment in Africa and elsewhere in the world.

The investment stands as a monument to the plunder of the natural resources of poor countries such as Tanzania by the multinational corporations of the rich industrial countries of the North; and the impoverishment and further marginalization of the mostly rural communities in mineral rich areas of Tanzania and elsewhere. It is a living testimony of the proposition that where multinational corporate interests are at stake, notions of rule of law, good governance and a respect for human rights take on a secondary importance to be swept aside whenever expedient. It provides the proof to the charge that the World Bank Group almost always acts against the interests of the vast majority of the poor and the marginalized groups of society. The Group cannot, therefore, live up to its poverty alleviation credentials while at the same time maintaining support for socially ruinous projects such as Bulyanhulu Gold Mine. In the paragraphs that follow below we discuss these issues at some length.

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1. http://www.miga.org/screens/projects/guarant/regions/africa.html
2. See message from Patricia Veevers-Carter pveeverscarter@worldbank.org: ‘MIGA Issues Largest Guarantee Ever for African Mining Venture’, undated.