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Controversial Big Miner Under Fire

Kazakhstan-based mining company, Eurasian Resources Group (ERG, formerly ENRC) which helped former First Lady Grace Mugabe’s son Russel Goreraza import top-of-the-range vehicles worth US$2,5 million after brokering a controversial mining deal involving government, is violating basic human rights of thousands of people in an area which it mines in the Democratic Republic of Congo(DRC), a British government report says.

In September last year this paper reported that Goreraza and his business partner Valentine Garacho imported seven luxury vehicles, which include Range Rovers, Rolls Royce and an Aston Martin, after brokering a mining deal between government and Todal Mining.

Todal mining is owned by ERG and it owns platinum concessions between Shurugwi and Zvishavane.

A government source said told this paper then that Garacho and Goreraza were involved in the deal which saw Todal being offered a special grant to mine in Zimbabwe. As a result the cars were bought from money paid as “facilitation fees” of the deal. The deal included high-profile officials and clandestine networks.

However, the British government released a report on ERG this week which found that the company has deprived thousands of people of clean water and healthcare, while failing to establish any meaningful development projects to assist people in Lenge and Kisankala in DRC. Both villages are on one of ERG’s concessions in Lualaba province, formerly Katanga. It is understood that the British government first took up the matter after a complaint was made on behalf of the communities in May 2013.

The assessment was published by officials at the United Kingdom (UK) National Contact Point (NCP), a UK government body for the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises.

When the complaint was first brought up, ENRG then was listed on the London Stock Exchange (LSE) and registered in the UK. It de-listed in scandal in November 2013 following reports of poor governance and unscrupulous deals, registering in Luxembourg as a private company under the name ERG.

In DRC, one of the main issues raised against ERG was the lack of reliable access to clean water. It is stated that the company was aware that water supplies for the villages had been contaminated by previous mining activities and that those who lived there, many of who are subsistence farmers or artisanal miners, had few financial means.

The British government’s new assessment follows an earlier 2016 report in which the UK government found that ERG’s had failed to address human rights impacts at mine sites under the control of its subsidiaries in Congo and had not engaged effectively with local communities.

According to the NCP assessment, ERG had only started to act on the recommendations from the 2016 report several months after the initial deadline had expired. Last week, ERG sought to delay publication of the NCP assessment report still further.

In its assessment, the UK NCP found among other issues that ERG had: “Failed to live up to its requirement to keep the communities informed of the conduct of its staff and security contractors on the site.

“ERG has hailed to establish any meaningful development projects to assist people in Lenge. Although company officials belatedly held meetings with some local leaders, the assessment notes that: “no concrete decision had been arrived at to ensure the village had an operational school or health centre,” the report says.

ERG has always been in the news for controversy. In April 2013, the UK’s Serious Fraud Office opened a criminal investigation into bribery and corruption by then ENRC officials, including in relation to the company’s acquisitions in DRC.

The company, which is currently mining in Zimbabwe, is accused of being only interested in mining and not caring about basic human rights.

Todal mining’s history is also controversial, although the company is now owned by ERG.

It was once partly owned by Zanu-PF benefactor Billy Rautenbach through Lefever, a subsidiary of Central African Mining and Exploration Company (Camec) in which his family had an interest. Camec was listed on the LSE’s subsidiary market, Alternative Investment Market from 2002-2009.

Camec and Rautenbach in November 2009 then sold Todal to ERG, then known as ENRC. The company paid US$945 million to Camec.

However, sources said government was not happy with Rautenbach’s disposal of concessions to ERG as it was done without ministerial approval and thus not procedural or illegal. This prompted a crisis after the deal was consummated at the LSE.

“Rautenbach was given the platinum concessions by government to offset a debt. He then transferred the claims to Camec, which partly owned Todal, as he also had an interest in those companies,” a source said last year.

“The claims were later sold by Camec on the LSE to the Kazakh company. However, government was opposed to this as it was unlawful and bordered on speculation. The indigenisation policy was also violated and relevant taxes were also not paid. This prompted government to refuse to allow ERG to mine and this is where behind-the-scenes brokerage by Garacho and Goreraza, working with high profile and powerful networks, comes in.”

The Independent previously reported that during the March 2008 elections, Lefever Finance, a Rautenbach-linked enterprise, advanced former president Robert Mugabe and Zanu-PF a US$100 million loan for their ill-fated campaign.

But government failed to repay the money and Rautenbach was given platinum claims to offset the debt. This was after government had repossessed 30% of the claims held by Anglo America.

Under pressure, Anglo American Platinum, the world’s top platinum producer, ceded more than a quarter of its concessions in Zimbabwe to the government.

In return, Anglo was granted empowerment credits and foreign exchange indulgences that would allow it to develop a valuable remaining concession.

Immediately after Anglo’s concession had been seized, government awarded them to Todal, which was then a joint venture between the state-owned Zimbabwe Mining Development Corporation (40%) and Lefever Finance (60%), before Rautenbach sold the company to ERG.

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