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Mineral Smuggling Losses Said to Cost Congo Millions - 2004-09-28

A natural resources watchdog group issued a report Tuesday warning that smuggling and corruption are costing the Democratic Republic of Congo millions of dollars a month in lost revenues from copper and cobalt mining. Global Witness expresses particular concern that the loss coincides with a boom in cobalt prices that neither the country's economy nor the local miners were profiting from.

With swathes of territory blessed with gold, diamonds, coltan, copper and cobalt, the Congo is a country famous for its vast mineral wealth. But yet another damning report has been issued by analysts examining the country's mining sector.

Global Witness, a London-based natural resource exploitation watchdog, said Tuesday that rampant corruption and smuggling means that the impoverished country is losing millions of dollars a month in revenues from copper and cobalt mining.

In its report on mining in Congo's southern province of Katanga, the organization says that despite a boom in the price of cobalt, neither the country's economy nor the local population is benefiting.

The analysts say the country is missing out because so much of its ore is being smuggled out of the country and the vast majority is leaving unprocessed. Global cobalt prices have tripled since May 2003 and they now stand at a record $55,100 per tonne. This is largely driven by China's massive demand for the metal, which is used in mobile phone batteries. But the report notes huge inconsistencies between the amount of cobalt China imported from the Congo and the amount the African country's central bank said was being produced. Global Witness says the discrepancy raises serious questions about where mining revenues are going and how trade and production is being recorded. It adds that corrupt customs officers are colluding with transport companies to allow the export of unprocessed copper and cobalt ore - despite a recent decree calling for refining to take place in the Congo.

Meanwhile, the analysts say that thousands of artisanal miners are working in appalling conditions, earning less than a dollar a day, gathering minerals soil by hand.

Although endowed with vast mineral wealth, the former Zaire has been torn apart by years of conflict and the country remains one of the world's poorest.

Congo's transitional government is struggling to lead its people to elections after the official end to a five-year war that sucked in six neighboring countries and killed three million people, mostly from hunger and disease.

Global Witness called on the international community to support attempts by the fragile government to implement the mining code, which was introduced in 2002 to control a sector that is notoriously unregulated.