In Ghana, for example, where Canadian firms hold half of all mining concessions, the latest version of the mining code is completely unfavourable to the government in practically every area where it might have expected to garner tax revenues: equipment to be used in mining installations is tax exempt; expatriates pay no fees when they transfer funds abroad; in order to buy equipment, investors are allowed to deposit 25 percent of their income, or more, in a foreign currency account. As a result, in Ghana the mining sector does not seem to account for more than 2 percent of the country’s GDP.78
In Tanzania, a report entitled A Golden Opportunity? underlines the shortfall faced by the government as a result of new tax laws for the mining industry enacted in the late 1990s. The authors state that “the combined loss to Tanzania of a low royalty rate, unpaid corporation tax, and tax evasion is at least US$400m over the past seven years” and that “the concentration of gold mining in the hands of large multinational companies at the expense of artisanal small-scale miners has put 400,000 people out of work.”79
In the Democratic Republic of Congo, the mining code stipulates that only 4 percent of a mine’s “operating capital” (their costs, not the value of the materials they extract) shall be returned to the government in the form of royalties, which is less than half the rate of neighbouring countries where royalties are already low.80
With the minimal regulations embodied in the mining codes, mining countries in the South are unable to collect the tax revenues that would enable them to support economic development projects or foster the growth of their own industrial sector. Meanwhile, Canada or other organizations involved in funding “development” are underwriting Canada’s own powerful extractive industry. Not only do Canadian pension funds invest in Canadian mining companies, but agencies such as Export Development Canada and the Canadian International Development Agency, as well as a variety of one-off initiatives designed to “help” the African continent, also tend, in fact, to support the industry’s expansionist aims.
In addition to the investment guarantees that we mentioned earlier, Export Development Canada provides the extractive industry with insurance, and political risk is one of the threats against which companies are protected. As one analyst explained in 2009: “EDC has been making substantial efforts to broaden and market its presence in the mining sector, and its Political Risk Insurance product is part of that strategy. The EDC coverage protects against a variety of threats ranging from political violence, currency conversion or transfer restrictions and foreign government non-payment or repossession threat.”81
Export Development Canada has financed and insured politically high-risk projects in countries such as Madagascar, DRC, Tanzania, Eritrea, Congo-Brazzaville, and Mauritania. The case of Madagascar is one example of a controversial project. In 2009, Canadian interests, including natural-resource company Sherritt and engineering heavyweight SNC-Lavalin, held a 45 percent interest in the Ambatovy open-pit mine in the Toamasina region. Export Development Canada’s contribution was worth $400 million in the form of insurance against the political risks engendered by the project: mining companies had insured themselves against the consequences of the fact that the population of Madagascar was angry.82
Since 2001, Export Development Canada’s decisions with regard to projects have been related to environmental policies. However, the Canadian Network on Corporate Accountability notes the persistence of many blind spots: “EDC still lacks sufficient levels of transparency to ensure accountability. The corporation does not disclose its due diligence process for proposed projects, or reveal the specific standards that a project is deemed to have met. Besides, EDC does not require companies to consult with communities that would be affected by proposed investments.”83
Now that the private sector is immune – thanks to Canadian taxpayers – to the political responses of populations confronted on a daily basis with corrupt dictatorships, who will still genuinely care about the fate of these people?
Thanks to another unexpected source of financing, the extractive industry was able to count on $100 million from the Canada Investment Fund for Africa (CIFA),84 set up with public funds by Jean Chrétien after the creation by Western countries of the New Partnership for Africa’s Development (NEPAD). CIFA’s capital was allotted to projects in DRC, Nigeria, Rwanda, Senegal, South Africa, and Tunisia. Exploration company Banro Corporation, for example, received millions of dollars in public funds in support of their projects in Eastern Congo, in the heart of the war-torn African Great Lakes region.
CIDA supports the extractive industry in other, even more unexpected ways. It operates the Industrial Cooperation Program (CIDA-INC), whose stated goal is to provide financial and technical assistance to Canadian industrial start-ups in developing countries or countries in transition to a market economy.85 The program is described as the developing world’s single-largest source of credit available to private sector companies; the yearly value of agreements signed under its auspices is estimated at US$12 billion, with oil, gas, and extractive industries holding first rank. In 2004, the World Bank’s International Finance Corporation gave Canada $3 million to be administered by CIDA-INC;86 the purpose of the funding was to underwrite eventual investors in the mining sector, particularly in pre-feasibility and feasibility studies, training, technology transfer, and consulting services.87
Corporate investments also received support from the Canadian government in 2011 when then minister of international cooperation Bev Oda, pretending to believe that the development of the Canadian mining industry leads to poverty reduction and improved standards of living for people living near mining sites, used “development aid” funds to create a program supporting the mining industry. The stated goal was “to reduce poverty in Colombia, Peru, Bolivia, Ghana, and Burkina Faso” by funding the activities of civic organizations such as World Vision, Plan Canada, and the World University Service of Canada.88 The “partners” with whom these organizations were said to be “working” – Barrick Gold, Iamgold, and Rio Tinto Alcan – were hardly lacking in financial resources. Further, the minister made her announcement, not to desperately poor populations, but at the Devonshire Initiative CEO Summit. Some of Canada’s most scrupulous actors in the field of international cooperation, such as the general Coordinator of the Andean Indigenous Organizations (CAIO), Miguel Palacin Quispe, were highly critical of this alliance; Quispe wrote that Canadian mining corporations of this kind “are the source of many conflicts because of the dispossession of lands, destruction of water sources, and the ignoring of international rights.”89
Who benefits from this kind of international “development aid”? In Madagascar, according to local residents, Rio Tinto’s titanic iron-ore mine is causing both ecosystem disruption and major social and economic problems. Further, the ore extracted in Madagascar is then processed in Sorel, Quebec. The process of extracting the ore, which benefits the company and a small number of people working in Quebec, is funded by the World Bank, once again to the detriment of people in the South.a90