Mauritania: Hot Heads and Cold Shoulders

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As the wealthy upper management of Canada’s Kinross Gold were celebrating Christmas, a large group of almost 300 members of its workforce at the Tasiast operation in Mauritania received the unwelcome news that they were being laid off. The official line is that this was all part of a necessary strategy to cut costs and reduce operational capacity, and is also related to a fall in the price of gold.

The workers in Mauritania say they have not been treated fairly, that collective redundancies are not legal, and that they have a raft of additional issues which need to be addressed. One worker told a local reporter that he received his notice while taking his first vacation from work in six years. Another got the news while still undergoing medical treatment for an industrial injury. Several of those laid off had been encouraged to take out large bank loans, the status of which is now a major problem.

Frustrated by the lack of reaction, a group of workers began an open-ended sit-in outside the Presidential Palace in Nouakchott on December 25 to demand a hearing and request fair treatment under the prevailing law. As usual, a representative from the office of President Aziz came out to receive the demands of the delegation, but returned to say Aziz would not grant them an audience. The protesters remained in place, throughout the bitterly cold nights.

After the sit-in continued for some days without redress from the company or action by the authorities, local activists and concerned members of civil society went to sit with them and show solidarity, and returned on January 5 to take part in a human chain of protest, as shown in the video above, and the photo gallery below.

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The media responded with a blanket of silence – the mining companies in Mauritania are big spenders when it comes to advertising contracts. The parties of the political opposition likewise had little to say.

Then, late on Thursday 9 January, the sit-in had a visit from the police. The mining workers were told they must leave the area because President Keita of Mali was coming to pay an official visit and they were making the place look untidy. Naturally, they refused to budge. Another group of unrelated protesters who were in the same location that evening did comply with police orders to vacate the area.

At around 02:55, the riot squads arrived in eight vehicles and, after talking quietly with the workers for about 15 minutes, launched a sudden violent attack, using batons and tear gas. After two brutal hours of police repression against the workers from Tasiast, and the activists who rushed to their side in support, there were about a dozen people injured. Four men with more with serious injuries were refused treatment, through the combined obstruction of medical staff at the National Hospital and the police. Several protesters were robbed of cash and mobile phones by the police while being searched; an amount of 400,000 MRO has been reported. The police also confiscated blankets, rugs, clothes and cooking gear from the sit-in.

Police released about 10 workers arrested during the raid and the running battle in the streets of Nouakchott which ensued; the rest were released later. There was no media presence the entire time, only activists from Mouvement du 25 Février (m25fev) and La Jeunesse de RFD trying to document events. One of the m25fev activists was injured quite seriously in the shoulder and was detained by police for about 2 hours.

The protests in the capital continued on Saturday 11 January, despite the previous day’s violence.

Protesting mine workers outside Tasiast HQ Nouakchott

Protesting mine workers outside Tasiast HQ Nouakchott

The protesters switched location to stand outside the Kinross office in Nouakchott, but an activist reported to a local journalist that the management there called the police, claiming the protesters were throwing stones – which the activist strenuously denied. Police cordoned off the area and there was an unconfirmed report that tear gas was used again.

This issue is being systematically ignored, while far larger “Islamic” protests are being orchestrated in Nouakchott and Nouadhibou to demand the application of Sharia law against the author of a recent blog post which was critical of the Prophet Mohammed (PBUH).

Massive protest march after Friday prayers descended on the presidential palace

Massive protest march after Friday prayers descended on the presidential palace

These protests are growing in size and turning violent. On Saturday 11 January in Nouadhibou, three injuries – including one police officer – were reported after clashes with police. The previous day, that town saw large protests with tyres being burned, cars and shops vandalised, as police used tear gas to disperse the protesters. Local journalist Ahmed Salem was beaten and arrested by police. In Nouakchott, hundreds marched to the palace and the president came down to address the crowd, and remind them that Mauritania is an Islamic Republic which already uses Sharia.

10Jan Aziz outside the palace

Aziz dons his turban to address people outside the palace

Deeply reminiscent of the book burning incident of May 2012, this Aziz PR stunt has drawn immediate censure across the board, including from some highly influential commentators. Although the worst of the criticism was reserved for Aziz, there was some remaining for an obviously false claim by one (barely legitimate) news site that Al Qaeda flags had been spotted in the Nouadhibou protests, which is being resoundingly refuted. There is also mounting concern about the decidedly un-Islamic behaviour of robberies and violence being reported.

As for the alleged reason for these massive, repeated protests – the offensive article – this is a most unusual situation and one which is perhaps too easily exploited.  The supposed author of the article was arrested over a week ago, and was sent to the High Court for arraignment a few days later, after admitting to writing the item in question. He is said to have been charged with apostasy, which is covered in Article 306 of the current penal code. He can be fined and sentenced to prison if he makes a public apology, or he can refuse and be sentenced to death. He has already issued a written retraction and apology before being arrested (or taken into protective custody, depending on the source). No one has been executed in Mauritania for decades.

These twinned sagas will continue, the redundant Tasiast workers will be ignored, while demanding redress under a law which exists but probably doesn’t apply to their specific situation; and the devout Muslims will be showered with attention, demanding introduction of a law that would be redundant because one already exists and is being applied. By Tuesday, 14 January, the day assigned as the anniversary of the birth of Mohammed (PBUH), this particular powder keg could be set to explode.

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Kinross-Tasiast Mauritania: Questionable Values

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Kinross-Tasiast has been a hot topic in the mining community for at least two years, since the take-over of Red Back mining in September 2010, stirring much speculation among stock market traders as well as anticipation from unemployed Mauritanian graduates. Yet it remains an impenetrable mystery. The precious ore is extracted far from prying eyes hoping to catch a glimpse of the truth, to confirm their unanswered questions and suspicions. Despite its many problems, the mine is claimed to have achieved something in the order of US$2.5 billion annual revenue, under an agreement where Mauritania receives only 3%.  With traders losing faith in the promised gold, and the jobless Mauritanians still looking for work, the big question is: “where is the money?”

Tasiast was touted as the second largest gold deposit in Africa, making it irresistible to international companies lured to Mauritania by the promise of massive returns. By April 2012, the Executive Board of Kinross Gold was cloistered for two days in the Canary Islands at the Las Palmas regional headquarters of the Canadian gold mining giant. They were urgently discussing a major capital optimization study for its mines in Ghana and Mauritania. The meeting came at a critical juncture for Kinross Gold, facing massive cost escalation on its development projects, after already announcing delays to the Ghanaian Lobo-Marte and Fruta del Norte projects to focus on Tasiast.

A series of negative events triggered a sharp fall in share price in January 2012m when US$3.1 billion – about 21% of its value – was wiped out after announcing a $2.49 billion write off – part of the US$4.6 billion “goodwill” included in the US$7.1 billion cost of the Red Back purchase, and a 6-9 months’ delay before Tasiast gold production would come on-stream, at which time it would fail to meet previous output estimates.

Then in March, the company was hit with a $4-billion class action lawsuit related to the troubles at Tasiast, filed by Canadian firm Koskie Minsky LLP. “Based on our investigation, we are prepared to pursue litigation to preserve the company and the value of Kinross Gold stock for all shareholders, including seeking removal of certain officers and directors and monetary payments,” said shareholder rights attorney Willie Briscoe. The complaint charged that Kinross Gold’s financial statements were not fairly presented in conformity with International Financial Reporting Standards and were materially false and misleading.

This was the second such suit in less than a month, after a similar claim was filed in the United States in February. Both lawsuits relate to Kinross Gold’s disclosure around Tasiast: that the miner made misrepresentations relating to the quality and quantity of gold ore.

With the write-off, plus punitive damages in the offing, cost-cutting would be at the top of the agenda in Las Palmas. They would also need to decide how to respond to an unexpected tax demand for several million dollars from Mauritania.

The meeting would also be an ideal opportunity to discuss the creation of a plan, since, despite allocating a budget of $US800 million for Tasiast this year, and being way behind schedule, they don’t have one.

Speaking as a programme manager, this would be the most disturbing fact about Kinross Gold I have uncovered, were it not for the fatal plane crash in July which claimed seven lives, all Mauritanians, and to which Kinross reacted with condolences for the deceased and their families, but also saw fit to mention that no Kinross staff were killed, no gold was on board, and that the tragedy would not impact mining operations. It certainly made a difference to the loved ones of the seven people who died. The pilot’s sister is still struggling to cope with her grief.

Top-down de-staffing

Despite offical denials, removal of “certain officers and directors” did happen, although it is not clear whether this was solely in response to the lawsuits. People who were formerly described in glowing terms as “integral” to the growth of the company, and especially the flagship Tasiast project, disappeared.  Calls to their numbers via the Kinross switchboard went unanswered, and the receptionist said they had left the company.

Based on press releases, it is apparent some of them found new jobs:

  • TIMOTHY C. BAKER– Executive Vice-President and Chief Operating Officer, when the due diligence was being done on the Red Back transaction.
  • THOMAS M. BOEHLERT– Executive Vice-President and Chief Financial Officer.  He left soon after the Red Back transaction.
  • KENNETH G. THOMAS– Senior Vice-President, Projects.  This was the man responsible for the Tasiast expansion project.
  • ROBERT D. HENDERSON– Senior Vice-President, Technical Services.  He signed off as a “Qualified Person” on most of the Kinross Gold mines’ reporting.
  • MARK E. ISTO– Senior Vice-President, Project Development.  Coordinated work with engineering consultants for Tasiast.
  • MARK D. SEDORE—Vice-President, Technical Services.  He signed off as a “Qualified Person” on Tasiast.

For a while it seemed as though the one man who has profited most from Kinross, CEO Tye Burt, who was awarded total compensation of US$50-60-million since 2005 in the form of cash, share and option-based awards and pension value, would never leave, but he finally got canned in August after a drop in Q2 profits.

Whoever was still around in April would have had to discuss the Tasiast mine expansion project in their meeting. This is a project which had previously been considered impracticable by independent and separate expert studies. However, Ken Thomas, who joined Kinross Gold from Hatch in 2010, seemingly had his heart set on engaging the company in what later proved a costly and reckless adventure. The expansion project, which included two processing plants with a complex infrastructure, would have to be cancelled or curtailed. But Kinross had already outsourced to a host of foreign sub-contractors. If the board decided to surrender the project indefinitely, the subcontractors would not relinquish their claims without some form of compensation.

Subcontractor perks

Some subcontracted companies based in Mauritania enjoy(improperly) the same dispensations and benefits as Kinross-Tasiast. This situation has come about either by contrivance, or through the ignorance of the Mauritanian authorities which carved out the Tasiast deal. The primary subcontractor was Hatch, a Canadian consulting firm whose mission was the study and monitoring of the expansion project.

The key expansion project subcontractor is Consolidated Contractors Company [CCC], an Arabian construction company, owned by a Palestinian from Lebanon, and based in Greece. CCC was in charge of Civil Engineering works to build the expansion project plant at a cost of US$1 billion.

The project being mothballed, CCC has been thrown some million-dollar bones to chew on while waiting for the return of better times, but they are all projects which were originally slated to be awarded to Mauritanian companies. CCC now supports construction of the airport at Tasiast; an asphalt road linking the site to the road between Nouakchott and Nouadhibou – and related works; and a pipeline project to supply fresh water. To do this, it employs 110 expatriates and not a single Mauritanian.

In those situations where local people are employed, the recruitment practices reflect the grace-and-favour cronyism that is endemic in Mauritanian society. “Kinross employs about 300 Mauritanian workers, strictly for manual labour, and 5 in 6 of them almost exclusively have the same tribal affiliation,”  says one worker.

Second in line is DORCE, a Turkish company based in Ankara, tasked with construction of a workforce camp of about 7,000 rooms, for a total of US$100 million. It employs 500 expatriates and 600 locals, but 80% of the Mauritanians are small traders.

Next is the turn of Friedlander (ORTEC Group), a French company specializing in plumbing, whose mission is limited to the construction of a pipeline feeding the plant with seawater to clean extracted ore. It employs 50 expatriates, as well as a workforce of labourers, of which 70% are from sub-Saharan Africa.

Fourth most important is CIS, an international catering company with headquarters in France, operating in Mauritania as NAC, and responsible for a catering contract worth US$11 million. CIS, or NAC, employs 30 expatriates and more than 400 Mauritanian staff. The indigenous employees are hired without permanent employment contracts, working 12 hours a day for a measly 70,000 Ouguiyas (about US$230) at the end of the month, and no entitlement to overtime. No wonder the company has no operations in France other than an office: the EU labour laws forbid such treatment.

According to one worker, “There are of course other, less visible foreign companies operating behind the scenes, seemingly unknown to the Mauritanian tax man, but appearing on the list of companies associated with Kinross-Tasiast.”

“The ‘Mauritanisation’ of workers obviously does not apply to these companies,” one worker voices. “Here, they conspire with the authorities, with the compliance of the labour inspector, to keep almost everything in the dark,” concludes a team leader. “Cheating is endemic here,” reveals a Mauritanian civil rights activist. “For example, salaries of expatriate workers of these various companies are kept under wraps. Expats working in that area of Kinross-Tasiast which they call “operations” are managed from the regional office in Las Palmas.”

Another indignant  Mauritanian engineer adds, “Kinross-Tasiast is just a big scam.”

“Regardless of the level of commitment from the government in wanting to impose real transparency on these vested interests,” adds a technician, “it will never happen.”