Sustainability

The DRC : Working in an Emerging Democracy

The mining sector is expected to play an important role in the recovery of DRC from war and social disruption in the late 1990s and early 2000s. The return of peace and democracy has encouraged a new stability in the country and miners are working to re-establish an industry with the capacity to create a sound export base for the DRC economy.

Anvil, as one of the first companies to take up development and production after five years of war, has highlighted the potential to establish successful mining operations in Katanga. The Company has also developed a blueprint for maximising local employment and benefits from mineral production.

One of the key factors in the DRC recovery has been the strong international support for democratic and administrative processes.
Initial peace agreements brokered by South Africa led to the establishment of a transitional Government in 2003. Backed by the European Union and the United Nations, the transitional government oversaw the drafting of a new constitution, which was ultimately supported by more than 80% of parliamentarians.

Presidential and parliamentary elections, the first elections in 40 years, were held in the DRC on July 30, 2006 under the guidance of the European Union Electoral Observer Mission (“EU EOM”) and MONUC, the United Nations mission to the DRC. Joseph Kabila was declared the winner of the Presidential election on November 15, 2006. Throughout 2006, DRC voters went to the polls to elect parliamentary, regional and local representatives.

Local enthusiasm for the democratic process contributed to high voter turnouts and generally orderly polls.

During the transitional period, the World Bank and the International Monetary Fund have returned to the DRC to support new business development and economic activity. This support has included the introduction of political risk insurance. At the same time, the National Government has adopted modern mining legislation to provide some transparency and security for potential investors.

The changes are generating new interest in the widely recognised economic potential of the region. In 2006, Congo projects raised more than $1 billion on Canadian and UK Stock Exchanges. Anvil alone has raised C$149 million in the first quarter of 2006.

The trend is likely to accelerate as more companies establish successful operations.

Anvil presently employs approximately 2000 people, and local evidence shows that the multiplier effect of direct employment is approximately 10 to 1, highlighting the strong flow-on effect of major resource projects. Locally based engineering, construction and service companies have played an important role in developing new projects for Anvil and the relationships are likely to strengthen as service sector capabilities increase.

In the long term, the DRC’s future lies in a diverse broadly based economy capable of competing on world markets. In the short term, the mining sector in Katanga is likely to be the key factor in kick-starting the recovery.

The Kilwa Incident

In October 2004, rebel forces took over the community of Kilwa (est. population 40,000) about 50 kilometres from the Dikulushi mine site. In response, the FARDC (DRC armed forces) commandeered Anvil vehicles and other logistics support and attacked the rebels. Some time later, it became apparent that numerous human rights violations had occurred.

In 2005, serious allegations began circulating that Anvil had voluntarily, and with prior knowledge of FARDC’s intent, supported the human rights abuses and the tragic killing of civilians. Anvil rejected and continues to reject these allegations. A Military Court Inquiry, which concluded in June 2007 cleared the Company and its employees of any involvement in the action.

The consequences of the Kilwa tragedy are far reaching; most of all for the community members of Kilwa, but also for Anvil. Anvil continues to develop and strengthen its corporate social responsibility program.