M23: How a local armed rebel group in the DRC is altering the global mining sector
In recent weeks, North Kivu, a province in the eastern part of the Democratic Republic of Congo (DRC), has seen over 135,000 displacements in what has become the latest upsurge in a resurging conflict between the Congolese army and armed rebel groups. The indiscriminate bombing in the region puts an extra strain on the already-lacking humanitarian infrastructure in North Kivu, which thus far harbours approximately 2.5 million forcibly displaced people.
The March 23 Movement, or M23, is an armed rebel group that is threatening to take the strategic town of Sake, which is located a mere 27 kilometres west of North Kivu’s capital, Goma, a city of around two million people. In 2023, M23 became the most active non-state large actor in the DRC. Further advances will exacerbate regional humanitarian needs and could push millions more into displacement.
The role of minerals
Eastern Congo is a region that has been plagued with armed violence and mass killings for decades. Over 120 armed groups scramble for access to land, resources, and power. Central to the region, as well as the M23 conflict, is the DRC’s mining industry, which holds untapped deposits of raw minerals–estimated to be worth upwards of US$24 trillion. The recent increase in armed conflict in the region is likely to worsen the production output of the DRC’s mining sector, which accounts for 30 per cent of the country’s GDP and about 98 per cent of the country’s total exports.
The area wherein the wider Kivu Conflicts have unfolded in the last decade overlaps almost entirely with some of the DRC’s most valuable mineral deposits, as armed groups actively exploit these resources for further gain.
The artisanal and small-scale mining (ASM) sector produces about 90 per cent of the DRC’s mineral output. As the ASM sector typically lacks the size and security needed to efficiently deter influence from regional rebel groups, the mining sector as a whole falls victim to instability as a result of the M23 upsurge. Armed conflict and intervention by armed groups impacts 52 per cent of the mining sites in Eastern Congo, which manifests in the form of illegal taxation and extortion. As such, further acquisitions by M23 in Eastern Congo may put the DRC’s mineral sector under further strain.
The United Nations troop withdrawal
The escalation of the M23 conflict coincides with the United Nations’ plan to pull the entirety of their 13,500 peacekeeping troops out of the region by the end of the year upon the request of the recently re-elected government. With UN troops withdrawn, a military power vacuum is likely to form, thereby worsening insecurity and further damaging the DRC’s mining sector. However, regional armed groups are not the only actors that can clog this gap.
Regional international involvement
A further problem for the DRC’s mining sector is that the country’s political centre, Kinshasa, is located more than 1,600 km away from North Kivu, while Uganda and Rwanda share a border with the province.
Figure: Air travel distance between Goma and Kinshasa, Kigali and Kampala (image has been altered from the original)
The distance limits the government’s on-the-ground understanding of regional developments, including the extent of the involvement of armed groups in the ASM sector, thereby restricting the Congolese military’s effectiveness in countering regional rebellions.
In 2022, UN experts found ‘solid evidence’ that indicates that Rwanda is backing M23 fighters by aiding them with funding, training, and equipment provisions. Despite denials from both Kigali and M23 in explicit collaboration, Rwanda admitted to having military installments in eastern Congo. Rwanda claims that the installments act as a means to defend themselves from the Democratic Forces for the Liberation of Rwanda (FDLR)–an armed rebel group that Kigali asserts includes members who were complicit in the Rwandan genocide. The FDLR serves as a major threat to Kigali’s security, as its main stated aim is to overthrow the Rwandan government.
As such, M23, on the other hand, provides Rwanda with the opportunity to assert influence in the region and limit FDLR’s regional influence. Tensions between Rwanda and the DRC have, therefore, heightened, especially with the added fact that the Congolese army has provided FDLR with direct support to help the armed group fight against M23 rebels. As such, the DRC has been accused of utilising the FDLR as a proxy to counter Rwandan financial interests in the Congolese mining sector.
Another major point of contention between the states involves the smuggling of minerals. The DRC’s finance minister, Nicolas Kazadi, claimed Rwanda exported approximately $1bn in gold, as well as tin, tungsten, and tantalum (3T). The US Treasury has previously estimated that over 90 per cent of DRC’s gold is smuggled to neighbouring countries such as Uganda and Rwanda to undergo refinery processes before being exported, mainly to the UAE. Rwanda has repeatedly denied the allegations.
Furthermore, the tumultuous environment caused by the conflict might foster even weaker checks-and-balance systems, which will exacerbate corruption and mineral trafficking, which is already a serious issue regionally.
In previous surges of Congolese armed rebel violence, global demand for Congolese minerals plummeted, as companies sought to avoid problematic ‘conflict minerals’. In 2011, sales of tin ore from North Kivu decreased by 90 per cent in one month. Similar trends can be anticipated if the M23 rebellion gains strength, which may create a global market vacuum for other state’s exports to fill.
China
In recent years, China gained an economic stronghold of the DRC’s mining sector, as a vast majority of previously US-owned mines were sold off to China during the Obama and Trump administrations. It is estimated that Chinese companies control between 40 to 50 per cent of the DRC’s cobalt production alone. In an interest to protect its economic stakes, China sold nine CH-4 attack drones to the DRC back in February 2023, which the Congolese army utilised to curb the M23 expansion. Furthermore, Uganda has purchased Chinese arms, which it uses to carry out military operations inside of the DRC to counter the attacks of the Allied Democratic Forces (ADF), a Ugandan rebel group, which is based in the DRC. In return for military support, the DRC has granted China compensation via further access to its mining sector, which is helping bolster China’s mass production of electronics and technology within the green sector.
The US
Meanwhile, the US has put forth restrictions on imports of ‘conflict minerals’, which are minerals mined in conflict-ridden regions in DRC for the profit of armed groups. Although the US attempts to maintain certain levels of mineral trade with the DRC, the US’s influence in the country will likely continue to phase out and be overtaken by Beijing. The growing influence of M23 paves the path for further future collaboration between China and the DRC, both militarily and economically within the mining sector.
The UAE
The UAE, which is a major destination for smuggled minerals through Rwanda and Uganda, has since sought to end the illicit movement of Congolese precious metals via a joint venture that aims to export ‘fair gold’ directly from Congo to the UAE. In December of 2022, the UAE and DRC signed a 25-year contract over export rights for artisanally mined ores. The policy benefits both the DRC and the UAE as the UAE positions itself as a reliable partner in Kinshasa’s eyes, which paves the path for further business collaboration. In 2023, the UAE sealed a $1.9bn deal with a state-owned Congolese mining company in Congo that seeks to develop at least four mines in eastern DRC. The move can be interpreted as part of the UAE’s greater goal to increase its influence within the African mining sector.
Global Shifts
China and the UAE’s increasing involvement in the DRC can be seen as part of a greater diversification trend within the mining sector. Both states are particularly interested in securing a stronghold on the African mining sector, which can provide a steady and relatively cheap supply of precious metals needed to bolster the UAE’s and China’s renewables and vehicle production sectors. The scramble for control over minerals in Congo is part of the larger trend squeezing Western investment out of the African mining sector.
Furthermore, the UAE’s increasing influence in the DRC is representative of a larger trend of the Middle East gaining more traction as a rival to Chinese investment in Africa. Certain African leaders have even expressed interest in the Gulf states becoming the “New China” regionally, as Africa seeks alternatives to Western aid and Chinese loans.
Although Middle Eastern investment is far from overtaking China’s dominance of the global mining sector, an interest from Africa in diversifying their mining investor pools can go a long way in changing the investor share continentally. Furthermore, if the Middle East is to bolster its stance as a mining investor, Africa serves as a strategic starting point as China’s influence in the African mining sector is at times overstated. In 2018, China is estimated to have controlled less than 7 per cent of the value of total African mine production. Regardless, China’s strong grip on the global mining sector might be increasingly challenged through investor diversification in the African mining sector. The DRC is an informant of such a potential trend.
The further spread of the M23 rebellion, though likely to damage the Congolese mining business, might also foster stronger relations with countries such as the UAE which seek to minimise ‘conflict mineral’ imports. As such, the spread of the M23 rebellion–which acts as a breeding ground for smuggling, might catalyse new and stronger trade relations with the Middle East. This could be indicative of a trend of “de-Chinafication” in the region, or at least greater inter-regional competition for investment into the African mining sector.
The East African Crude Oil Pipeline controversy
“Insufferable, shallow, egocentric, and wrong” is what Ugandan president Museveni called an EU condemnation of the country’s newest and biggest oil pipeline project, EACOP (The East African Crude Oil Pipeline). The pipeline, which will be developed in congruence with other oil projects in the country, has been an increasing source of controversy over the past months. While supposedly delivering economic benefits, the oil projects also stand in stark contrast with commitments to decrease carbon output. To complicate the matter even further, they also are a source of environmental and human rights concern.
The oil politics involved with EACOP and Ugandan oil do not only reflect the consideration between economic development and green agendas. To a large extent, protest groups have also made it significantly harder for the country to access the capital needed to develop the projects. Their approach, targeting the financial sector, potentially could make it harder to develop other fossil fuel projects in the future. As such EACOP has become a complex question of oil politics involving states, companies, financial institutions and civil society.
Uganda oil development
EACOP will connect the Kingfisher and Tilenga oil fields near Lake Albert (Western Uganda) to the port of Tanga in Tanzania. The reserves in these fields account for 6.5 billion barrels. Once finished, the project will be the longest heated crude oil pipeline in the world, spanning more than 1,400 kilometers, and able to carry 246,000 barrels per day. Due to the waxy properties of the Lake Albert oil, the pipeline needs to be heated to ensure a smooth flow.
Although EACOP Ltd claimed that pipeline construction will cost $4 billion, other sources state it will cost $5 billion. The combined cost of developing EACOP, Kingfisher Field, and Tilenga Field will amount to $10 billion. The shareholders will finance $4 billion and aim to finance the other $6 billion through a 60-40 debt to equity split, with the remaining 60% being funded through loans of financial backers.
TotalEnergies owns a majority stake of 62% in the projects, whereas both countries’ state-owned oil companies, UNOC (Uganda National Oil Company) and TPDC (Tanzania Petroleum Development Cooperation), hold a 15% stake each and CNOOC (China National Offshore Oil Corporation) an 8% stake. CNOOC will operate the Kingfisher field, which will produce 40,000 barrels per day, and Total will operate the Tilenga field, which will produce 190,000 barrels per day. In addition to the pipeline project and development of oil fields, a refinery will be built, which has a right of first call to 60,000 barrels per day.
The potential
The Ugandan government has framed the project as one of economic development. Uganda is projected to earn $1.5-3.5 billion per year, which is similar to 30-75% of its annual tax revenue, and Tanzania is projected to earn almost $1 billion per year. The projects should create approximately 10,000 jobs in both countries and bring $1.7 billion worth of work during its construction phase. Aside from that, cheap reliable power often plays a key role in lifting people out of poverty, which is what oil potentially may do for Uganda.
By becoming an oil-exporting country, it would also turn Uganda into a relevant regional player. As Tanzania is not an oil-producing country it offers the potential to form import-export partnerships with Uganda. There also is a hope that the pipeline-project eventually will reach beyond Tanzania and provide oil to the DRC and South Sudan. According to President Museveni, “it could serve the entire region long-term”.
The controversy
On the other hand, protestors and environmentalists point to the multiple risks that are involved with the projects. The biggest concern is carbon output. The Ugandan government, actually, argues that national oil production may lead to lower emissions, since the country’s current imports need to be trucked in from Kenya, creating high emissions. Similarly, Total claims it is one of the company’s lowest emitting projects. Nevertheless, campaign group STOP EACOP states the project will create 34 megatons carbon emission per year, when you take into account the downstream as well. That is twice the current size of Uganda’s and Tanzania’s emissions combined.
Another concern is the displacement of communities and wildlife. On the humanitarian side, supposed human rights abuse, delayed or insufficient compensation, displacement, increased prices and loss of land are all involved with the project. On the environmental side, 2000 square km of protected wildlife habitats will suffer from the construction of the pipeline and roads. Water sources and wetlands are also at increased risk of oil spillage.
To a certain extent the economic development argument is also being debunked. It is argued that the projected returns are incorrect, since they don’t take into account several factors. First of all, it is claimed that only ⅓ of the reserves are commercially viable. Furthermore, demand markets are undergoing a transition from fossil fuels to renewables. As such, Uganda and Tanzania may not find good returns on their investments. Even if the project were to generate decent returns, campaign groups argue that it will not benefit society, but mostly the country’s elite and that it potentially will worsen corruption.
Condemnation and campaigns
Due to the aforementioned reasons, the EU Parliament passed a resolution that condemned the construction of the pipeline. This in turn led to outrage among the East African countries that pointed to hypocrisy and double standards. According to them, Africa has a right to use and export their natural endowments as Western countries have done for hundreds of years.
Yet the EU wasn’t the only actor disapproving of the project. Major financial institutions have committed not to finance the project, due to campaigns from opposition groups. These groups aim to chip the 60% of funds that the project requires, which comes from major financial institutions. By tracking the banks that are mostly likely to finance the projects, they were able to pitch the risks, create pressure and ask them to make commitments. This approach has led to commitments from banks such as JPMorgan, Morgan Stanley, Citigroup, Wells Fargo, Barclays and Crédit Suisse. Certainly it does not make finance impossible, but rather harder and more expensive.
Risks and outlook
So far not a single metre of the pipeline has been built. That is not to say the project is on hold. The Kingfisher oil rig is in place and the Tilenga rig is on the move, marking the starting phase of project development.
On the one hand, the oil projects have a huge potential for economic development and if successful, it will improve Uganda’s standing in the region. On the other hand, there are significant downsides, such as displacement, environmental impact, and carbon emissions. The EU statement and commitment from financial institutions certainly places the project into bad light and makes it harder to secure funding. However, it will not be impossible and the gap left might be filled by Chinese and African banks, which in European eyes might be something to consider.