Banro navigates risk in the DRC

The Democratic Republic of the Congo (DRC) is often described by miners as “elephant country” — a metaphor for a land filled with extra-large mineral deposits.

The elephant in the room, however, are the extra security risks mining companies in the war-torn country have had to face to get minerals out of the ground and into the hands of buyers.

Banro (TSX: BAA; NYSE-MKT: BAA) knows about this all too well. During the last five years the Toronto-based company has put two open-pit mines into production and advanced two other gold projects in  eastern DRC.

Banro’s Namoya gold mine in the Democratic Republic of the Congo, where five employees were kidnapped in March. Credit: Banro.

Its Twangiza mine, 45 km southwest of Bukavu in South Kivu province, started commercial production in September 2012. Namoya, about 210 km southwest of Twangiza in neighbouring Maniema province, started commercial gold production in January 2016.

The last couple of years have been particularly challenging, however.

In March, five employees (a Frenchman, a Tanzanian and three Congolese) were kidnapped from its Namoya mine. The Tanzanian national, an employee of SGS who worked as a supervisor in the mine’s laboratory, was released early. The others — including the Frenchman, a contractor who worked at the mine for international security services firm G4S — were held for three months.

Gold dor bars from Banro’s Twangiza project in the Democratic Republic of the Congo. Credit: Banro.

A handful of international media reported during the abductions that the kidnappers had asked for a US$1-million ransom.

Experts in the field advised that Banro take a low-key approach, so it did not report the kidnappings in its press releases.

“The story was already widely reported,” Banro’s president and CEO John Clarke says in an interview  with The Northern Miner from his home in London, United Kingdom. “The whole point of dealing with the hostage situation was low-key information, to stay cool and calm, and talk through it. It takes time. Our focus was to get everyone back to their families.”

Clarke said the hostages were treated well, were in good shape upon their release, and have received support and counselling.

“I can’t imagine going through that myself, but they came out in good shape and got on with things,” he said. “You check their health, make sure family is in immediate contact and get people back to their families as fast as possible.”

He would not confirm or deny whether a ransom was paid, and if so, how much, and noted that the outlaw group’s demands changed frequently.

“They were looking after their own ends — they were bandits,” Clarke said. “I wouldn’t say it was poverty-related. Poor people don’t do that. It’s a mindset. These few bandits are remnants from the country’s difficult past, twenty or so years ago — a time of general unrest.”

Media reported that the kidnappers had criticized Banro for not giving jobs to artisanal miners active on the site before the company built its mine.

Clarke disagrees.

“The issue is recognizing those that you are affecting at the beginning and providing alternatives,” he said. “Artisanal miners that would have been associated with our open-pit area were found alternative employment and we trained them to become operators. But artisanal mining is endemic. Even though it’s illegal, people carry on the trade. It’s an arduous job with little return for the miners, and if they have any chance of employment, they don’t go into artisanal mining.”

In addition to the kidnappings, Banro had to deal with other incidents at both of its mines.

In February, a group of armed robbers tried to enter the gate at Twangiza’s mine site. Three mine police officers and one of the armed robbers were killed and a security guard was injured. No items were stolen and operations continued at normal levels.

In May, attacks on police and military personnel took place in villages surrounding the Namoya mine. Armed intruders also tried to get into the mine site but were driven back by security. At least one of the intruders was killed, along with one police officer and one military personnel. None of Banro’s staff were injured, but as a precaution, foreign nationals and local staff left the site temporarily and mining operations were suspended.

Mining resumed at Namoya on May 22 and employees gradually returned.

In July, a 23-truck convoy belonging to Namoya mine contractors travelling from Baraka with supplies was trapped in a cross fire between the Congolese national army (FARDC) and an armed group in Lulimba on N5, a major highway. Banro said the armed group controlled the Lulimba community and its surrounding area.

In a press release on July 3, the company reported the incident and said that due to fighting between FARDC and other armed groups along the N5 supply corridor, all operations at Namoya were suspended and staff evacuated.

Banro’s Twangiza gold mine in the Democratic Republic of the Congo’s South Kivu province. Credit: Banro.

Employees returned to the mine on July 6 and the truck drivers proceeded with their cargo.

Clarke emphasized that both national and regional governments helped the safe return of Banro employees and contractors, and ensured the safety of its truck drivers.

“The support was very real and very valuable,” Clarke said. “It was provided to assist us to move forward together in developing our part of the DRC.”

Banro is the only mining company in South Kivu and Maniema provinces, Clarke noted.

“We’re a long way from any other mines,” he said. “It’s a big country. We’re in a lowly populated part, where these people can be in the forest and in hiding.”

Last year there was another hijacking.  The trucks had delivered all of their goods to Namoya and were ambushed on their return trip. The bandits held the drivers for a time before letting them go.

Clarke says the company is taking precautions at its mines and two projects in the country, Lugushwa and Kamituga, which are located along the 210 km Twangiza-Namoya gold belt in South Kivu and Maniema provinces.

“We’re committed to building a Congolese mining company with Canadian roots — building up the expertise of our workforce, employing and training more Congolese staff — and we’re pretty proud of what we’re doing.

“The government wants to see Congolese mining companies, so we proudly fly our Canadian flag and proudly fly the national flag, as well,” he says. “We have a significant exploration portfolio, two mines in operation, and good quality staff and management running these mines — and they’re committed to building the company with us.”