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Controversial deal in Burundi

Hilke Fischer / sstMay 13, 2015

German company ThyssenKrupp Metallurgical Products has signed a deal to buy rare earths in Burundi - a country in turmoil over President Pierre Nkurunziza's bid for a third term.

Rare earth Neodymoxid (photo: Frank Rumpenhorst/dpa)
Image: picture-alliance/dpa/F. Rumpenhorst

Private mining company Rainbow Rare Earths Limited explored an area of 39 square kilometers (15 square miles) in the Gakara area for about four years. Conditions seemed ideal: Hundreds of thousands of tons of ores like bastnaesite and monazite were simply waiting to be extracted.

The company was granted a mining license by Burundi's government in March 2015. Operations are expected to start by the end of this year - Rainbow Rare Earths intends to extract 5,000 tons of ore annually.

It has already sealed a deal with a client who is interested in buying the scarce commodity that is used for a broad range of technical products - everything from cell phones to note books, wind turbines to solar panels: ThyssenKrupp Metallurgical Products, the commodity trading company of German steel company ThyssenKrupp. "We look forward to successful cooperation with Rainbow Rare Earths," Kai-Norman Knötsch, chairman of the management board of ThyssenKrupp Metallurgical Products said in a press release published in April.

Burundi protests (photo: SIMON MAINA/AFP/Getty Images)
People have been demonstrating since Nkurunziza announced he would run for a third termImage: Simon Maina/AFP/Getty Images

But it's hardly news about deals like this one that dominate coverage on Burundi these days. The small East African country is battling a political crisis: For months, there have been increasing incidents of repression against the opposition, demonstrators and journalists. Burundi's President Pierre Nkurunziza announced his intention to run for a controversial third term in office. Some members of the youth wing of his party are believed to have distributed weapons to people in the country - which reminds many of the 1993-2006 brutal civil war.

More than 50,000 people have fled to neighboring countries, according to estimates by the United Nations. Since Nkurunziza announced his intention to run for a third term at the end of April, people took to the streets - ever since, the death toll has risen on a daily basis.

Human rights as part of the contract?

This certainly wasn't the right time for deals with the Burundian government, says Gesine Ames of the Ecumenical Network on Central Africa (ÖNZ), an alliance of German church organizations active in the region. She says deals like these would help support Burundi's president. "I would rethink such deals in such a precarious situation or put clear conditions forward, for instance to observe human and civil rights."

Rare earth oxides (photo: USDA, ARS, IS Photo Unit)
Rare earths are needed for a plethora of technical gadgetsImage: USDA, ARS, IS Photo Unit

Are such conditions stipulated in the contract between ThyssenKrupp Metallurgical Products and Rainbow Rare Earths Limited? Could the German company pull the plug and cancel the contract if the human rights situation called for such action?

"Details concerning contracts are confidential, so I'm afraid we can't comment on that," ThyssenKrupp spokesperson Stefan Ettwig told DW. Business relations with Rainbow Rare Earth were subject to strict criteria regarding compliance and code of conduct. Human rights are explicitly mentioned when it comes to material management.

However, ThyssenKrupp's supplier is not the Burundian government, but British Rainbow Rare Earths Limited - and ThyssenKrupp says it relies on its partner to assess the situation.

Rainbow Rare Earths Limited does not want to comment on Burundian politics and concerns by NGOs. "We do not involve ourselves with the politics of the country," Martin Eales, managing director with Rainbow Rare Earths told DW. "We do not align ourselves with any particular party of politics and we hope the country will in a short time become peaceful again, allowing everybody to work."

"We are hoping for a speedy conclusion but we will leave it to the people involved in the process to do so," he added.

European vs Chinese companies?

It would require international sanctions for companies such as Rainbow Rare Earth and ThyssenKrupp to step away from doing business in Burundi, according to Christoph Kannengiesser, chief executive officer of the German-African Business Association - but these sanctions hadn't even been discussed yet. "In our opinion it's not advisable to have single companies stopping their activities in the country," he said. This would only lead to other companies taking over, which might care less about social or environmental standards - Chinese companies, for instance, he said. "It's definitely better for Burundi if rare earths are extracted and traded by companies that uphold certain values and standards."

Street scene in Burundi (photo: picture alliance/Tom Schulze)
Human rights activists say local people have to profit from ressource extraction as wellImage: picture-alliance/dpa/T. Schulze

ÖNZ's Ames doesn't think this argument holds. "It's especially important in the case of Burundi that there is a clear signal on behalf of businesses." ThyssenKrupp Metallurgical Products should not dodge responsibility, she added. Even a member along the value chain that's not directly involved with mining is responsible if it has exclusive rights to the resources, she said.

Deogratias Marahukiro, a Burundian priest and human rights activist who lives in the German city of Freiburg, said that while foreign companies are welcome in Burundi, it is crucial that projects such as extracting rare earths in Gakara also help the local population. "Foreign companies that close deals to extract resources in conflict regions stand to profit immensely - unlike the local population," he said.