sharing in governance of extractive industries

Virtual mining in Cameroon: How to make a fortune by failing

Cameroon has a growing portfolio of failed mining projects in which a few well-connected individuals have made millions, all the while the minerals have remained deep under the ground. We investigate.

Overlooking Yaoundé. Credit: Emmanuel Freudenthal.

Overlooking Yaoundé. Credit: Emmanuel Freudenthal.

In 2003, the American company Geovic raised hopes when it secured a permit to build an industrial cobalt mine. Cameroon’s mineral wealth had long been known – ranging from iron and bauxite to diamonds and gold – but this was the first such licence to be granted in decades.

Expectations were sky high and further intensified when the company announced it had discovered the “largest known primary cobalt deposit in the world”. A leaked cable from the American embassy in Yaoundé in 2008 insisted: “Far from a ‘hoax,’ Geovic is Cameroon’s best hope for industrial mining in the near future.”

However, despite the company’s spectacular declaration and the US diplomat’s rosy outlook, Geovic’s project site remained mostly fallow until, in 2014, the company finally up and left. There had once been hope that Geovic’s activities could be transformative for the country’s economy, and the East region. But by the time the company departed, it had still yet to extract any minerals whatsoever. In fact, the most lasting legacy of the company’s presence may well be a handful of decrepit announcement boards that are still standing in some surrounding villages.

On the surface then, the project was clearly a failure. Geovic’s shareholders lost money. The Cameroonian government missed out on tax revenues. And the local population did not benefit from substantial employment or development.

However, it is clear that not everyone lost out. For instance, while foreign investors squandered huge sums of money and Cameroonians got increasingly frustrated at the lack of activity, Geovic executives paid themselves handsomely in salaries and stocks worth several millions of dollars over two decades.

At first glance, it would be easy to dismiss this account as an oddity, as an unfortunate failure in a sometimes risky sector. But a closer look at Cameroon’s mining projects suggests that Geovic’s story is the rule rather than the exception.

In its recent history, Cameroon has produced more failed projects than minerals. Venture after venture has followed in Geovic’s exemplary footsteps. Projects start full of promise and often raise enormous sums of money before ultimately vanishing in a puff of smoke, leaving all but a small handful of individuals let down and out of pocket.

But why do these projects keep collapsing? How is it that some people come away with huge financial rewards? Who are these individuals benefiting from Cameroon’s mining misadventures? And at whose expense?

By examining public and leaked documents, speaking to insiders in the companies involved, and visiting the site areas of several mining projects, we conducted an investigation in an attempt to answer these questions.

In the course of our inquiries, we uncovered close links and conflicts of interest between investors and powerful politicians, we came across multi-million investments that vanished into thin air, and we saw how a few well-connected individuals managed to multiply their money by a factor of 400 in just one year.

Read the full article on African Arguments.

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