Soldiers of Fortune: multinationals say it’s time to invest in Zaire
NEW YORK (AP) _ Multinational mining executives aren’t shy about picking up deals amid Zaire’s revolution. They’re betting on the rebels.
Insurgent leader Laurent Kabila has amassed so much credibility that in some ways he already is considered President Mobutu Sese Seko’s successor.
For mining companies salivating over Zaire’s incomparable mineral riches, Kabila’s control of the most important mining areas is reason enough to deal with him. Even before Kabila’s forces occupied half the country, the boldest mining executives were courting him and making plans.
``We are going to capitalize on the current uncertainty, the current strife, by increasing our presence and our land holdings in the country,″ said Kenneth MacLeod, president of International Panorama Resource Corp. of Vancouver, British Columbia.
MacLeod has plenty of company. On Wednesday, America Mineral Fields of Hope, Ark., signed three major agreements with Kabila’s forces worth $885 million.
DeBeers Consolidated Mines Ltd. and Anglo-American Corp., South Africa’s biggest miners, also have turned to Kabila’s alliance and are renegotiating deals they had with Mobutu’s government.
Mining companies for years have coveted Zaire’s resources _ 65 percent of the world’s reserves of cobalt, its capacity to be the second-largest producer of industrial diamonds behind Australia. But while some companies have helped enrich Mobutu, others have been reluctant to deal with his corrupt regime.
``A lot of mining companies are prepared to help rejuvenate the industry,″ said George Coakley, African countries specialist for the U.S. Geological Survey of the Department of the Interior.
``They just want to know what the ground rules are,″ Coakley said, because mining is a high-risk, intensive industry. ``They don’t want them to change. It makes bankers unhappy. It makes shareholders unhappy.″
Zaire’s mining has declined in the past several years because of the country’s protracted political turmoil. But Coakley applied 1997 prices to the country’s top ores and minerals _ copper, cobalt, gold, diamonds and zinc _ and foresaw a $3 billion-a-year industry for those five alone.
Cobalt, for one, is of great significance. The United States, a non-producer of cobalt but the world’s largest consumer, considers it a strategic commodity because of its use in aerospace and defense industries.
Available but of less economic importance are tin, tungsten, manganese and coal.
``Minerals clearly are key for the economy,″ for a country with little arable land and only subsistence agriculture, Coakley said.
Beyond that, said Marvin Zonis, a professor of political economy at the University of Chicago, Zaire’s enormous supply of various precious metals potentially makes the country a leading producer.
He said this is significant because any substantial influx of commodities onto the world market will lower prices and play a role in restraining inflation.
``It’s in all our interests to see that this is developed,″ Zonis said. ``They’ll get richer but we’ll all be better off.″
Kabila also is getting contracts because he doesn’t appear to be acting in the corrupt fashion of Mobutu, whose regime has virtually bankrupted the country since he came to power three decades ago.
``If they (Kabila’s forces) have a stable government and they are not going to extract phenomenal payments in the form of corruption, then there would be just a magnificent opportunity″ for mining companies, Zonis said. ``It’s like the world’s market has been waiting for this.″
Michael McMurrough, chief executive and chairman of America Mineral Fields, stressed that was why he preferred negotiating with Kabila.
``AMF has not paid anyone anything. That’s the reason we admire what his approach to things is,″ McMurrough said. ``He has not asked our company for anything.″
That makes sense to McMurrough, who said Kabila seems to be honest.
``He seems to have a very high set of morals,,″ McMurrough said. ``He seems to be more in line with the Western way of thinking.″
Meanwhile, MacLeod said he was in favor of Mobutu’s ouster.
``It’s truly a golden opportunity for the people of Zaire to be brought into the 21st century and brought into a political framework that enables them to have democracy,″ MacLeod said.
But McMurrough, like other business people, knows the bottom line of overseas investing.
``We are only acting as prudent businessmen,″ he said, ``dealing with whom we think is in control of the country.″