The Case of the Lueshe Mine
More Interesting Multinational Corporation Connections to the Congo: The Case of the Lueshe Mine Expanded.
At the end of last year, I finished a preliminary investigation into a suspected international mineral-smuggling ring in the war-torn North Kivu Province of the Democratic Republic of the Congo (DRC). It was associated with General Laurent Nkunda(batware), who is the target of international sanctions. I did not release the more specific details of the investigation to the public. However, since a German-American firm named Gesellschaft fuer Elektrometallurgie (GfE) was involved, I was asked to do an interview about some of my general findings by a online German magazine (http://www.german-foreign-policy.com). We discussed GfE’s connections to a monetary contributor and member of General Nkunda’s political party (CNDP), Mr. Modeste Makabuza, a well-known Tutsi businessman who has many ties to companies involved in the supply chain of ores mined in North Kivu. He is also the General Director of the Societe Miniere du Kivu (SOMIKIVU), a company 70% owned by GfE. Though the Rwandan Government denies it, the United Nations (UN) and non-governmental organization (NGO) reports stated that Mr. Makabuza is a close associate of Rwandan President Paul Kagame. Mr. Makabuza’s brother, Alexis, who is also connected to mining companies in North Kivu like the Sapphir Society and Bangandula Mining Group (BMG), is a reportedly a member of the CNDP’s Conseil des Honorables, an exclusive inner circle of political advisors to General Nkunda.1
GfE reincorporated in the United States as Metallurg Inc., which now has several subsidiaries under the Metallurg Holding company. Metallurg and GfE currently hold a virtual worldwide monopoly on an ore called pyrochlore. GfE has been in Congo actively trying to obtain the legal rights to the Lueshe mine, which is the only source of pyrochlore in the region.2 On November 20th, 2007, Mr. Modeste Makabuza announced in Bloomberg News that SOMIKIVU was going to start producing a small amount of niobium (pyrochlore ore’s most valuable component mineral) from Lueshe on a monthly basis. The announcement came amidst an attack by General Nkunda’s soldiers, yet Mr. Makabuza claimed initial production would be ready to go in a month’s time. Needless to say, it did not happen. As I explained during my interview, I currently believe GfE and its affiliates have no intention to ever exploit the pyrochlore in Congo any more than is legally required by Congolese national and/or provincial law. Rather, it is to maintain their monopoly on pyrochlore, and thus control the world’s supply, which acts on the supply side to set niobium’s market price, and also to prevent other countries not aligned with the U.S. from obtaining it to use for their own purposes.
A recent lead that surfaced in this case sparked my interest. It turns out that the primary shareholder in Metallurg and GfE is a private equity firm named Safeguard International Fund L.P. The company is based in Wayne, Pennsylvania, and has satellite offices in Frankfurt, Germany, and Paris. It is managed by Dr. Heinz C. Schimmelbusch3 and Mr. Arthur Spector.4 In June 2006, Safeguard merged its shares of Metallurg Holding and GfE, making GfE a 100%-owned subsidiary of Metallurg Holding. Then, in November 2006, the same month Mr. Makabuza made his announcement about resuming Lueshe’s niobium production, Dr. Schimmelbush and Mr. Spector incorporated a new company in the Netherlands called Advanced Metallurgical Group N.V (AMG). Safeguard is the majority shareholder in the company. They created two divisions within AMG, one for advanced materials and the other for engineering. GfE was organized under the advanced materials branch. Safeguard’s website (http://www.safeguardintl.com/amg.html) states that AMG also handles the operations of Metallurg Holding. Another subsidiary under the advanced metals division is London & Scandinavian Metallurgical Co Limited (LSM), located in South Yorkshire, Great Britain.
Dr. Schimmelbusch is AMG’s Chairman while Mr. Spector is the current Deputy Chairman. The President of the advanced materials division, Mr. Eric Jackson, is a director of several Metallurg subsidiaries and is the Chief Operating Officer (COO) of Metallurg itself. The Supervisory Board is even more interesting. Its Chairman is Oxford and Princeton educated Mr. Pedro Pablo Kuczynski, former Prime Minister and Minister of Mining in Peru. Mr Kuczynski also worked for the World Bank as a policy planner in the 1970s. Another member of the Supervisory Board is Mr. Norbert Quinkert, Chairman of the Motorola company branch covering Austria, Germany, the Netherlands, and Switzerland. In addition, Mr. Quinkert is a former director of the German branch of General Electric (GE). Another former World Bank employee, Mr. Guy de Selliers, also sits on AMG’s Supervisory Board. Notably, he worked on the Bank’s mining and metals projects. In 1990, immediately after the fall of the Communist Bloc, he helped create the European Bank of Reconstruction and Development, where he worked for seven years. In 2002, he was co-chairman of an expert group that advised the European Commission and the Russian Government on potential and existing joint energy projects.
Rounding out the Supervisory Board is General Wesley Clark, a retired four-star general, one-time Democratic Party presidential candidate (2004) and former Supreme Allied Commander (SACEUR) of the North Atlantic Treaty Organization (NATO), where he commanded the bombing of Serbia in 1999. Prior to his NATO post, General Clark was the Director of Strategic Plans and Policy for the Joint Chiefs of Staff (J5) from April 1994 to June 1996, commander of the United States Southern Command (USSOUTHCOM) from June 1996 to July 1997, and commander of the United States European Command (EUCOM) from July 1997 to May 2000. He is currently a Board member for the International Crisis Group (ICG), a senior advisor for the Center for Strategic & International Studies (CSIS), and is a National Association of Securities Dealers (NASD)-qualified investment banker. In 2004, he founded a consulting firm, Wesley K. Clark & Associates in Little Rock, Arkansas. He is also a director at Axicom, a company that collects, houses, and examines personal data.5 Like former United States President Bill Clinton, General Clark obtained a Bachelor’s and Master’s degree in Philosophy, Politics and Economics at Oxford University as a Rhodes Scholar.
According to their website (http://www.amg-nv.com), AMG, through its various subsidiaries, produces turbine blades and their corresponding engine components, aerospace structural components, rocket fuel, high-strength steel, stationary turbines, petrochemical pumps and pipes, electronic capacitors, fiber optics, semiconductors, engine parts, and engine transportation bodies. Given the numerous applications that aerospace technology has in the military-industrial sector, it is apparent why General Clark was given his position on the Supervisory Board. Mr. Quinket’s ties to the telecommunications and electronics industry represent another major market AMG can utilize, particularly with semiconductor and capacitor production. AMG also produces parts needed for oil pipelines and the high-strength steel can be used as a component in building construction projects, further expanding AMG’s market and their need for raw materials.
1 Hilgert, Filip, Spittaels, Steven. “Mapping Conflict Motives: Eastern DRC.” International Peace Information Service. March 4, 2008. pg. 6.
2 Note: For more details on the Lueshe mine and pyrochlore ore, please consult Barouski, David. “’Blood Minerals’ in the Kivu Provinces of the Democratic Republic of the Congo,” ZNet. June 1, 2007. http://globalpolicy.igc.org/security/issues/congo/2007/0601bloodmin.htm. and Teubert, Horst. “War Financing,” german-foreign-policy.com. April 3, 2008. English Translation. http://www.german-foreign-policy.com/en/fulltext/56140.
3 Note: Mr. Schimmelbusch is a former director of Mobil Oil AG, Allianz Versicherungs AG, Teck Corporation, and Safeguard Scientifics, Inc. He was also a member of the Advisory Board at Dresdner Bank AG, Creditanstalt AG, the European Bank for Reconstruction and Development, and Hermes Kreditversicherungs-AG. Mr. Schimmelbush is also the former Chairman of the Managing Board at Metallgesellschaft AG and he was the Chairman of the Supervisory Board at Buderus AG, Dynamit Nobel AG, Norddeutsche Affinerie AG, Grillowerke AG, and BUS Umweltservice AG. In addition, he was also the Chairman of the Board at the Metall Mining Corporation and the Methanex Corporation. He served as a member of the Presidency of the Federation of German Industry [BDI] in Cologne and as Chairman of the BDI’s Environmental Committee. He is currently the Chairman of Metallurg and President of Metallurg Holdings.
4 Note: Mr. Spector is the Vice Chairman of Metallurg.
5 “Clark Worked for Ark. Data Firm,” Robert O’Harrow Jr. Washington Post. September 27, 2003. pg. A08.