U.S. watchdog sounds alarm on mismanaged mining sector in South Sudan

Despite boasting of the potential to become a catalyst for major economic growth, South Sudan’s mining sector could, on the contrary, be the next source of conflict in the young country, United States anti-corruption body The Sentry has warned.^[1]

South Sudan, a country rich in mineral resources (gold, copper, cobalt, zinc, iron, marble, limestone and dolomite), has seen its mining sector develop rapidly in recent years. But the industry, largely unregulated, has been captured by politically-connected locals and foreigners, as well as militia groups, the watchdog says in its latest report released this month. This is in part due to the breakout of war in 2013, after which it became difficult to streamline the sector.^[2][3]

As a result, the industry remains highly vulnerable to corruption, mismanagement and violent competition over the country’s resource wealth. “Although South Sudan took welcome steps to reform the mining sector in 2012, some government officials, their relatives, and their close associates have fostered a weak regulatory environment susceptible to exploitation,” the report says.

In an example of how the privileged few have apparently exploited “kleptocratic arrangements,” The Sentry says President Salva Kiir’s daughter Winnie partly owns a company with three active licenses, while another company with three licenses lists former Vice President James Wani Igga’s son as a shareholder.

In August 2016, the company owned by the then 20-year-old Winnie received its first two licenses to explore in mineral-rich areas of Central and Eastern Equatoria. Documents reviewed by the U.S. watchdog indicate that Winnie Salva Kiir was listed as an 11 percent shareholder in Fortune Minerals, a Chinese-owned, but without indicating how much she paid to the government.

“These are the same factors that have marred South Sudan’s oil sector and rendered peace elusive,” adds the report. “Illicit mining activities are inflaming tensions in Eastern Equatoria, the army holds interests in exploration licenses, and opposition groups informally control artisanal mining sites.” 

More so, weak transparency and accountability frameworks have left the mining space vulnerable to exploitation, raising significant concerns about the government’s willingness to oversee responsible development.

Protecting the mining sector from exploitation by corrupt actors in government would require concerted efforts from a variety of stakeholders, The Sentry says, adding that such action would bolster transparency, accountability, and oversight standards. 

Firstly, South Sudan should enforce and enhance existing laws and empower oversight institutions. Also, companies looking to do business in the country should adopt industry best practices, particularly by disclosing information about ongoing due diligence efforts, public payments, and human-rights sensitive security policies. 

Government bodies in the U.S. and the United Kingdom should also implement policies that encourage responsible investment in South Sudan’s mining sector. In addition, international financial institutions should conduct enhanced due diligence and transaction reviews, as well as ongoing screening and monitoring.

References

1. ^{^} The Sentry (thesentry.org)
2. ^{^} rich in mineral resources (en.wikipedia.org)
3. ^{^} latest report (thesentry.org)