[R-G] Corporate Connections to the Congo: The Case of the Lueshe Mine Expanded

[Anthony Fenton]

The Case of the Lueshe Mine


Jul 26, 2008 By David Barouski


David Barouski's ZSpace Page / ZSpace

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.



From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/zspace/commentaries/3566