Kinross Gold Corporation: a history of bad management, facilitated corruption and mass murder
By Sergio Ulhoa Dani, from Göttingen, Germany, Tuesday 3, November 2009
Canadian Kinross Gold Corporation (NYSE:KGC; TSX: K) has reported its
third quarter 2009 results [1,2]. There was a net loss of US$21.5 million
or US
.03 per share, compared to net income of US$64.7 million or
US
.10 per share in the same quarter last year. The culprits are the
“challenges at our Paracatu expansion project”, said Kinross CEO Tye Burt.
To overcome these hurdles, Kinross has been diligently working to
“facilitate” its business down the equator. Instead of cutting in its own
flesh and fat, it is cutting in the health and lives of thousands of people
in Paracatu, a 90,000 inhabitants city in the State of Minas Gerais,
Brazil.
An open cut tragedy
Kinross open cut gold mine at Paracatu is located within the city
territory. To explore the world’s lowest grade ore (0.4 g/ton) this
truly criminal mining company disputes with local population and
farmers huge volumes of precious fresh water, giving back in turn one
million tones of toxic arsenic.
In the Wikipedia it reads: “Arsenic became a favorite murder weapon of
the Middle Ages and Renaissance, particularly among ruling classes in
Italy, notably the Borgias. Because the symptoms are similar to those
of cholera, which was common at the time, arsenic poisoning often went
undetected. By the 19th C., it had acquired the nickname "inheritance
powder," perhaps because impatient heirs were known or suspected to
use it to ensure or accelerate their inheritances” [3].
Kinross is also impatient, longing to put its claws over the city of
Paracatu – transformed in Kinross’ property as per inheritance right.
DNPM, an agency in task for issuing mining permits in Brazil, has
issued mining rights to Kinross in the whole territory of Paracatu.
To put its claws on its inheritance, impatient Kinross cares for the
poisoning of the 90 thousand inhabitants of the city. Kinross counts
on invaluable help of a fistful of Brazilian governmental authorities.
The dust of the open cut gold mine localized within the city throws
inorganic arsenic over the population 24 hours a day. The mostly poor
people are forced to breath a daily arsenic doses which is ten times
higher the provisional limits set by WHO [4].
As to guarantee a more efficient genocide, Kinross now plans to poison
Paracatu’s only public source of drinking water. On Friday, August 21,
a fistful of Kinross-sympathetic people issued Kinross a permit to
dump 1 million tonnes of inorganic arsenic into the Machadinho Valley
which forms the hydrological system of public water supply to
Paracatu. Kinross managed to get this permit issued by the government
of the Minas Gerais State in the middle of a corruption plot which is
currently under investigation by the Public Ministry.
A board of directors with “respectable” curricula
Decisions at Kinross are taken by a board of directors in Toronto,
Canada. Kinross’ publicly declared policy is to seek out and hire
directors with “competencies and skills that the board, as a whole,
should possess” [5]. No further explanation is given on such skills,
but an independent report has implied Tye Burt – a former Deutsche
Bank employee and present Kinross’ CEO – into financial fraudulent
business [6,7]. In addition, various reports, including a UN report
and a book have implicated Kinross into the looting of the Democratic
Republic of Congo’s natural resources [8-12] and various reports and
film documentaries on Kinross’ corruption and murdering activities in
Paracatu are also publicly accessible [13].
In Kinross’ Board of Directors there is also a seat for Wilson N.
Brumer. Brumer, an executive and former Minas Gerais State Secretary
of Economical Development, was hired May 2009 in rather interesting
circumstances.
Bottlenecked twice by State and Federal legal suits which prevented
Kinross to build up the world’s largest toxic tailings impoundment in
the outskirts of Paracatu, the mining company responded by hiring the
shortly resigned Secretary of State of Minas Gerais, Wilson Brumer in
May, 2009.
The good relationships between Kinross and Brumer date back to the
time when Kinross bought the Paracatu mine from Rio Tinto and Brumer
was serving as a State Secretary in Minas Gerais. Brumer´s appointment
as a Kinross Director has been interpreted as Kinross desperate try to
place its most important Brazilian operation in the hands of someone
with “easy transit and flow” within government offices.
Brumer has a truly “respectable” curriculum. Together with Benjamin
Steinbruch, he played a role in the true donation of the then
State-owned multibillion assets at Vale do Rio Doce to private
national and international investors. While still serving as a CEO at
Acesita, Brumer executed a disastrous financial operation which
indebted and stuck the company. As a consolation prize, he won a
position as Secretary of Economical Development of the Minas Gerais
State which he occupied in the years 2003-2007.
Bad results for the poor thousands, good results for the rich fistful
Kinross activities in Paracatu may be murdering for thousands, but
highly profitable for a fistful of rich Kinross directors. Kinross
directors decide on their own salaries and benefits. In 2008, Kinross
CEO Tye Burt received more than US$10 million as salary and
compensations for his hard work. Among the five best paid Kinross
directors, no one got less than US$3 million payment in 2008. No one
of the remaining 6 Kinross directors got less than 1.2 million payment
last year. The total amount due to Kinross’ executives in the board of
directors exceeds the net loss of US$21.5 million announced this
Monday. The conclusion is that Kinross whole operation only serves a
fistful of people.
Bad news for Kinross stakeholders and shareholders alike
A lawsuit was brought before the Paracatu court of law in which
Acangaú Foundation claims to have perceived imminent damages from
Kinross Gold Corporation mining operations to Paracatu's 90,000
inhabitants and the environment [14,15].
The civil action proposed by Acangau Foundation is worth
R$37.260.000.000,00 (US$ 20.5 billion, equivalent to the value of the
gold reserves of Kinross' open cut gold mine in Paracatu) to remediate
estimated health, environment and social damages imposed to 10% of
Paracatu people in the next 30 years of continuing Kinross' gold
mining operations.
This amount may not constitute a remedy for the human lives that are
going to be lost or the foreseeable social and economic distresses;
but it gives an idea of the unsustainability of Kinross' mining
project in Paracatu. The Paracatu mine gold reserves are worth some
US$ 15-20 billion. The arsenic output in mine tailings amounts 1
million tonnes. The Paracatu mine is unique in that it has the world's
lowest gold grades and world's highest arsenic output, and it is
located in the outskirts of a city.
Acangaú Foundation's lawsuit is likely to be followed by several other
civil and criminal actions as damages start to be felt on a global
scale. Several recent geochemical mapping projects have delivered
indications for arsenic degassing as an important process leading to
arsenic enrichment in the surface environment and a recent in-depth
review points to serious consequences of arsenic and recommends a
worldwide ban of hard rock gold mining [16].