21 years after the signing of the agreement between Qit Madagascar Minerals-Rio Tinto (QMM-Rio Tinto) and the Malagasy State, the population of Taolagnaro is far from enjoying the benefits of this partnership. Worse still, the social and ecological problems and the management of funds intended for the state coffers are causing discontent among the population and local elected representatives. The central government, the company’s partner, closes its doors to requests for information on this subject. There is little transparency between the company’s management and the company.
The State is over-indebted, its hands and feet tied
The Malagasy population has the right to be informed about the situation of these major companies, particularly those involved in mining. However, on the one hand, there is little clear information on the content of the agreements, and on the other, communication itself is lacking. This lack of communication between government officials and the government itself is one of the reasons why the government has called for an enquiry into finance and management, explains an official at QMM-Rio Tinto. “The situation surprises us, because the Malagasy state, as a partner of our company, is represented on the board of directors. In fact, the Minister of Mines appoints this member to represent the State. As a result, they are supposed to know the problems and everything that goes on within the company”, explains this manager at QMM-Rio Tinto.
The agreement between Rio Tinto and the Malagasy state was signed in 1998. 80% of the capital is held by foreigners and Madagascar can terminate this agreement and not renew it. However, the State is bound hand and foot because it still has to pay a debt of 93 million dollars to Rio Tinto, including 77 million dollars for the recapitalisation in 2012 and 2015 and 16 million dollars that were to be paid in 2019. This recapitalisation was necessary after the company recorded losses and now has only half of its capital, according to law 2003-036 on commercial companies. This contribution is supposed to be deducted as and when the benefits are distributed, in proportion to the capital introduced. To date, the benefits have not been received, the partners must participate in a recapitalisation, and QMM-Rio Tinto has no intention of giving up Madagascar. ‘We are ready to renew the agreement and are open to discussions’, says QMM, while the government has expressed no intention of abandoning the partnership.
No economic advantage
QMM-Rio Tinto began extracting cobalt from Taolagnaro more than ten years ago. The local people we interviewed at the site say they do not benefit from the presence of this company. Villagers, shopkeepers, civil servants, associations and local government officials all share the same opinion. Firstly, the social impact of the company and its influence on local development are not tangible.
“As far as we know, QMM has exported more than 2,500,000 tonnes of cobalt. Since 2018, it has also exported monazite, to the tune of around 500,000 tonnes. It’s not easy to accept that the company is making losses. The sad thing is that the social initiatives are hardly tangible. Compared with its capital and profits, the Malagasy people have only benefited from 13 million dollars in rebates over the last ten years. This is the famous 2% mentioned in the mining code. A sum that is still divided between the region, the communes and the former province, as required by law”, explains the Governor of Anosy, Hatrefindrazana Jerry, during our interview on 24 February 2020.
Mpamboly Mitambatra, the association of peasant farmers, shares this view, as its president Milsen Jasmin, known to all as Guy, points out. “Based on what we are experiencing today, we are not benefiting from the presence of this company in Taolagnaro. Only the companies that are already working with QMM-Rio Tinto are benefiting. The money does not flow to other sectors, but remains confined to the area. One of the most damning situations, for example, is the construction of the port of Ehoala. The company that manages this port belongs to QMM, so mooring there is expensive and this situation increases the cost of living”, she explains. On the other hand, businessmen who are members of the Chamber of Commerce and Industry, and who wished to remain anonymous, support the view that QMM has a stranglehold on Taolagnaro’s economy. “It costs twice as much to use the port of Ehoala as any other port in Madagascar. It’s not surprising that prices are doubling in Taolagnaro”, they say.
A price explosion that we can verify locally. A bag of cement at 22,000 Ar costs 37,000 ariary in Taolagnaro. Bottled water, which costs 2,000 Ar, goes for 4,000 or even 5,000 Ar in grocery shops. In 2019, the Malagasy government has asked for an investigation into the management of the QMM – Rio Tinto company, according to the Council of Ministers of 20 November 2019. In March 2020, this investigation has not yet begun. “All the steps must be clear. The State must give us the details of these steps and the stages of the investigation, as well as the relative terms of reference. This is the reason that has delayed this investigation, to which QMM-Rio Tinto is not opposed”, as a QMM-Rio Tinto manager confided, anonymously and unofficially. According to the Governor of the Anosy region, Hatrefindrazana Jerry, ‘It is the identification of the company responsible for the audit and the details of the audit that are slowing down the process’. These are details that the State has yet to clarify, in addition to the explanations given by the Minister of Mines on 21 November 2020 during his press conference held at his place of work.
In fact, the audit is currently on hold, as those responsible at various levels are not being transparent in their communications. The Office des Mines Nationales et des Industries Stratégiques (OMNIS) and the Ministry of Mines, which is also primarily responsible for the audit, are keeping silent. Silent, despite our requests for an interview and emails sent to the communications department in February 2020. President Andry Rajoelina agreed to give an interview, an acceptance that has so far gone unheeded. The Presidency’s communications department has refused any specific interviews with the press on this subject. It was the Secretary General of the Presidency of the Republic, Valery Ramonjavelo, who, during an unofficial discussion on 21 February 2020, stressed that this financial and management audit of QMM-Rio Tinto must be carried out, including the fact that the Malagasy population is not reaping any benefit from the presence of this company in Madagascar. In short, the government’s communication is inadequate.
Unfounded claims
Faced with these different points of view, QMM-Rio Tinto is speaking out. The company rejects the assertion that it does not contribute to local development or to improving the living conditions of the population. For the company, it remains a lever for development in the region, particularly for the town of Taolagnaro. “We have injected more than a billion dollars into the Madagascan economy. We have created 2,000 jobs, 97% of which are Malagasy and 80% of which are recruited in Taolagnaro. 150 businesses are receiving support from our company. 350 million dollars are dedicated to common infrastructures to which the population has direct access: this concerns roads, electricity, water supply and public health. 2.5 million dollars are allocated annually to environmental protection and the well-being of the local population. Can we still say that we are not involved in local development? The problem with state officials and local associations is that all they want to do is extract money from our company”, according to the QMM-Rio Tinto communication.
They also stress the fact that they have not interrupted the payment of rebates linked to their exports. “We pay between 800 million and 1 billion Ariary a year and this has never been interrupted. We have carried out a number of social activities, and Taolagnaro would not have reached this level (of development) without QMM,” the company continued.
Cover photo source: https://www.depeche-taratra.mg/
