Canadian Firm Failed to Adequately Address Issue
January 15, 2013

If mining companies are going to work in Eritrea, they need to make absolutely sure that their operations don’t rely on forced labor. If they can’t prevent this, they shouldn’t move forward at all. 

Chris Albin-Lackey, business and human rights senior researcher

(Toronto) – International mining firms rushing to invest in Eritrea’s burgeoning minerals sector risk involvement in serious abuses unless they take strong preventive measures. The failure of the Vancouver-based company Nevsun Resources to ensure that forced labor would not be used during construction of its Eritrea mine, and its limited ability to deal with forced labor allegations when they arose, highlight the risk.

The 29-page report, “Hear No Evil: Forced Labor and Corporate Responsibility in Eritrea’s Mining Sector,” describes how mining companies working in Eritrea risk involvement with the government’s widespread exploitation of forced labor. It also documents how Nevsun – the first company to develop an operational mine in Eritrea – initially failed to take those risks seriously, and then struggled to address allegations of abuse connected to its operations. Although the company has subsequently improved its policies, it still seems unable to investigate allegations of forced labor concerning a state-owned contractor it uses.

“If mining companies are going to work in Eritrea, they need to make absolutely sure that their operations don’t rely on forced labor,” said Chris Albin-Lackey, business and human rights senior researcher at Human Rights Watch. “If they can’t prevent this, they shouldn’t move forward at all.”

Eritrea is one of the world’s poorest and most repressive countries. In recent years the country’s largely untapped mineral wealth has provided a badly needed boost to its economic prospects. The Bisha project, majority owned and operated by the small Canadian firm Nevsun Resources, is Eritrea’s first and so far only operational mine. It began gold production in 2011 and produced some $614 million worth of ore in its first year.

Other large projects led by Canadian, Australian, and Chinese firms are in the pipeline, however. Numerous exploration firms are scouring other leases for new prospects.

Eritrea’s government maintains a “national service” program that conscripts Eritreans into prolonged and indefinite terms of forced labor, generally under abusive conditions. It is through this forced labor program that mining companies run the most direct risk of involvement in the Eritrean government’s human rights violations. Human Rights Watch has documented how national service conscripts are regularly subjected to torture and other serious abuses, and how the government exacts revenge upon conscripts’ families if they desert their posts. Many Eritreans have been forced to work as conscript laborers for over a decade.

Most national service conscripts are assigned to the military, but others are made to work for state-owned companies. Some of those companies are construction firms that the government pressures international companies to take on as contractors.

Nevsun Resources operates the Bisha mine through a joint venture with Eritrea’s state-owned mining firm, the Eritrea National Mining Corporation (ENAMCO). Nevsun acknowledged to Human Rights Watch that it initially failed to carry out any kind of due diligence activity around the human rights risks involved with the project. At the government’s urging, it then employed a state-owned contractor called Segen Construction Company to build some of the infrastructure around the mine site. Segen has a long track record of allegedly deploying forced labor in connection with its projects.

Human Rights Watch interviewed several Eritreans who worked at Bisha during its initial construction phase. Some said they were deployed there as conscript laborers by Segen. They described terrible living conditions and forced labor at paltry wages. One former conscript said that he had been arrested and imprisoned for several months after leaving the work site to attend a relative’s funeral.

“Nevsun employed a contractor with a long track record of alleged reliance on forced labor, without adequate safeguards in place,” Albin-Lackey said. “What’s worse, Nevsun has continued to operate and to employ this contractor even though it is not allowed to monitor its labor practices.”

During the project’s early stages, Nevsun did not have adequate procedures in place to ensure that forced labor was not being used to build its project. The company has since tightened those policies, largely through an improved screening procedure that is meant to vet all workers at the mine to ensure that they are there voluntarily. Nevsun says that these policies are now adequate to the task of keeping their project free of forced labor.

Human Rights Watch has not encountered allegations that forced labor is currently being used at Bisha, but monitoring is extremely difficult due to the limited access for independent human rights investigators into Eritrea. But even Nevsun cannot be truly certain that forced labor is not being used since its contractor refuses to cooperate with efforts to monitor its human rights performance.

Nevsun says that Segen has promised not to use forced labor at Bisha. But Segen has refused Nevsun’s requests to interview Segen employees to verify that they are working at Bisha voluntarily. Segen has also refused to allow Nevsun to visit the site where its workers are housed to assess conditions there. In 2010, Nevsun began providing food to Segen’s workers after receiving reports that they had deplorable living conditions and inadequate food.

In 2012, Nevsun attempted to expand the mine without re-engaging Segen. The Eritrean government objected, and Nevsun brought Segen back on. Segen workers are still on site at Bisha.

“Nevsun has allowed itself to be bullied by its own local contractor, which has the backing of the Eritrean government, and it shouldn’t accept this state of affairs,” Albin-Lackey said. “This should be a lesson to other mining firms working in Eritrea – if they wait until there is a problem to address the human rights risks of working there, it may well be too late.”

Unfortunately, it appears that other companies are moving ahead with mining projects without addressing these risks. Human Rights Watch interviewed the CEO of Australia’s South Boulder Mines, which is on the verge of developing a $1 billion potash mine in Eritrea. The CEO acknowledged that the company has done no assessment of the potential human rights risks involved with the project, including the potential risk of the use of forced labor.

The Canadian firm Sunridge Gold, which is also working on plans to develop a mine in Eritrea, did not respond to requests to discuss the issue of forced labor and other human rights abuses. The newest entry into the mining scene is China SFECO, a Shanghai-based conglomerate that recently purchased a controlling interest in another mining project from Australia’s Chalice Gold.

Based on the Bisha experience, the greatest risk of abuse may occur during the construction phase of these projects. Nevsun has also acquired the rights to another deposit near its Bisha site which, if it turns out to be commercially viable, could involve more construction or infrastructure work.

Mining firms that want to work in Eritrea should refuse to work with any contractor implicated in the use of forced labor, and insist on the right to investigate any and all allegations of abuse connected to their operations, Human Rights Watch said.

All mining firms working in Eritrea should undertake human rights due diligence activity to identify and mitigate the full range of risks posed by the projects they plan to undertake. The importance of human rights due diligence is heavily emphasized by the United Nations-endorsed Guiding Principles on Business and Human Rights, which have been widely accepted as a legitimate benchmark of responsible corporate behavior.

Once projects are under way, companies should keep a close eye on events in the field to make sure that their project is not moving forward through forced labor or other abuses. Companies should insist on unfettered, independent access to all workers at their mine site and the right to fire local contractors that are credibly implicated in abuse.

The home governments of multinational mining companies should regulate and monitor the human rights practices of domestically based companies when they operate in high-risk environments like Eritrea, Human Rights Watch said. The governments should press these companies to uphold high standards and to investigate alleged abuses in their foreign operations. No country currently monitors the extraterritorial human rights performance of its companies except in certain narrow contexts, such as investment in Burma.

“It is negligent for mining companies to ignore the risks of forced labor that clearly exist in Eritrea,” Albin-Lackey said. “It is also long past time for these companies’ home governments to make their overseas human rights records an issue of domestic concern.”