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$0.03 per share, compared to net income of US$64.7 million or US$0.10 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 tonnes of toxic arsenic. 

In Wikipedia, one can read: “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 into the city of Paracatu – transformed into Kinross’ property as per inheritance right. DNPM, an agency issuing mining permits in Brazil, has issued mining rights to Kinross throughout the territory of Paracatu. To get its claws on its inheritance, impatient Kinross attends to the poisoning of the 90 thousand inhabitants of the city. Kinross counts on the invaluable help of a fistful of Brazilian governmental authorities. 

The dust of the open cut gold mine localized within the city spreads arsenic all over the population. The mostly poor people are forced to breathe daily arsenic doses ten times higher than the provisional limits set by WHO [2]. 

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 Economic Development, was hired May 2009 amid  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 Economic Development of the Minas Gerais State which he occupied in the years 2003-2007. 

Bad scenario 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 Acangau 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. 

Acangau 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]. 

References: 

[1] Kinross Gold Slips To Loss In Q3 - Quick Facts. Available at www.rttnews.com
[2] November 2, 2009 - News Releases: Kinross reports third quarter 2009 results; Margins, cash flow remain strong http://www.kinross.com/news/1122009-1.pdf
[3] http://en.wikipedia.org/wiki/Arsenicosis, accessed November 2009. 
[4] http://alertaparacatu.blogspot.com/2009/07/arsenio-na-poeira-de-paracatu-dados.html, accessed November 2009.
[5] http://www.kinross.com/corporate/pdf/management-information-circular.pdf,
[6] “The September 11 Commission Report”, published by J.P. Heidner at: http://www.scribd.com/doc/9423598/September-11-Commission-Report-Revised-December-008
[7] http://alertaparacatu.blogspot.com/2009/06/relatorio-independente-implica.html
[8] http://www.augustreview.com/issues/globalization/trilateral_plan_to_corner_world_gold_market?_20081209107/
[9] http://www.augustreview.com/issues/globalization/the_trilateral_commission%3a_usurping_sovereignty_2007080373/
[10] UN report accuses Western companies of looting Congo. By Chris Talbot, 26 October 2002. Available at http://www.wsws.org/articles/2002/oct2002/cong-o26.shtml, accessed November 2009.
[11] http://www.crisisgroup.org/home/index.cfm?id=4587 "Getting Congo's Wealth To Its People," John le Carre and Jason Stearns, Boston Globe, 22 December 2006
[12] http://alertaparacatu.blogspot.com/2009/06/o-loteamento-do-congo-por-empresas.html
[13] Various reports and film documentaries on Kinross’ corruption and murdering activities in Paracatu are accessible at www.alertaparacatu.blogspot.com and www.sosarsenic.blogspot.com.
[14] http://sosarsenic.blogspot.com/2009/10/our-lives-for-golds-sake.html
[15] Lawsuit accessible at: http://www.serrano.neves.nom.br/1xACPPTU.pdf
[16] Dani SU. Gold, Coal and Oil. Medical Hypotheses, doi:10.1016/j.mehy.2009.09.047.