Iron Mine Is Key for Gabon’s Next Leader

Daily News Article   —   Posted on August 28, 2009

(by David Gauthier-Villars, WSJ.com) — Gabon is preparing to elect its first new leader in 41 years on Sunday, and one of the biggest issues for the 23 candidates is how to do what President Omar Bongo Ondimba had pledged until his death in June: use one of the world’s last big untapped iron-ore deposits to transform the country into one of Africa’s most prosperous economies.

The remote Belinga mine, nestled deep in a tropical forest, drew interest from top global mining companies, including Brazil’s Vale SA. In 2006, Gabon awarded the project to a consortium led by China National Machinery & Equipment Import & Export Corp., known as CMEC, which was allowed to mine the iron without paying taxes related to production there for 25 years.

In exchange for the mine’s entire iron-ore output, Chinese investors would build a 500-kilometer railroad, hydropower stations and a deepwater harbor to help develop the mine, Mr. Bongo Ondimba said. But work in Belinga hasn’t gone beyond the stage of feasibility studies.

“Belinga is a symbol of what must change in Gabon,” said presidential candidate André Mba Obame during a recent visit to Paris. “We need to do away with incompetent ministers and rampant corruption; we need less talk and more action.”

Much of the reason Gabon never got anywhere with the Belinga mine — touted as a national priority as far back as 1967, when Mr. Bongo Ondimba came to office — has to do with the late president himself. During his four decades in power, Mr. Bongo Ondimba was credited with keeping the former French colony at peace, far from the ethnic conflicts and civil wars that have ravaged African nations such as the Democratic Republic of Congo and Rwanda. But he has been widely criticized for not taking advantage of Gabon’s substantial revenue from oil, timber and manganese exports to improve the economy.

Gabon has a population of 1.5 million. Last year alone, the country reaped an estimated $9 billion from oil and other raw-material exports, enough to be as prosperous as some Middle Eastern oil states, economists say. But only 10% of its roads are paved, and some Gabonese hit the streets last year to protest rising food prices. Gabon ranks 107th out of 179 countries in the 2008 United Nations human development index, which combines measures such as gross domestic product, life expectancy and literacy.

Critics say Mr. Bongo Ondimba regularly doled out contracts to friends for everything from building roads to setting up a health-care system, effectively squandering wealth that could have been distributed to the population.
[Gabon map]

“Some Gabonese may have appreciation for the stability that [Mr. Bongo Ondimba] brought to their country,” said Monique Theron, a lecturer in history at the University of South Africa and a researcher with publishing group Consultancy Africa Intelligence. “But Gabon was not able to manage its wealth.”

The leading presidential candidates all have said they want to revisit the Belinga mining agreement and speed up the iron project as a way to get Gabon back on track. Some said they would like to renegotiate the tax exemption granted to the Chinese-led joint venture, obligate CMEC to hire a significant number of workers from Gabon when mining begins, and perhaps scale down the project — the railroad alone accounts for nearly half of the $6 billion bill.

CMEC didn’t respond to messages seeking comment. A lawyer for CMEC declined to comment.

It is unclear whether a new generation of Gabonese leaders will succeed where Mr. Bongo Ondimba failed. All the leading presidential candidates occupied senior positions in the previous administration. Mr. Mba Obame was interior minister in Mr. Bongo Ondimba’s last government.

“The idea that people who didn’t change anything while they were in power will suddenly change Gabon is a joke,” said Pierre Mamboundou, a candidate and a rare longtime opponent of Mr. Bongo Ondimba.

Mr. Mba Obame said experience gained with Mr. Bongo Ondimba was an asset, not a liability.

The front-runner in the vote is Mr. Bongo Ondimba’s son, Ali Bongo Ondimba, who has served as defense minister for the past decade. If he is elected Sunday, the younger Mr. Bongo Ondimba will break with his father’s legacy, and put Gabonese people to work, according to spokeswoman Clémence Mezui Me Mboulo.

Ms. Mezui Me Mboulo said the Belinga project is decades behind schedule, in part because Gabon has been bogged down by a culture of “squandering and preferential treatments” under which “incompetent people were awarded senior jobs in the administration.”

The younger Mr. Bongo Ondimba plans to revisit terms of the Belinga project because “paying no taxes for 25 years is not acceptable,” Ms. Mezui Me Mboulo said. She cautioned that talks with CMEC would be difficult because Gabon lacks the financial resources to develop Belinga alone. Under the 2006 deal, the Chinese government committed to financing the entire mining project through the Export-Import Bank of China.

Vale, the Brazilian mining giant which lost out to CMEC in the competition to develop Belinga in 2006, said it would be willing to resume talks with Gabon if the government decided to review the contract.

Some candidates have said they fear the election will be tarnished by irregularities. Some deceased voters are still registered, for example. The government has acknowledged the existence of problems but says most have been solved.

In Gabon, the president must collect more votes than rivals in a single-round ballot. Even if some of the 23 candidates were to withdraw, the successor to the late Mr. Bongo Ondimba could be elected with a small fraction of the vote. “There is a risk that Gabon’s next president won’t have a strong mandate,” because he would likely be elected by a minority of voters, said Mr. Mba Obame.

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com.

Copyright 2009 Dow Jones & Company, Inc.  All Rights Reserved.  Reprinted here for educational purposes only.  Visit the website at wsj.com.

Background

ON GABON: (from the CIA World FactBook website.)

• Until recently, only two autocratic presidents had ruled Gabon since its independence from France in 1960.
• The recent president of Gabon, El Hadj Omar Bongo Ondimba -one of the longest-serving heads of state in the world - had dominated the country's political scene for four decades.
• President Bongo introduced a nominal multiparty system and a new constitution in the early 1990s. However, allegations of electoral fraud during local elections in 2002-03 and the presidential elections in 2005 exposed the weaknesses of formal political structures in Gabon.
• President Bongo died in June 2009 and was replaced in accordance with the constitution by Rose Francine Rogombe, the president of the Senate.
• New elections are planned for the summer of 2009. This will be the first Gabonese elections in which Bongo is not participating.
• Despite political conditions, a small population, abundant natural resources, and considerable foreign support have helped make Gabon one of the more prosperous and stable African countries.