“Congo” An Outrageous Decision By AMD

The recent decision by AMD to name a new computer chip “Congo” has to go down in marketing history as one of the cruelest decisions ever made. Here’s the letter I sent in response:

June 8, 2009

Mr. Dirk Meyer
Chief Executive Officer
AMD Corporation
PO Box 3453
Sunnyvale, CA 94088-3453

Dear Mr. Meyer:

Your company’s recent decision to name a new microchip “Congo” is astoundingly heartless and ill-informed. Did you really mean to link your product to the world’s worst humanitarian crisis?

Nearly six million people have died in the Democratic Republic of Congo since 1998 and the death toll continues to mount as fighting over the country’s mineral resources continues. Currently, more than a million Congolese have been driven from their homes and farms by the fighting in the Eastern provinces. It is estimated that 250,000 women have been brutally raped and mutilated by armed groups seeking to control communities where mines are located.

Among the prizes that fuel this conflict are gold, tungsten, coltan, and cassiterite. Coltan, as you know, is a source of tantalum, a mineral used in the manufacture of capacitors widely used in many electronics including ultra-thin laptops like the ones destined to be powered by your “Congo” chips. Tin, a key material in the production of many electronic components, comes from cassiterite. Both ores are mined under horrific conditions in the DRC from deposits controlled by various militias and rebel groups. The Enough Project estimates that these groups generate some $144 million from the illicit trade in these and other minerals. Those profits buy weapons that have killed millions of people and threaten to destroy the nation known as “Congo.”

While your new chip may not include these minerals, connecting the product to the conflict is an incredibly bad idea. Your statement of corporate responsibility reads in part:

“Our success in business is built on a core value of respect for people. From our employees around the world, to our customers and partners, to the families who live in the communities where we operate – people come first and foremost.”

On behalf of the people of the Democratic Republic of Congo, I urge you to fulfill that promise and change this product name. I also call on you to commit to policing your supply chain to ensure that your company’s purchases do not contribute to the abuse and deaths of innocent people.

Thank you for your attention to this matter.

Dave Donelson
Author of Heart of Diamonds

If you’d like to email this message (or your own) to AMD, feel free: Investor.Relations@amd.com

Dave Donelson, author of Heart of Diamonds a romantic thriller about blood diamonds in the Congo.

Congo Rape Testimony Moves Senate

Chouchou Namegabe Nabintu testified recently before the Senate Committee on Foreign Relations Subcommittee on African Affairs and the new Subcommittee on International Operations and Organizations, Human Rights, Democracy and Global Womens Issues, moving the audience with her eloquent appeal for US help in stopping terror rape in the Democratic Republic of Congo.

Senator Barbara Boxer said after Chouchou’s testimony that “In the Senate today, the silence on this issue has ended.”

The hearing was titled “Confronting Rape And Other Forms Of Violence Against Women In Conflict Zones Spotlight: DRC and Sudan”. Also testifying were Melanne Verveer, US Ambassador-at-Large for Global Women’s Issues, Esther Brimmer, US Assistant Secretary of State for International Organization Affairs, Phil Carter, Acting Assistant Secretary of the Bureau of African Affairs, Eve Ensler, founder of V-Day, Robert Warwick, Country Director of Southern Sudan International Rescue Committee, Neimat Ahmadi, Save Darfur Coalition, and John Prendergast, founder of The Enough Project.

Dave Donelson, author of Heart of Diamonds a romantic thriller about blood diamonds in the Congo.

China Wins, Congo Loses In Mine Deal

The recently-announced copper/cobalt mining contract between the Democratic Republic of Congo and China–widely proclaimed as bringing $9 billion in development aid to the DRC–looks like another unfortunate deal for Congo. According to my back-of-the-envelope calculations, it is probably even more one-sided than American multinational Freeport McMoRan’s arrangement for Tenke Fugurume that I examined recently.

Last year, the Congolese Ministry of Mines announced that it had signed an agreement between China’s Exim Bank, the Kinshasa government, Congolese state mining company Gecamines, China’s Sinohydro Corp, and China Railway Engineering Corp forming a joint venture to develop the Mashamba West and Dikuluwe copper and cobalt deposits, concessions originally scheduled to be developed by Katanga Mining Ltd through a joint venture with Gecamines. The deposits are believed to hold ten million tons of copper and two million tons of cobalt.

While complete details of the contract are yet to be announced, what is known doesn’t look particularly profitable for the Congolese. On the surface, the deal sounds fine, with the Chinese agreeing to build $6 billion worth of roads and railroads and another $3 billion in mining infrastructure in return for rights to operate the mines. Gecamines is to own 32% of the venture, too, or nearly twice as large as the share it has in Tenke.

Using recent prices for copper ($4500/ton) and cobalt ($30,000/ton) and spreading production over the 25 year term of the deal, annual gross revenues of the mine will be $4.2 billion. Using the same operating cost assumptions as at Tenke, profits will be approximately $2.6 billion annually. Gecamines share could be $832 million.

The devil, though, is in the details. First, the $9 billion from the Chinese is not a gift—it’s a loan secured by the mines and to be repaid from the Congolese share of the operation’s profits. Generously assuming that the loan will be for the 25-year life of the project and carry an interest rate of only two percent (much less than I expect it will be), Gecamines will be on the hook for $540 million in annual debt service. That leaves only $292 million as the Congo’s share of the mine’s profits. By comparison, Gecamines’s deal with Freeport annually yields $100 million more.

Additionally, Gecamines has agreed to either give Katanga Mining deposits carrying nearly four million tons of copper and 200,000 tons of cobalt or pay the company $825 million as compensation for giving up the Mashamba West and Dikuluwe concessions. This additional cost, of course, further reduces the DRC’s take from the deal with China.

The IMF has objected to the deal on the basis that Congo is simply trading $11 billion in current debt (which the DRC hopes to have canceled) for $9 billion to the Chinese, and that the state guarantees of those loans are ill-advised at a time when the government can’t fund basic services, much less invest in the country’s growth. The IMF has said it might go along with the deal pending a study to make sure the mine’s reserves cover the cost of the infrastructure and if the terms are renegotiated.

The Chinese stand to gain in several ways from the deal as announced. In addition to their nearly $1.8 billion in annual profit from the mine, they’ll earn perhaps $4.5 billion in interest on the development loans—more if they carry an interest rate higher than two percent. There also looms the very large question of who will get the profits from the contracts to build the promised infrastructure. My assumption is that China’s Sinohydro Corp and China Railway Engineering Corp will be awarded those contracts on a no-bid basis, which means they’ll take home another billion or so in profits on the project.

It would seem to me that a better deal for Congo would be a straight-forward mining concession with the Chinese along the lines of those typically negotiated by Zambia and South Africa, where the parastatal companies get 51% of the operation. The infrastructure could be financed from those revenues, open-bid contracts for the roads, railroads, and power facilities let to the lowest bidders (maybe even Congolese companies), and funds would still be left over for the state general revenue coffers.

Dave Donelson, author of Heart of Diamonds a romantic thriller about blood diamonds in the Congo.

Congo Women Benefit Performance Of “Ruined”

If you haven’t yet seen “Ruined,” Lynn Nottage’s Pulitzer-prize-winning play about rape in the Congo, make sure to attend the June 14 matinee in New York. Proceeds from that performance will go to support women in the Congo through the work of Friends of the Congo and Congo Global Action. I saw the play early in its NY run and can’t say enough about it’s importance in understanding the terrible effect of terror rape on the victims and society in the DRC.

Following this special performance, filmmaker Lisa Jackson will moderate a panel of Congolese women who will speak out about the continuing violence. The participants include Amini Kajunju, Georges Malaika Foundation; Marie-Claire Faray, Common Cause UK; Marie Mossi, National Network of Women; Gorethy Nabushosi, Congo Restoration; and Maman Jean Kasongo, Fondation Shalupe. In addition to Friends of the Congo and Congo Global Action, the panel is sponsored by the Ellen Stone Belic Institute for the Study of Women & Gender in the Arts and Media Columbia College Chicago.

This video underscores the importance of this event:

The play and panel discussion will be at the Manhattan Theater Club, New York City Center at 130 West 56th Street. Tickets are available through the box office or Friends of the Congo.

Dave Donelson, author of Heart of Diamonds a romantic thriller about blood diamonds in the Congo.

A Sobering View Of Africa’s Future

Africa: Altered States, Ordinary Miracles
by Richard Dowden

As an author and activist, I am generally optimistic about Africa’s future, but Richard Dowden tempered my hope with a sobering dose of reality based on his decades of reporting on the continent. His powerful guide to sub-Saharan Africa is a must-read for anyone who hopes to understand why Africa is the mess it is.

Dowden is the director of the Royal African Society and spent two decades as Africa editor of the Independent and the Economist. His book is filled with both studied thoughts on the forces that have shaped Africa’s history and pertinent personal tales of his experiences there. His message is ultimately fairly simple: Africa’s problems can only be solved by African people.

The depressing counterweight to that conclusion that I drew from Dowden’s accounts is that corruption is so ingrained throughout the power structure of most nations in Africa that it is unlikely that solutions can ever be implemented.

Having set my latest novel in the Democratic Republic of Congo, I was particularly interested in his conclusions about that beleaguered nation:

“In December 2005 a new constitution was confirmed by a referendum and elections were held in July 2006. The assumption of outsiders was that, forced to govern together, the warlords would check each other’s theft and violence. The opposite happened. They keep the country divided, cut deals with each other and filled their pockets.”

Dowden makes another observation which mirrors my own experience:

“Despite the politics of theft, violence and patronage, Congo still inspires great patriotism among its long-suffering citizens. They may have little loyalty to institutions or a ruler, but Congolese believe desperately in the Congolese nation and a few are prepared to fight its looting bosses.”

Africa – Altered States, Ordinary Miracles reveals Dowden’s great love for the continent he has spent his life discovering. It is no dewy-eyed romance, however. He reveals all his lover’s warts and blemishes, bad breath and occasional frequent bouts of ill-temper in a paean to her beautiful potential.

Dave Donelson, author of Heart of Diamonds a romantic thriller about blood diamonds in the Congo.