Thank you, Mr. Chair.
My remarks will be confined to the subject I travelled to Eritrea to investigate, the only subject relating to Eritrea on which I think I have a depth of knowledge as great as that of our ambassador.
The subject is the Bisha mine at which, it has been alleged before this subcommittee, forced labour may have been used in 2008 by a subcontractor, the state-owned Segen Construction Company, in the building of mine facilities.
If forced labour were indeed used, it would have happened in the following manner. Upon reaching adulthood, all Eritrean nationals are required to perform 18 months of what is called national service. This is partly military service and partly labour on state-run projects or for state-owned enterprises. Pay is nominal and the person is subject to the form of discipline that is typical for military conscripts in any state, including a lack of choice as to employment or place of residence.
At the end of 18 months, most Eritreans are released from national service. Those who are not released continue to be paid nominally and to be subject to military discipline. If any of those who remain in national service were to be used as labour at any foreign-owned mine site, then those workers would in effect be the victims of a regime of forced labour, which is prohibited under article 4 of the Universal Declaration of Human Rights.
This is exactly what has been asserted by the litigants in a case that is now before the British Columbia courts. This ostensible situation is summarized by Human Rights Watch as follows:
Some national service conscripts are assigned to state-owned construction companies who exercise a complete monopoly in the field. International mining firms operating in the country face intense government pressure to engage these contractors to develop some of their project infrastructure. If they do so, they run a pronounced risk of at least indirect involvement in the use—and harsh mistreatment—of forced laborers.
When Nevsun began building its Bisha mine in Eritrea in 2008 it failed to conduct human rights due diligence activity and had only limited human rights safeguards in place. At the government’s insistence the Bisha project engaged Segen Construction Company as a local contractor.
Human Rights Watch reports that when it drew the allegations of forced labour to the attention of Nevsun, the company:
Nevsun has professed itself powerless to compel its contractor to cooperate. When Nevsun sought to interview Segen workers in an effort to reassure itself that the company was not complicit in abuse Segen refused to allow it. When Nevsun repeatedly sought to investigate the living conditions of Segen workers at their camp near the mine site Segen barred them from entering. When the Bisha project attempted to carry out new construction work in early 2012 without re-engaging Segen the Eritrean government ordered it to stop. Segen was brought back on.
These circumstances may be responsible for Dimitri Lascaris, co-counsel for the plaintiffs in the British Columbia litigation, to state:
In my view, the mere act of doing business with a government that is as reprehensible as Eritrea's is morally repugnant. No ethical corporation would seek to profit from a relationship with such a repressive regime.
Regrettably, my own three-day visit to the Bisha mine site does not put me in a position of being able to shed any additional light on what may have taken place in 2008. As the subcommittee knows, the matter is before the courts.
I can comment with greater confidence on whether or not such abuses could happen today at Bisha. If the answer to this question were yes, then Mr. Lascaris's suggestions regarding the morality of doing business in Eritrea today would be justified, but if sufficient safeguards have now been put in place so that the kinds of abuses that may have taken place in 2008 could not occur today, then Canadian business activity in Eritrea's mining sector should be regarded as being up to world standards. All other mining activity in the country, as long as it follows this model, should be regarded as being entirely moral.
The importance of this question extends beyond the Bisha mine site. Bisha was the first mine in Eritrea, but it will not be the last. Several mines operated by Canadian, Chinese, and Australian firms are planned and more will follow.
I can't comment on any of these other projects, but my impression is that it is highly unlikely that forced labour is being used at present, or will be used in the future, by state-owned subcontractors at the Bisha mine, for five reasons.
First, and perhaps most important, the state of Eritrea has adopted a 40% ownership stake in the Bisha mining corporation, or BMC. This 60:40 profit division means that the state has a strong financial incentive to ensure a fully capitalized mine capable of expansion that is in full compliance with international standards.
If Nevsun faces negative publicity back in Canada, and in consequence is unable to raise capital, then the mining activity back in Eritrea, including the development of the smaller nearby mineral deposits that could keep the mines or processing facilities operating for many years, will dry out. This would lead to an immediate and substantial hit on revenues flowing to the government.
From the point of view of foreigners, internal operations of the Eritrean government, including internal financial operations, are opaque. We can't know what is going on within the government. We can't know, for example, whether the people who run the Segen Construction Company have a financial stake in using conscripted labour to keep their costs low. We can know that the much larger revenue stream that comes from maximizing the profits from the mine itself will outweigh by many multiples the marginal revenue enhancements theoretically produced via these conscripts at Segen. In short, the state now has a strong financial incentive to ensure that Segen conducts its activities at Bisha in conformity with international standards.
Second, Nevsun has attempted to exceed the required standards for reporting by retaining the services of Lloyd Lipsett, an international human rights lawyer based in Montreal, who travels regularly to Bisha to conduct on-site audits known as human rights impact assessments. In order to conform to his profession's ethical standards, he must conduct these assessments in conformity with the established set of internationally recognized standards. Mr. Lipsett testified before this committee on June 5, 2014, and his written reports are also available for consideration.
I also had the opportunity to watch on site how he conducts his work, and I can confirm that a number of issues relating to the ongoing monitoring of Segen's activities have now been resolved, including access to Segen's barracks and cafeteria, which we visited, and the ability to conduct one-on-one confidential interviews with Segen employees. Should the situation worsen, or access start to be denied, Mr. Lipsett would be able to report this immediately, and indeed he would be under a professional obligation to do so.
Third, even in the absence of Mr. Lipsett's periodic visits, some basic oversight can be maintained by Nevsun itself. The Segen labourers are employed on site at the Bisha refining plant, and hence work in easy view of Nevsun management. Nevsun can therefore insist on the use of safety equipment, such as hard hats, goggles, and steel-toe boots.
I should mention that much of the resistance to using this kind of equipment appears to me to come not from Segen management, but from the employees themselves, who find it uncomfortable. Having experienced the weather at the mine site, which is very warm, I have some sympathy for their desire not to wear more heavy equipment than they need to.
Fourth, there are some practical considerations that make the use of conscripted labour less economical than an outside observer might guess. Bisha is located in an area populated by pastoralists—herdsmen, essentially—with no alternative source of monetary income. For unskilled or casual labour, local villages are the obvious source of labourers, who will be happy to work for very modest wages paid in cash, as nobody has a bank account. Local villagers at the mine site are bused home each night, saving Segen the cost of room and board. With the availability of such a low-cost source of free labour, by which I mean non-indentured labour, indentured or forced labour drawn from the local population is simply not competitive.
The alternative might be indentured labourers drawn from other parts of the country, but these workers would have to be housed and fed, which costs money, and in addition would face language barriers that would produce considerable workplace inefficiencies as Eritrea has 11 different language groups.
Fifth, perhaps as a consequence of the first of the five factors I noted above, the finance ministry and the economy ministry seem to have been trying to develop methods of keeping a close eye on Segen's activities. I visited two of the five villages surrounding the mine in company with the ambassador and Lloyd Lipsett. In each village, the Bisha mining corporation maintains an employment office staffed by a resident of the village who keeps track of BMC job opportunities. To be clear, these are not Segen job opportunities, and the person is a Bisha mining corporation employee, not a Segen employee. This individual keeps a list of local residents who would like to work for BMC. There is a long list, and we investigated one of these lists.
While I was in Eritrea, Todd Romaine, the vice-president for social responsibility from Nevsun, received a phone call from one of the ministries informing him that the government would like to set up a system of reporting under which the BMC village representative would take on the additional responsibility of collecting any information from villagers about abuses occurring at Segen's operations at the mine site.
This essentially allows an entirely alternative route for anonymous complaints from villagers employed at Segen, which would then flow through BMC. I thought it was quite a clever mechanism.
Taken together, these seem to be a robust set of safeguards and might serve as a useful model for other Canadian-owned mining operations elsewhere in Eritrea.
Thank you, Mr. Chair.