E&MJ contributor Magnus Ericsson, president and co-founder of Stockholm, Sweden-based Raw Materials Group, reports the struggle for African resources has intensified. China and India have aggressively entered the region. Their search for secure supplies may well create new problems in many areas but also opens new opportunities for mineral-rich African countries. If these nations can reform their mineral regimes and strengthen their institutions, a healthy competition could be set up between the new Asian investors and mining companies from Europe and North America, which have traditionally financed and managed mineral development.
Africa must secure more benefits from the predicted future expansion of its mining sector than it has done so far. The increasing demand for mineral resources will mean that prices will remain at high levels for at least another decade. The economic foundations for resource- based development are sound. In addition there is strong, reawakened political interest within the EU, the United States and Japan in securing a stable supply of metals. The African Union (AU) and the UN Economic Commission for Africa (UNECA) are pushing ahead with an initiative to review the region’s mining regimes. All these factors have sparked renewed hope that mining, minerals and metals can catalyze economic and social developments in a way that has not been possible so far.
In a workshop held in Kigali, Rwanda, in early December 2009, the prerequisites for such a development were reviewed. A report, which will be presented to the mining ministers of the AU in 2010—and was scrutinized by stakeholders from all over East Africa—is the result of a two-year effort headed by the UNECA secretariat in Addis Ababa, Ethiopia.
A number of areas are highlighted for action by mining ministers together with their ministries and other stakeholders throughout Africa in cooperation with mining companies and metal consuming countries. The conventional approach limits mineral policy to the extraction of minerals and sharing of revenue from it. But the fundamental objective of harnessing Africa’s mineral resources to promote its economic and social development calls for a much broader framework. This includes a “cross-sectoral” approach integrating the primary sector into the broader economy and integrating mining and processing into local supply chains via side stream linkages; introducing new models for local participation and empowerment and finding ways to channel mineral rents into capital accumulation; making best use of development corridors, improved infrastructure and appropriate levels of technology; exploring means to foster innovation; and applying many other models and processes. Most of the approaches are not new but they are, for the first time, being packaged together in Africa by Africans—in a cooperative manner including all real, potential cooperative partners in the process.
During the workshop examples of recent African mining progress on various scales were presented:
•The organization of the major trans-national companies, ICMM, presented new figures on the benefits to Tanzania of its large-scale gold mining sector. The study concludes that in just eight to nine years, gold mining has become the major economic activity in Tanzania. Although the figures are not uncontested, the industry organization claims that the tax payments by five of the major mines will grow rapidly until 2017 when they will peak at $280 million, three times higher than in 2007. ICMM further points out that projected future re-investments to keep produc-tion at planned levels will require substantial investment through 2034. It is acknowledged that these plans might easily change with future gold price levels and possible tax system changes but the levels are nevertheless high and could become the basis of considerable linkages during a long period of time, provided the authorities plan well ahead.
•The mining sector of Rwanda and its progress in recent years, with strong growth albeit from a very low level, was also highlighted. Mineral exports, mainly tin, coltan and tungsten concentrates, accounted for some 30%–40% of the country’s total exports in 2008. Most mines are still small-scale operations, both open-pit and underground. European companies such as H. Starck of Germany and private companies controlled by South African and East European interests are, however, moving into industrial-mode operations. The opportunities for more exploration and new operators should be ample in this well organized country which is functioning better than many of its neighbors.
Based on the findings of the report, the second phase of the review project will start. Its aim is to develop toolkits, templates, guidelines, briefing notes and other instruments with regard to specific matters of significance and concern in the formulation or revision of African mineral regimes. The optimism in the African mining community is tangible and the hopes for mining to be able to kick-start social and economic developments have not been so high since the 1970s when Algeria and the Non-Aligned movement presented its New Inter-
national Order. Hopefully this time around, 35 years later, expectations will be better founded in a long-term super cycle of minerals and metals demand.