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Africa: Africa Mining Vision

AfricaFocus Bulletin
November 12, 2018 (181112)
(Reposted from sources cited below)

Editor's Note

The Africa Mining Vision (AMV) was adopted by Heads of State at the February 2009 African Union summit following the October 2008 meeting of African Ministers responsible for Mineral Resources Development. An action plan was adopted in December 2011, and the African Minerals Development Centre (https://www.uneca.org/amdc) launched in December 2013. The lead role in developing the vision was taken by African professional staff at the United Nations Economic Commission for Africa (UNECA), in consultation not only with African governments but also with civil society organizations and specialists on the mining sector.

This AfricaFocus Bulletin contains a concise summary of the AMV and its context, as well as links to other resources available on the web provided by the African Minerals Development Centre. The text that follows is either taken directly from these official resources or adapted from the sources with additional explanatory wording by the AfricaFocus editor.

Another AfricaFocus Bulletin sent out today by email and available on the web at http://www.africafocus.org/docs18/tax1811.php, contains excerpts on the specific difficulties of taxing the mining sector.

For previous AfricaFocus Bulletins on economic and develoopment issues, visit http://www.africafocus.org/econexp.php


The status quo of the mining industry is well documented visually on-line. Take a look:

Hugh Masekela, Stimela, (video, 7 m)
https://www.youtube.com/watch?v=dv90eZjiSrc

China bets big on Guinea's bauxite (Al Jazeera, 3 m video clip),
https://www.youtube.com/watch?v=p89OE8oJAQk

Children's lives at risk in Tanzania's gold mines (Human Rights Watch, 5 m video clip)
https://www.youtube.com/watch?v=38hbwakHwKY.

The human cost of South Africa's gold mining industry (BBC, 3 m video clip)
http://www.bbc.com/news/av/world-africa-34696669/the-human-cost-of-south-africa-s-mining-industry

Miners Shot Down (video, South Africa, Lonmin, 1 h, 25 m)
https://www.youtube.com/watch?v=EN199WpXBmU

Good Copper, Bad Copper (video, Zambia, Glencore, 53 m)
https://www.youtube.com/watch?v=uamzirLswjk

The Cobalt Pipeline (Washington Post photo feature story, Democratic Republic of Congo, Huayou Cobalt)
https://www.washingtonpost.com/graphics/business/batteries/congo-cobalt-mining-for-lithium-ion-battery/

++++++++++++++++++++++end editor's note+++++++++++++++++

Africa Mining Vision: What is It?

The Africa Mining Vision (AMV) is Africa’s own response to tackling the paradox of great mineral wealth existing side by side with pervasive poverty. It is intended to provide the basis for an alternative policy framework to address the reality that Africa's mineral wealth, as in the days of colonialism, still primarily benefits outside interests, impoverishing those who mine the wealth and leaving only a fraction of the profits for investment in sustainable development of African countries.

The AMV was adopted by Heads of State at the February 2009 African Union summit following the October 2008 meeting of African Ministers responsible for Mineral Resources Development. An action plan was adopted in December 2011, and the African Minerals Development Centre (https://www.uneca.org/amdc) launched in December 2013. The lead role in developing the vision was taken by African professional staff at the United Nations Economic Commission for Africa (UNECA), in consultation not only with African governments but also with civil society organizations and specialists on the mining sector.

The goals of the AMV include:

  • making sure that nations are able to negotiate contracts with mining multinationals that generate fair resource rents and stipulate local inputs for operations,
  • making sure workers and communities see real benefits from large-scale industrial mining and that their environment is protected,
  • harnessing the potential of artisanal and small-scale mining to stimulate local/national entrepreneurship, improve livelihoods and advance integrated rural social and economic development; and
  • opening out mining’s enclave status so that Africa can move from its historic status as an exporter of cheap raw materials to manufacturer and supplier of knowledge-based services.

Achieving these goals requires paying attention to all the stages of the value chain of non-renewable mineral resources, from contracts and licenses for exploration and production to integrating mining with sustainable development plans.

Implementation requires above all action by national African governments. This in turn requires the wide diffusion of the vision and related knowledge to influence the policies of governments and donor agencies and counter conventional wisdom that ignores the need for transforming international mineral value chains. Most of all, implementation will only be successful if there is strong pressure on governments, both from those directly involved in the mining sector and from citizens whose future depends on redirecting resources to sustainable development.

African Mineral Wealth and the Global Economy: Past to Present

From the diamonds and gold in South Africa in the late 19th century to the dependence of smartphones and electric cars on cobalt from the Democratic Republic of the Congo (DRC), Africa's mineral riches have contributed to streams of profit accumulated primarily in global financial capitals.

The list of minerals for which African countries have been major suppliers is long, including

  • Precious metals, such as diamonds (South Africa, Namibia, DRC, Sierra Leone, Botswana, and Zimbabwe) and gold (South Africa, Ghana);
  • Essential metals for manufacturing for over a century, such as copper (Zambia, DRC), chrome (South Africa, Zimbabwe), manganese (South Africa, Gabon, Ghana), vanadium (South Africa), bauxite (Guinea, Ghana), and iron (South Africa, Sierra Leone, Liberia);
  • An essential input for agriculture, namely phosphate (Morocco, occupied Western Sahara);
  • Metals that took on strategic roles in the 20th century, such as uranium for nuclear weapons (South Africa, Namibia, and Niger), and platinum for catalytic converters ( South Africa, Zimbabwe); and
  • Metals essential to today's battery technology, such as cobalt (DRC) and lithium (Zimbabwe).

Demand for cobalt for lithium-ion batteries, less than 3,000 tons in the year 2000, reached almost 33,000 tons in 2015, and is expected to double by 2025, to over 76,000 tons.

During the colonial period, the mining sector in Africa consisted almost entirely of foreign-owned enclaves. The major exception was South Africa, where local white settler controlled the state from 1910 and control of mining was shared by local as well as British and American capital. Even in South Africa, where mining wealth spurred local infrastructure and manufacturing, the economy remained dependent on mineral exports.

After the first wave of African independence in the 1960s, international capital remained dominant in mining in Africa. Despite Botswana's successful effort to win joint control of diamond mining, other efforts, such as nationalization of mines in Ghana and Zambia, were unsuccessful and short-lived. Dependence on expatriate personnel and marketing meant little change in operating practices. Even in South Africa, where political apartheid was ended in 1994 and Black entrepreneurs were added as owners and managers of companies, the head offices of companies moved overseas, and there were no fundamental changes in the structure of the mining industries.

At the beginning of the 21st century, the conventional wisdom of the World Bank, major donors, and international investors still dominated African government policymaking on mining and development. The principle focus of policy was on "attracting new high risk capital from foreign mining companies." This precluded a serious push to break break Africa's concentration on unpredictable primary commodity markets, despite spurts of export growth that sometimes enriched local political elites as well as foreign investors.

The 21st century has been marked by profound shifts in the world economy affecting Africa, including the entry of new powers such as China, Brazil, and India as buyers and investors in African minerals, the exponential spread of smartphones and the internet, and the acceleration of "illicit financial flows" into secrecy jurisdictions (tax havens) around the world. The goal of the Africa Mining Vision is to craft strategies to take advantage of these changes to benefit Africa rather than further entrench dependence and inequality.

African Mineral Wealth and the Global Economy: Present to Future

If the status quo trajectory continues, Africa will not gain its fair share from the future growth of mineral extraction to meet global demand. As stated in the Africa Mining Vision:

"The key element in determining whether or not a resource endowment will be a curse or blessing is the level of governance capacity and the existence of robust institutions."

Africa must shift focus from simply mineral extraction to much broader developmental imperatives in which mineral policy integrates with development policy. The continent’s vast mineral resources can play a transformative role in Africa’s development only if it builds appropriate social and economic development linkages that meet national and regional developmental objectives.

This requires building a comprehensive Africa-based knowledge base of Africa's mineral resources and the global mining sector, elaborating a policy framework that can guide detailed planning and implementation, ensuring the sustainability of mineral production, protecting communities and the environment, and maximizing the equitable collection and spending of public revenues from the sale of mineral products.

It also requires building multiple linkages to break the pattern of a mining enclave cut off from the rest of the economy, namely:

  • Down-stream linkages into mineral beneficiation and manufacturing;
  • Up-stream linkages into mining capital goods, consumables & services industries;
  • Side-stream linkages into infrastructure and skills & technology development.

Primary policy arenas for implementation of the Africa Mining Vision include the following:

  • Contracts and licenses: Currently, negotiations with transnational corporations, required for exploration as well as production and sales, are highly asymmetrical. To counterbalance this reality, African countries must build independent expertise, supplementing their own capacity with the use of independent consultants
  • Regulation of corporate operations: Even in agreement is reached in principle, regulation and ongoing monitoring of all aspects of mineral production are needed, including impacts on communities and the environment, working conditions, and the financial arrangements for sales and taxation.
  • Artisanal and small-scale mining: This sector requires separate and distinct policies, given the dispersion of the mining sites in rural areas, the extent of illegal and/or informal production and child labor, and the impact on the rural population.
  • Taxation of resource rents: Even once agreement is reached on a just division of revenue between profit for transnational corporations and public revenue, it is absolutely essential for governments to be able to detect and prevent "illicit financial flows" through distorted transfer pricing or other accounting manipulations.

Opportunities and Obstacles

The Africa Mining Vision provides an ambitious vision to guide policy. Even more important, it also offers a systematic process designed to engage policymakers at international and national levels with civil society, trade unions, communities, academic researchers, and journalists in shaping its implementation.

Its adoption was preceded by extensive consultations with international initiatives such as the Extractive Industry Transparency Initiative (EITI), Publish What You Pay (PWYP). The African Minerals Development Centre (AMDC), charged with implementation, was launched in December 2013. The AMDC maintains ongoing ties with civil society campaigns such as the Stop the Bleeding Campaign to stop illicit financial flows and the Alternative Mining Indaba, and through Pan-African partners such as the International Trade Union Confederation-Africa and Tax Justice Network-Africa. And there is already a strong foundation for building a knowledge base, laid out in the International Study Group report on Minerals and Africa's Development.

Most important, there are specific plans for implementation at the national level through Country Mining Visions, which provide opportunities to "domesticate" the vision with the aid of consultations at national level. The Country Mining Vision Guidebook lays out clearly defined agendas to address key issues, including

  • Fiscal regime and revenue management;
  • Geological and mineral information systems;
  • Building human and institutional capacity;
  • Artisanal and small-scale mining;
  • Mineral sector governance;
  • Linkages, investment and diversification;
  • Environment and social issues; and
  • Communication and outreach strategy.

Despite the positive direction, the AMV process is still dwarfed by the inertia of the status quo process, epitomized in the annual African Mining Indaba. This gathering brings together African government delegations with delegates from over 2,100 international companies and 400 sponsors.

Although an Alternative Mining Indaba convenes almost 500 civil society and community delegates, and a few panels at the industry Indaba feature alternative perspectives, mining trade unions, civil society, and the Africa Mining Vision are almost invisible at the industry Indaba. And trade unions are hardly represented even at the Alternative Mining Indaba.

For a new vision to be implemented, it must be strengthened by intensification of collaboration among the African Mineral Development Centre, allied national civil servants committed to delivering benefits to their citizenry, and other forces committed to transparency and transformation, including journalists, academics, civil society, and trade unions.

Key resources

Africa Mining Vision
http://www.africaminingvision.org/amv_resources/AMV/Africa_Mining_Vision_English.pdf

Minerals and African Development
https://www.uneca.org/publications/minerals-and-africas-development

Country Mining Vision Guidebook
http://tinyurl.com/yacduny2


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at africafocus@igc.org. Please write to this address to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see http://www.africafocus.org


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