Tanzania has been ranked the third in Africa among countries that have adopted new market-friendly mining laws which have led to a surge in new mining investments.
According to the Canadian Fraser Institute’s (Survey of Mining Companies) which mining experts say ranked African countries very highly among the 51 jurisdictions in its mid-2010 survey, Botswana (ranked eighth) was lauded for being ‘excellent and forward looking’ in Africa.
Ghana was ranked 21st, Tanzania 23rd, Namibia 24th, and Zambia 27th. South Africa’s 31st position put it ahead of DRC (40th) and Zimbabwe (46th), according to the survey.
While the survey report says ‘the lights have come on in Africa,’ it points out that they appear to be deeming in major mining jurisdictions, including Australia whose new tax and regulatory regimes are driving more of its miners away.
The report which was revealed in a forum which discussed the fate of mining and miners in Africa in Perth, Western Australia on Thursday says countries in Africa, which were previously considered no-go areas (such as Angola, the Democratic Republic of Congo - DRC, and Mozambique) have attracted a new wave of international investors, explorers and miners wanting to have another look.
Those countries whose recent bloody civil wars resulted in the ‘Kimberley Process’ that tracks ‘blood diamonds’ (Sierra Leone and Liberia, Côte d’Ivoire and Guinea) have all adopted new market-friendly mining laws which have led to a surge in new mining investments.
The forum which discussed the fate of Africa’s minerals and mines was the seventh edition of the “Africa DownUnder Conference”, a yearly rendezvous hosted by Bill Repard, the CEO of Paydirt Media Pty Ltd of Australia, for mining executives, financiers, bankers, brokers, analysts, investors, international and local media, mining service industry, suppliers, mining consultants, and a few government officials and representatives.
Last year, the conference reportedly attracted more than 900 delegates, about 100 exhibitors and a full programme of ‘top-notch speakers,’ a record the organisers hope to exceed by the time this year’s conference ended on Friday.
On the minds of the participants, as always, is how to exploit and maximise profits from Africa’s ‘untold mineral riches,’ namely gold, diamond, copper, silver, iron, zinc, platinum, titanium, tantalum, nickel, lithium, molybdenum, phosphate, and uranium, and so on.
No month passes these days without some policy makers and their industry counterparts and international financial institutions gathering somewhere, from Pretoria to Abuja and from London to Toronto to the global market for Africa’s minerals.
While seriously selling the continent as capitalism’s ‘last frontier,’ some of these ‘champions’ still find it difficult to shed their stereotypical images of Africa. Here’s one example by Repard:
“This ancient land mass of Africa is without question the world’s greatest treasure trove—and has yet to be comprehensively explored using modern techniques… there could not be a better time to explore the options and hear the stories from the people who are unlocking the wealth of the formerly ‘dark continent’. The lights have come on in Africa.”
Rudyard Kipling and Joseph Conrad would be relieved that Australians have yet to abandon the white man’s burden of ‘radiating the light of civilisation to Africans’.
Missing from this Afro-mineral euphoria is the fact that in the 1990s, the World Bank foisted a mining-friendly regime on African countries as a condition for aid. Moreover, as commodity prices recovered after the recent global financial meltdown, several mining jurisdictions have taken steps to increase both regulatory hurdles and taxation, and thus making mining more difficult and costly.
While a few African countries (South Africa and DRC Congo) have tangled with mining companies, most of the continent has remained a mining investors’ haven, eager to welcome any foreign direct investment.
One surprising vacuum in the conference was representation from African countries that have become the destination of a new era of joint ventures with ‘juniors’ and grub-staking in the mining sector, namely Mauritania, Sierra Leone, Liberia, Ghana, Cote d’Ivoire, DR-Congo, Kenya, Uganda, Tanzania, and Zimbabwe, says the report.
‘Junior miners’ are normally a group of investors or sole ownership who scout underdeveloped mineral-rich countries with lax mining laws and entrenched corruption.
Once they acquire mineral rights, they quickly sell to the highest bidder, usually another ‘junior miner’ that wants very little to do with ‘intrusive’ government officials and nosy human rights and environmental NGOs. Institutional investors see juniors as very risky; hence, this category of miners is more likely to ask for special tax deals from cash-strapped governments to help sway potential financial backers.
Their short-term perspective means they must also turn profits faster and be less sensitive to corporate social responsibility. No wonder ministers responsible for mineral resources from Bostwana, Eritrea, Malawi, Mali, Mozambique, Nigeria, Senegal, South Africa, and Zambia were invited to Australia, while representatives of labour, civil society and human rights groups whose forte is sustainable minerals development and verifiable corporate social investments in the mining communities were not.
Sadly, most of the mining companies that either participated or sponsored this year’s parley in Australia belong to the aggressive club of ‘juniors.’ Those who celebrate the upsurge in junior mining interests in Africa often fail to address the compromised quality of foreign direct investment they have injected into Africa’s newly privatised mining sectors. Finally, the organizers of the •Africa DownUnder Conference• should consider inviting a few Chinese mining companies next time round. It could lead them to rethink their smog claim that the Aussies are ‘the best melting-pot for businesses with Africa.