Will Mining Priorities Shift in Africa?

Will Mining Priorities Shift in Africa?
Image by Paul Parsons
South Africa-Cullinan Premier Mine

A new wave of neo-mercantilism and resource nationalism has swept across Southern Africa chilling what had once been considered one of the worlds’ hotspots for mining activity. The changing investment climate maybe to the benefit of West African and Sahel countries as traditional mining investment destinations lose their shine among Russian investors; however Russia and the rest of the BRIC countries are often undeterred.

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“You used to want to be in Southern Africa or in places like DRC or Tanzania now investors are looking elsewhere,” said a British official who spoke to Tzarism, “the Sahel is one of those places which is getting a second look.

Earlier this year in Miami, Jean Sebastien-Jacques the CEO of mining giant Rio Tinto warned of growing resource nationalism: 

“From the DRC and South Africa to Mongolia and Australia [resource nationalism] is gaining momentum,”

The new wave of neo-mercantilism in Africa has not struck all markets. Countries in West Africa have positioned themselves as diamonds in the rough hoping to benefit from the current situation.

The Sahel region and ECOWAS countries seem primed to benefit as investors with experience working in Africa look for other markets to invest in. Russia, however, remains undeterred with its investment in a large scale platinum project in Zimbabwe.

Not so long-ago South Africa was a gem for investors. Not only has mining made the country rich but, the weight of the annual Mining Indaba is still seen as the premiere mining event on the continent was such that Xhosa and Zulu word for discussion has become ubiquitous simply speak of “the Indaba.” 

However, since coming to power South Africa, President Cyril Ramaphosa policies, unfortunately, built a perception that the country’s property rights were less secure. Trump’s Tweets aside, many investors were troubled when the government narrowly backed away from plans for a 1% mining community levy

Elsewhere in the region signs are equally disconcerting. Zambia sent Canada’s First Quantum Minerals a bill of $8.04bn in owed tax for its operation in that country. Across the border in Tanzania, President John Magufuli slapped a $190bn tax bill on Acacia the largest gold miner in Tanzania — a sum that is four times Tanzania’s GDP. The government also banned the export of copper, silver, iron and nickel ore to boost local production. 

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The Sahel and West African Mining conference in the spring of 2018 attracted senior mining officials from several countries. A second such conference is planned for 2019.

“We are opening our country to investors, “ said Abubakar Bawa Bwari, the Minister of State in Nigeria responsible for mining at the inaugural Sahel Mining conference in 2018.

One of the countries is Nigeria which has rarely been considered an important mining destination. The government and international investors have long focused not on solid minerals but, on petroleum. However, the government of Buhari has made mining a key priority. For Nigeria, the minister believes mining is more than just an economic opportunity for the country. It also offers a “third-way” for those seeking employment in regions of Nigeria where herder-farmer conflict is common.

Another country which has shown an interest in further developing its mining potential is Senegal.

“Senegal is well endowed with minerals we have phosphate, gold, clays and industrial minerals and heavy mineral sands and uranium prospects as well,” said Ousmane Cisse Director of Mines & Geology, Ministry of Energy & Mines,” we have an educated population and are a stable country where there is the rule of law. We are one of Africa’s best democracies and the most stable country in West Africa regarding social stability.” 

Given conditions elsewhere in the continent investors may want to take a second look at the ECOWAS region and Sahel states especially if the ongoing trade wars involving the United States, China, and Europe are set to continue. 

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Andrew Benjamin

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