Australian miners operating in Africa have been warned that social governance is an art, not a science and should not be viewed as an unavoidable PR exercise when engaging with local communities on local exploration and mine development approvals and economic opportunities.

Speaking on the second day of the three day Paydirt 2019 Africa Downunder mining conference in Perth, Gilbert + Tobin Lawyers Partner – Energy and Resources, Mr Phil Edmands, said that across a continent which had suffered the deep rooted and negative impacts of historic colonial settlement, modern day social governance now needed to be part of the DNA of the investing company, not a condescending annoyance.

“The most precious commodity for resource investors in Africa is certainty - and to achieve that requires the delivery of good social governance – which also helps insulate against overreach in changes to African regulatory and fiscal regimes where that doesn’t occur,” Mr Edmands said.

“The skillsets necessary for social governance in a country which still struggles from a lack of local capital formation and development, requires an understanding by Australian participants of Africa’s history, the indelible stain of colonialism and pre-existing attitudes that African peoples were ‘inferior and would benefit from civilising’.

“Africa has also had to manage global reaction to its long fight for economic independence and this has seen the continent pilloried in Western media for failed attempts at such desires for nothing more than wanting their own people to actually fairly share in the riches of African lands.”

Mr Edmands cautioned that for players in modern resource investment in Africa, dependence on foreign capital presented an ongoing risk as many African countries risked remaining subordinate economies within the world economy.

“Political independence doesn’t remove the danger of foreign hegemony, nor foreign capital employing the same “mineral extractive” mindsets no different to those of the former colonial powers,” Mr Edmands said.

“True social governance will provide a modern era context for mining investment and this should include a proper and fair division of resource rent as a critical factor.

“Outcomes that get this wrong won’t endure while fair division will deliver a proper social dividend.”

Mr Edmands also said some broader issues needed to be considered when Australian miners were formulating strategies for engaging with African communities at local, regional and national levels.

A delay in a mining development may not severely impact the proponent miner but could deny local populations much more in the way of stalled or cancelled hospitals, roads, schools etc. funded in part through taxes and other State income foregone.

State revenue could also be foregone or delayed because the State through failing to capture a sufficient portion of the bargaining range on a mining project.

Maximising local employment as much as possible needed to combine with visible sensitivity to local culture and history – including becoming part of local communities rather than just compensating them in socially useful ways for the extraction of resources from their lands.

Mr Edmands encouraged Australian miners to really work on “getting the balance right” and a top mindset of working with private investors and communities and not just rely on central governments as they should not be put in a position of becoming the “meat in the sandwich” in a Company’s social governance aspirations.

Getting the balance right should also include recognising and valuing the major differences between Western and African cultures.

These included:

The concept of land – as a generalisation, Western societies did not have the same concept of land as part of soul and identity African cultures are much more people based

Western culture is about right and wrong – a danger for foreign investors is assuming their ideas are right and they just have to convince counterparties why

There are generally many paths and not everything is reduceable to an economic or mathematical formula.

There’s a need to appreciate the wisdom of other cultures

Acknowledgement of unconscious bias - Colonial powers considered Africans inferior – so it didn’t occur to them to consider the ethics of their treatment of Africans although the world has moved on since then

We all have our biases - Important to recognise this because unless miners truly accepted African people as equal, they could not fully engage with them.