Mining Weekly

African mineral resources Ministers speaking at this year’s Africa Down Under Conference reiterated the importance of creating meaningful stakeholder collaboration, achievable only through continued efforts to open dialogue between government, the private sector and civil society, says law firm ENSafrica natural resources and environment director Ntsiki Adonisi-Kgame.

She notes that initiating the process of collaboration is often as simple as identifying the key stakeholders in a region and arranging a roundtable discussion where every party is given the opportunity to voice its needs and concerns. “Finding the mutually beneficial middle ground may be more complicated, but it is not impossible and it is imperative. Mining is the biggest vehicle for driving economic growth in Africa. We are making progress, but there is still work to be done.”

Adonisi-Kgame notes that, in the past, there have been instances of mining companies coming into African countries, extracting minerals and leaving without benefiting the host communities in any way. However, there is increasing awareness about empowerment and the need to mine sustainably and responsibly to the benefit of the environment, society and the economy.

These benefits must, however, be meaningful within context, and key to achieving this is shifting the mindset of the private sector, where there has been a tendency by some mining companies to view their economic and social obligations to the African countries in which they operate as a ‘tick-box’ exercise. Rather than simply meeting the lowest-level criteria for mining in a region or assuming what is needed by the host community, Adonisi-Kgame stresses that companies must take the time to interact with the people affected by their operations to enable them to express their needs.

Companies also need to provide support for communities beyond simply donating finances through initiatives that, for example, facilitate skills transfer and build the capacity of local suppliers. “Empower- ment has many layers and companies need to be attuned to this if they are to make a meaningful contribution to host communities. Empowerment cannot simply be about fulfilling the requirements to do business – it must be integrated into the company’s entire approach to doing business,” she says.

Ensuring Mutually Beneficial Partnerships
International mining companies’ willingness to invest in such a comprehensive endeavour, however, depends heavily on the business environment provided by a host country. “African countries are rich in mineral resources, but that does not necessarily mean they have the infrastructure necessary to exploit them. Investors aren’t interested in orebodies only – the ease of doing business is imperative and the stability of a country’s regulatory framework has significant bearing on its attractiveness,” says Adonisi-Kgame.

She stresses that mining is, by nature, capital intensive and a long-term investment, and points out that investors require reassurance that fiscal regimes will not change substantially over the period during which they are active in a country. Adonisi-Kgame notes that African countries have managed to provide this stability with regard to mineral royalty tax payments, with only Kenya, Zambia and Zimbabwe having changed their mining royalty rates in recent years. However, political volatility and corruption remain significant and there are widespread obstacles when it comes to attracting foreign investors to Africa.

She points out that all the continent’s policymakers need to be aligned to the goals of the mining sector, highlighting that African countries must ensure that they are speaking “one language” to investors with regard to delineating the regulations and requirements for doing business in their domiciles. “In the South African context, if the Mineral Resources Minister is saying one thing and the Chamber of Mines is saying another, this uncertainty will deter investors.”

Further, governments and host communities cannot make limitless demands on mining companies. Ultimately, shareholders must have returns on their investments and host communities must benefit from socioeconomic investment.

Held in Perth, Australia, from September 6 to 8, this year’s Africa Down Under Conference was the fifteenth iteration of the event, which aims to foster partnerships between Africa and Australia with regard to mining and energy in Africa. Event organiser Paydirt Media notes that the conference was well attended by African and Australian government representatives, who took the opportunity to enhance their respective sectors through high-level interactions with key players responsible for driving mining development throughout Africa.