In recent decades, mining has been a major driver of improved socioeconomic indicators across the African continent. Over the past 20 years, state-owned Chinese banks have been important investors in developing Africa’s mines and supporting infrastructure.
The COVID-19 pandemic and the associated global economic downturn has probably restricted this flow of funds to Africa in the short- to medium-term, reducing mineral exploration, the development of new mines and limiting the development of major logistical infrastructure intended to facilitate the delivery of African minerals to world markets.
However, reduced mining development might not be that bad after all. It may even create new opportunities for existing mining operations, particularly those supplying copper, chromium, molybdenum, lithium, graphite and cobalt, which are expected to be in high demand to develop clean energy generation and storage technologies. As demands for these minerals increase, supply may be constricted due to these exploration and development constraints.
Provided they are able to survive the economic recession following COVID-19, the future looks bright for these mining operations when the global economy begins to recover. This then begs the question of what Africa’s mining operations must do to survive and reap the rewards of a post-COVID-19 mineral demand.
For one, an increased focus on ESG issues was already well established before the COVID-19 outbreak, particularly in the mining sector. The International Council of Mining and Metals (ICMM) launched the Mining, focusing on various ESG objectives, including biodiversity, diversity, pollution and waste, human rights and mine closure. At the same time that the ICMM introduced the ESG mining standard, two significant global events occurred:
COVID-19 shut down countries and economies, impacting mining as well as many other industries. That impact has been both on ability to operate the mine and loss of demand for the minerals produced. It highlighted the fallibility of labor-intensive industries, which were forced to halt operations due to both rampant spread of the virus in the close confines of underground mines and the vulnerability of the health and social-services infrastructure supporting the miners.
Mining companies that demonstrate their ESG objectives are achieved are more likely to attract investors and customers, while those that do not adapt may be unsupported in the future, notwithstanding their mineral deposits,
In this regard, Africa’s mining companies needs to focus on technological advancements that reduce the number of underground miners, thus reducing the risk of health and safety incidents. This would mean that when the next COVID-19-type event occurs, mining companies would be less affected, as operations continue remotely, with employees separated by a healthy distance or by screens.
Mining companies that are already considering technologies to improve efficiency may gain further competitive advantages by implementing these in response to government regulations regarding the conditions under which their workforces must operate. However, these technologies come at a cost to employment, and Africa desperately needs employment opportunities. Public-participation processes for prospective mining operations in Africa often include quietly desperate individuals looking to the mine for employment, to help feed their families. Sometimes, and especially if layoffs are looming, desperation leads to tearing up a mine’s social license and a revolt against its operations.
It is impossible to predict what future crises will affect the mining industry, although most point to climate change either directly or indirectly. Incorporating ESG risks and benefits into corporate strategies can help mining companies enjoy the benefits of technology, diversity and sustainability while building resilience and agility against future challenges.
