Next week, policymakers, industry executives, civil society actors and development partners will converge on Cape Town, South Africa for the 2024 African Mining Indaba. Now in its 30th year, Indaba is an annual confab, primarily known as a venue for dealmaking and discussions between governments and mining companies.
This year’s theme—“Embracing the power of positive disruption: A bold new future for African mining”—is encouraging. As players like the U.S., EU, China and most recently Gulf oil powers scramble for the continent’s minerals, this time must indeed be different. The history of mining in Africa is riddled with economic, social and environmental injustice, often accompanied by underinvestment and supply disruptions. A triple win—for people in African mining countries, for their environment, and for the energy transition itself—is sorely needed.
Only by reducing investor risks arising from disputes with governments and communities will companies be able to sufficiently increase capital flows into Africa’s mining sector to take full advantage of booming demand.
Civil society organizations and activists at the Alternative Mining Indaba, a very un-corporate parallel Indaba universe, have for years made the case for a better deal for Africans. World leaders are belatedly recognizing the importance of transition mineral governance for ensuring the production of green technology needed for climate change mitigation. At the COP28 climate conference, UN Secretary-General António Guterres stated that “the extraction of critical minerals for the clean energy revolution… must be done in a sustainable, fair and just way.”
Companies must also ensure that Africans get a better deal. Only by reducing investor risks arising from disputes with governments and communities will they be able to sufficiently increase capital flows into the sector to take full advantage of booming demand. And it seems companies are beginning to realize this. At last year’s Indaba, industry executives made frequent reference to “ESG” (environmental, social and governance considerations). And at this year’s edition companies are again queuing up to speak on panels about sustainability.
However, in the last year concrete action has been sporadic at best. This year’s Indaba is a good opportunity for companies to clearly define what actions they will take. Below are some of these actions on value addition, social and environmental protection, and corruption.
Value addition
Value addition—usually meaning the refining of raw commodities into something closer to their final consumable form—is increasingly sought after in most mining nations, as it brings additional revenues, jobs and, in some cases, an opportunity to produce inputs for producers’ domestic economies. African leaders reinforced their call for more value addition to take place on the continent at last year’s inaugural Africa Climate Summit.
To realize these ambitions, African governments must develop a clear and credible mineral-specific strategy. International players such as the U.S. and European Union need to convert memoranda of understanding on mineral supply cooperation with the likes of the Democratic Republic of the Congo and Zambia into concrete action to derisk financing and address other bottlenecks.
However, industry also has a critical role. Companies should:
- Support independent, publicly disclosed value addition feasibility studies. Companies should work with governments to better incorporate value addition planning in the licensing process and ensure transparency at key decision points. Companies, such as those soon to start mining Tanzania’s rare earths and Ghana’s lithium, increasingly agree to some form of scoping of value addition feasibility. But these assessments are often ill-defined and lack clear timeframes, and neither the companies nor government tend to publish them. Independent, published feasibility studies as part of license conditions would not only help governments to manage public expectations when value addition is not feasible but also help them to make value addition more feasible in the longer term by identifying bottlenecks.
- Coordinate. Coordination between mining companies operating in the same or neighboring countries could alleviate challenges of costly infrastructure needs and scale. Guinea’s huge Simandou iron ore project is finally proceeding with at least eight companies coordinating to construct two mines, a railway and a port; but companies in Guinea continue to primarily export bauxite ore despite sufficient scale for large alumina refineries that could bring down costs if they coordinated to supply feedstock. Governments should help to bring companies around the table, but companies themselves can be more proactive in this regard.
Social and environmental protection
Limiting the social and environmental harms of mining is just as crucial as maximizing the benefits. Some mining companies have taken positive, preliminary steps in this area—for example, “nature positive” commitments made by International Council of Mining and Metals (ICMM) members last month. But companies can and must do more. They should:
- Observe and expand mining no-go zones. ICMM members have committed to not exploring or mining in UNESCO world heritage sites and complying with the objectives of legally designated protected areas. However, this falls short, for example, of protecting forests of high conservation value inside and outside of protected areas—a key step for protecting communities and the environment. Nearly 27 percent of the Congo Basin’s intact tropical rainforests overlap with mining concessions. Governments should designate no-go zones, but companies shouldn’t wait for that to act themselves.
- Meaningfully consult with communities. In principle, governments and companies have increasingly recognized the need for “free prior and informed consent” from communities before allowing extraction. However, this engagement often has limited meaning. A recent analysis of 26 African countries found that seven do not require public consultation until after companies have completed a draft environmental and social impact assessment, rather than during the drafting process. Given the importance of community relations for companies’ “social license to operate,” and the expertise that communities bring on managing their local environment, companies should undertake meaningful consultation irrespective of any legal requirements.
- Publish project-level information on impacts. More project-level information will enable greater engagement by local actors directly affected by mining’s social and environmental impacts. The new Global Reporting Initiative (GRI) mining standard, set to launch next week at Indaba, supports this move by emphasizing mine-site reporting on a wide range of impacts such as water, waste and emissions.
Corruption
Corruption stands in the way of a better deal for the people and environment in African mining countries, and with it more minerals to address the climate crisis. Without action, the risk that the scramble for Africa’s minerals fuels corruption is high: corruption allegations have already emerged in relation to the race for Africa’s lithium.
To effectively tackle corruption, companies should, among other actions:
- Reduce the use of agents and intermediaries. Corruption commonly comes in the form of company staff paying bribes to public officials via agents and intermediaries. Companies should follow the example of trader Trafigura, which in 2019 committed to no longer hiring third parties to perform “business development” functions (recently announced bribery charges related to activities in 2009-2011 show why action on corruption at the company was essential). Companies should exert extensive control over relationships with any remaining intermediaries.
- Be transparent. Companies should adopt and champion project-level contract, payment, commodity trading and beneficial ownership transparency in line with the Extractive Industries Transparency Initiative Standard (EITI) to make it easier for journalists, citizens and other accountability actors to detect corruption. While there are examples of good practice, such as Newmont and Rio Tinto, 73 percent of EITI supporting companies still do not meet the expectations on beneficial ownership transparency and 27 percent fall short on contract transparency.
- Ensure strong due diligence to avoid elite capture. In many countries, powerful officials and their allies receive unfair access to the mining sector and its profits, including through influencing the choice of subcontractors and partners. Petrobras, the Brazilian national oil company, has reduced these risks following the “Car Wash” scandal by requiring suppliers to report beneficial ownership information and verifying this information for higher-risk entities—and refusing to engage with any entity whose key personnel or beneficial owners have unmanageable conflicts of interest. Mining companies should follow suit.
As Indaba kicks off on Monday, we hope to see companies embrace the types of positive disruption outlined above to achieve a “triple win.” It’s in everyone’s interest that they do.