Mining Africa’s Future

             Africa has been blessed with abundant natural resources, but one might also say that the continent’s blessings have often become a curse.  The concept of a resource curse is one that has been explored quite a bit, including in a Congressional hearing I organized several years ago.

While Africa’s mountains, rivers, volcanoes, lakes, and forests have divided communities and limited large-scale economic development, they also have helped by enabling the creation and spread of vast natural resources. Ancient forests over millions of years have produced fossil fuels such as petroleum, natural gas, and coal. The courses of rivers and the upheavals of surface features have produced deposits of metals such as uranium, iron, copper, zinc, and tin, as well as rock minerals such as phosphates, quartz and calcite, which all have varied uses. In Africa's rocks and soil, aided by volcanic activity, you will find some of the world's greatest treasures – from gold and platinum to diamonds.

            For more than a century, European nations colonized Africa countries and plundered not only agricultural resources such as cocoa, but also resources such as gold and ivory.  When other nations around the world entered into the Industrial Age, refining natural elements into more value-added states, Africa was denied making that leap.  As a result, elements such as cocoa were sold in the raw state and had to be repurchased by the countries that produced it in the first place as processed goods.  That situation is not limited to African countries, though, as other developing countries have experienced the same phenomenon.

            Even after colonialism, studies have shown that countries rich in natural resources are more likely to be poor.  Partly this is because of an over-reliance on commodities whose prices can fluctuate wildly, but also because control of the exploitation of such resources belong to whomever discovered them and can afford to utilize them, usually foreigners or a small group of elite Africans.  Moreover, they usually don’t produce as many jobs as one might think.

            Yet minerals in Africa should be a great boon to African economies if handled wisely. When it comes to mining, Africa’s place in world mining is paramount.  African mining leads the world in production of platinum at 92%, gold at 89% and diamonds at 73%.  We all understand the value of these minerals in jewelry, but they have other uses as well.  Diamonds also have industrial uses.  Gold is used in the production of electronics.  Platinum is used in electrical contacts, fine resistance wires and medical and laboratory instruments. An alloy of platinum and cobalt is used to produce strong permanent magnets.

Additionally, the continent has significant deposits of elements such as cobalt, which also is widely used in batteries and in electroplating, and in its radioactive form is critical in treating cancer. Uranium provides the nuclear fuel used to generate electricity in nuclear power plants.  Chromium is used to harden steel and to manufacture stainless steel (it’s named that because won't rust) and to produce several alloys. Bauxite is an aluminium-rich ore that is used to create aluminum and for production of refractory materials, chemicals or cements. 

More than that, Africa is home to deposits of rare earth minerals such as scandium, yttrium, lanthanum, cerium and lutetium.  Rare earth materials such as dysprosium, neodymium, terbium, europium and yttrium are often critical components of renewable energy hardware. The use of neodymium and dysprosium, for example, are essential to make the powerful generators used in wind technologies. Neodymium and dysprosium also are used to make motors for vehicles.

Tin was discovered approximately 5,500 years ago in Africa, and today, along with tungsten and tantalum, are essential for the cell phones and computers we use in the modern world.

With all this bounty, one would think that Africa’s mineral wealth would benefit its countries and people far more than it has.  Unfortunately, Africa’s mineral industries have not been controlled by Africans for Africans to the extent they should have been.  Today, China has gained a global monopoly on the production of rare earth minerals, largely mined in Africa.  Unlike the colonial times, though, the Chinese didn’t come in and just seize control of mines.  African governments negotiated deals that benefitted China more than their own countries.

After much global criticism of Chinese investment in Africa in recent years, it would seem that the Chinese government is moving toward a more mutually beneficial policy in which technology transfer and sharing of expertise may be more prevalent.  In such a development, one would hope to see mining contracts that benefit African countries more than they have in the past.  Under the right circumstances, American mining companies, using some of the most advanced equipment and techniques on earth, could be great partners in advancing mining in Africa.

But for mining to achieve a more diversified source of financing, including Americans, African governments must respect contracts.  A current case in Sierra Leone undermines that hope, however.  SL Mining, a subsidiary of an American firm, started construction of the first phase of its Marampa iron ore project shortly after being commissioned in January 2019, reviving an historically distressed mine site to produce the highest quality iron ore concentrate in Africa.  But the next month, the Government of Sierra Leone imposed an export ban on the project and soon after cancelled the company’s mining license, alleging breaches under the country’s mining law. 

The Government of Sierra Leone, one of the African countries most likely to benefit from American and other foreign investment in mining, seems determined to ignore a contract, international arbitration and international court rulings.  One hopes that countries such as Zimbabwe, which also stands to gain much from foreign investment in its mining sector, will not follow that same path.  Zimbabwe mines such as Mimosa, Ngezi and Unki represent vast production of platinum.  One hopes that the government will have no cause to regrets that the deals for production will benefit the country and its people as they will those who control those contracts.

Unethical behavior undermines the faith investors need to finance projects to take advantage of Africa vast mineral wealth.  China is investing billions in Africa, including in the mining sector, but that nation cannot develop all of Africa’s mineral resources alone.  Bravura Holdings Ltd., owned by Nigerian billionaire Benedict Peters, has plans for the development of a platinum mine in Selous, and Great Dyke Investments, owned by Russia’s Vi Holding and Zimbabwean investors, has plans for Zimbabwe’s biggest platinum mine, known as the so-called Darwendale project, which lies 65 kilometers (40 miles) from the capital Harare.  In the long run, no major mining project can succeed unless the contracts signed are respected by governments.

Furthermore, governments must ensure that mining projects produce broader benefits for all citizens, as well as prevent ongoing harm to the environment.  New techniques allow for such benefits and must be investigated and implemented by governments on any new mining projects and employed to the extent feasible in current mining projects.

For African countries to benefit from their mineral wealth, better negotiations with international investors from the outset and a commitment to contracts and the rule of law during mining operations will be necessary.  That way, Africa can prevent its resource blessing from becoming its curse.