Foreword

Mining in the SADC region

FOREWORD

The SADC region is endowed with myriad mineral resources that are currently being exploited and more that are yet to be mined. By Vusi Mabena*

The success or failure of mining these resources is, among others, dependent on the policy and legislative frameworks that the different governments in the region are pursuing. Apart from the legislative framework, investment and cost-effective mining are also critical to success.

The region is mining within a global context where there are other mining jurisdictions who are all scrambling for limited investors who have the appetite to invest in exploration and mining. Costcompetitiveness, therefore, is also an important consideration to guarantee that mining in the SADC region attracts the right investors and is able to compete in the global market.

Africa has adopted the Africa Mining Vision (AMV) through the African Union and has left it to the different African regions to apply it in a way that best suits regional conditions and that will ensure sustainability and the prosperity of Africa and its communities.

The SADC region, through the leadership of the SADC secretariat, has taken the lead in domesticating the AMV by drafting and adopting its own Regional Mining Vision (RMV), crafted from the key principles of the AMV. The RMV was adopted in August 2019 at the Summit of the Heads of State of the SADC region. The adoption of the RMV by

Vusi Mabena believes that value chains also need to be competitive enough to enable the mining industry to compete globally

the heads of state is a demonstration of political willingness to ensure that mining and its regional value chains are prosperous in the SADC region. The challenge remains the actual domestication of the RMV at country level.

An RMV is a sensible thing to have if all countries agree to it and make sure that policies and legislation at country level are aligned to it. When the RMV is launched, it finds countries at different stages or levels with regard to their mining policy and legislation. It then becomes a challenge for a country to realign itself to the RMV.

Another major challenge is that countries, as independent Governments in the jurisdictions, drive certain strategies region need to create that are competitive for that country the environment for the and thus make it difficult to adjust its competitive edge to ensure that industry to be attractive it supports other countries in the for both local and region. Another major challenge international investment with the alignment of the RMV is that countries are not always at the same level with their mining trajectory.

A key aspect of mining that is high on the agenda of most mining jurisdictions in the region is transformation, which is characterised differently in different countries. Some countries have a legislated mining charter, which contains

FOREWORD

such elements as: ownership, localisation, socioeconomic development, among others. Successful implementation of such policies and legislation at country level depends on the following conditions for each of the critical elements: • Successful transformation of mining ownership depends on the readiness of local investors to invest in mining, as well as the freedom to disinvest as and when they want. This is usually very difficult in a long-term-driven industry before one can reap the benefits of such investments. Ownership by local investors becomes difficult in economies that are not growing. • The core competence of mining companies is the extraction of raw commodities from the ground. Sometimes, policies related to localisation tend to stretch mining companies beyond their competencies and capabilities, especially in times when demand for commodities is low globally and companies are implementing cost-saving measures.

Sometimes, localisation becomes a challenge in countries that are highly dependent on imported machinery and other products. This leaves the key stakeholders in the mining industry to explore ways of promoting localisation in a way that will not be detrimental to the mining industry. • The mining industry is often accused of environmental degradation and the destruction of communities. For these reasons, the mining industry is under pressure to implement

Socio-economic development strategies for its communities. The mining industry in the SADC is subscribing to the concept of ‘Responsible Mining’,

which ensures that the environment is always rehabilitated and communities are supported with sustainable socio-economic initiatives. The RMV has identified value chains as the key driver of the growth and sustainability of the mining sector in the SADC. The mining sector, together with governments in the region, must work hard to create a conducive environment for the industry to successfully implement value chains without compromising the sovereignty of each state and ensure that all participating countries benefit equally from the value chains. Value chains also need to be competitive enough to enable the mining industry to compete globally.

Linked to value chains is the appropriate infrastructure to enable the easy movement of commodities from one country to next in the region. The region also needs to be ready with the necessary machinery, technology and electricity supply. Governments must be ready to invest in this infrastructure in partnership with other related industries that form part of the value chains.

Mining in the SADC region remains strategically well positioned to provide such commodities as base metals, ferro-metals and precious metals, which are always in demand in the global market. The industry needs to be well positioned to be able to take advantage of the global commodity boom and benefit the region.

Governments in the region need to create the environment for the industry to be attractive for both local and international investment. Life in general is heavily dependent on mining products and the SADC region holds all these life-dependent commodities. It is up the key stakeholders to make sure that mining and the region take advantage and benefit from them.