8 minute read
COVER STORY
AFRICAN MINING
INDABA BACK ON SOUTH AFRICAN SHORES
AVUYILE XABADIYA and SHONISANI MANYAGA, economists in the Department of Mineral Resources and Energy, believe that African states stand a good chance of developing African solutions through the Indaba by learning from other mining jurisdictions. To achieve this, the Indaba needs to reshape and influence African policy directives that will transform the mining industry to benefit much of the African population
In May this year, South Africa will host the world’s largest mining investment event – the Investing in African Mining Indaba. A platform in which key mining industry players will converge to discuss the evolution of African mining, the just energy transition, and the role of mining in the reconstruction and recovery of the economy in South Africa, Africa, and the world at large.
This comes two years after the outbreak of the Covid-19 global pandemic, which disrupted the world’s economies and changed the way of doing business worldwide. In fact, the current global economic environment remains uncertain due to the continuing impact of the Coronavirus. Africa has been affected heavily by these economic shocks and its leaders are still orchestrating its recovery plan.
The recovery for most countries on the African continent is taking longer than it is in developed economies – in large part due to the slow vaccination rate within the continent coupled with structural challenges embedded in African countries. It is evident that economies that successfully increased their vaccination rate continue to see improvements in their economic activities. Despite challenges, South Africa has also made progress in this regard, as shown by positive Gross Domestic Product (GDP) growth.
THE ROLE OF THE MINING INDUSTRY
Over the years, the South African mining sector has played a critical role in the advancement of some of the continent’s biggest economic hubs. For example, in South Africa, during Covid-19, government tabled the economic reconstruction and recovery plan, with mining at the centre of that recovery. Mining was the biggest contributing sector into the overall economy, at 11% of GDP.
The mining industry in 2020 employed 451 427 people, excluding indirect employment from mining activities. In the same year, the industry contributed 8.2% (R361.6-billion) to GDP, 3.4% less than 2019 figures, with 11% contribution to GDP coming from goods and services to the mining industry. Despite its huge contribution to the economy, the mining industry continues to experience challenges. Notably, are challenges in the logistical sphere – such as rail, harbour and roads – which has an adverse effect on exports. In Q4:2021, mining was down 3.1%, with the biggest contributors being gold, iron ore and coal, owing to Transnet rail challenges. Mines had to stockpile their produce instead of exporting it. These challenges are being felt across the continent, and at the very least, making it difficult for the continent to trade efficiently with each other.
In order for the continent to fully maximise commodity booms, the rail networks and security within our transporting lines should be prioritised and developed. Progress made in other countries through China’s Belt and Road Initiative (BRI) points us towards one of the strategies we can look to for expansion. It is imperative that we continue to work to change our mining GDP contribution trends in Africa to an increasing trajectory, to mirror other thriving mining jurisdictions such as those in Canada, Brazil and Australia.
THE SOUTHERN REGION OF AFRICA
The southern region of Africa continues the comparative advantage in Platinum Group Metals (PGMs) through the Bushveld Igneous Complex (BIC), in South Africa, and Great Dyke, in Zimbabwe. South Africa contains the world’s largest Chromium reserves, with coal reserves that could last more than 100 years. The Democratic Republic of Congo is Africa’s leading producer of copper. Accordingly, Africa should consider a move to future strategic metals such as copper, nickel, cobalt, rare earth elements/metals, among others.
The Council for Geoscience, which is South Africa’s biggest geoscience research institution, must work hard in assisting other African states, but will need financial resources to help other countries. This will lead to more collaborative efforts in Africa in the mining business. The expansion of South African companies such as Impala Platinum in the region and building of smelters will reduce employment pressure in the country and will also create more employment opportunities for the rest of the continent.
THE INVESTING IN AFRICAN MINING INDABA
The Indaba will need to dig deeper to show how best the continent can continue to benefit from its endowment. Africa deserves an equal opportunity benefit from its mineral endowments for the good of the current and future generations.
The sector must ensure that people meaningfully benefit from these endowments in terms of actual
shareholding, participation and employment. The delegates at the Indaba will need to share working models on several aspects. Accordingly, some presentations we hope to see are those that describe the experiences of successful countries – information on how they have managed to develop their upstream petroleum industry by attracting and ensuring that exploration of oil and gas in their respective countries happens without any hindrances.
We hold a firm view that the discovery of oil and gas on the African continent will be beneficial and will contribute to the African economies. South Africa, Mozambique and Namibia, have all recently announced discoveries of hydrocarbons around their shores, just to mention a few. There can be no doubt that the discovery of these resources will lead to energy security and reduce energy poverty on the continent. Now is the time for African economies to take advantage of the signed African Free Trade Agreement, as with their own natural minerals and energy resources they can solve the much recorded social and economic problems in Africa.
Noting that the Indaba is taking place soon after the World Investment Report showed a devastating 35% decline in investment attractiveness due to the Covid-19 pandemic, shoulders need to be put to the wheel to ensure that we attract investment into the economy of the continent.
Notwithstanding our challenges, African states stand a good chance of developing African solutions through the Indaba by learning from other mining jurisdictions.
To achieve this, the Indaba needs to reshape and influence African policy directives that will transform the mining industry to benefit much of the African population.
Africa has proposed an innovative approach to transform economic sectors such as the mining and energy industries, while addressing carbon emissions, economic inclusion and unemployment.
The African Mining Vision (AMV) adopted by the heads of states in 2009 at the African Union Summit, seeks to increase investment in energy and mining through policies that will facilitate the following: ■ Negotiation of contracts with mining multinationals that generate fair resource rents and stipulate local inputs for operations; making sure workers and communities see real benefits from large-scale industrial mining and that their environment is protected. ■ Livelihoods and will advance integrated rural social and economic development. ■ Attention to all the stages of the value chain of non-renewable mineral resources, from contracts and licenses for exploration and production to integrating mining with a sustainable development plan. The Indaba should seek ways to open the path for the continent to withstand the realities of the resource curse. The scramble for Africa was driven by natural resources and, in the main, mining activities were at the centre. As a result, the colonial powers considered Africa as a strategic source for cheap natural resources for their economic development. The scramble has led to a significant number of natural resources in the form of minerals being exploited for the benefit of colonial powers, and in Africa at the expense of indigenous Africans.
Despite the rapid exploitation, Africa retains significant mineral reserves in the post-colonial rule.
Africa remains the number one source of rare minerals such as those used in technology development to date.
The endowment of these minerals in Africa has turned the continent into a hive of mining activities for local and international mining companies, operating on a small and large scale. They process a wide range of high-quality minerals, such as bauxite, copper, gold, diamonds, coal, Platinum Group Metals, and iron. Although the production from small-scale miners remains low compared to the large-scale miners, the impact on employment by the small miners is still significant.
Both small- and large-scale mining generates complementary economic activities including merchant operations. This contributes to the gross national products and foreign exchange earnings for the economy. The social and economic benefits of mining also play a major role in the development of technology.
CONCLUSION
The Mining Indaba must discuss how smallscale miners can be supported to drive the reconstruction and economic recovery of our economy. There is no doubt that artisanal mining plays an important role in creating employment and as a source of export earnings for countries through the export of minerals.
Artisanal mining like large-scale mining has a strong social economic impact, as it contributes to the economic output of and creates economic stability for the indigenous people in rural areas. This shows that artisanal mining is an important factor in poverty alleviation.
The Indaba happens when the world is considering realistic energy security issues as well as development of domestic energy sources to power their economies. Africa needs to ensure that the energy transition is ‘just’ and that it caters for the social needs of the people. Transitioning from high carbon emissions to low carbon emissions must not plunge Africa into darkness but rather propel the economies into a growth trajectory.
