Mined in Africa – A commentary on the Africa Mining Vision

…It’s locked in the rocks

Minerals in the ground represent potential wealth. And luckily, Africa is blessed with all kinds of ores, gems and fuels locked away, waiting to be liberated. The continental mass is a treasury of bauxite, uranium, gold, platinum, cobalt, diamonds, chromium, manganese, coal, and phosphates to name but a few.

So it is not surprising that mining has come to dominate the export earnings of many African countries. In 2005 minerals accounted for more than 80% of exports in Botswana, Congo, DRC, Guinea, and Sierra Leone and more than 50% in Mali, Mauritania, Mozambique, Namibia and Zambia. By 2008 sustained demand from a burgeoning Chinese economy had seen prices for minerals reach new heights.

But there is puzzle: “If Africa is so resource-rich, how come most of its citizens are so very poor?” Despite the fact that over half of African countries are significant mineral producers, widespread poverty is still the norm.

Meeting the challenge

So the challenge is clear: “how can underground mineral potential translate into actual development for the millions of Africans living on the surface?” There have been many policies and approaches over the years that have begun to grapple with the task, but one of the most promising is the African Mining Vision (AMV).

The Vision was adopted after the very first meeting of African mineral resource development ministers held in Addis Ababa in late 2008 and was subsequently endorsed by the African Heads of State and Government at the February 2009 African Union Summit. As such, it is Africa’s own take on the problem.

What sets the AMV apart is that it extends policy beyond a narrow focus on mining itself. For the AMV there is more to it than to managing the extraction of resources and then finding optimal ways to collect and apportion the revenue.  It is not that these things are not  important – rather, the AMV approaches the issue differently. Central to the AMV approach is to put development outcomes at the heart of mineral regimes.

How does it work? A key point is that it is applicable at many levels. To begin with a small example; when mining contracts are negotiated with foreign investors not only do the right revenue gathering instruments need to be in place, there also needs to be stipulations for local supply of goods and services to the mining operation. The rationale is that this would stimulate the local economy and help prevent mines operating as enclave enterprises.

The bigger picture

But this example hardly does justice to the scale of the ambition evoked by a Mining Vision. If mining is to be the motor of development, that means thinking big. One such big example would be careful planning of the major infrastructure that takes minerals to port. That means planning strategically and asking “why does this road follow this route from mine to port, when if it were planned differently it could also open up potential in export agriculture?”

In fact, many natural resources in Africa are left stranded in this way because they lie far from ports and near no transport routes whatsoever. It is not only mining that has unlocked potential.

But also note how the AMV encourages synergy between mining and other sectors. Development rarely comes from exploiting a single resource – in fact that leads to dependency. Development is about leveraging one profitable business so that it helps another. Being visionary in the AMV sense means looking ahead and planning strategically.

But to be visionary also means expanding your horizons, and for the AMV, one such horizon are Africa’s national frontiers. One of the main reasons why Africa has been held back from developing through industrialisation is that its national markets are relatively small; and there is insufficient demand in a poor country to merit major manufacturing or even much mineral processing. But seen from a regional perspective, huge economies of scale can come into play.

That is why the Africa Union’s NEPAD initiative has set out plans for promoting corridors of development that span nation states and link up major transport routes with mines, power, and ports. In each of these 17 trade super highways, there is an enhanced opportunity for businesses to get established and then to support each other. The Africa Mining Vision embraces this idea of corridors, clusters and linkages, and it calls for mining to be integrated into trade and industrial policy too.

Mining is uniquely placed to become the motor of African development because it is only mining that can raise the kinds of money that is needed to construct the big infrastructure links. Mining can take the lead; it holds the key not only to unlocking the mineral wealth below but also the human capital above.

Vision into Action

This December sees the second session of the African Union Conference on mining matters. African experts in mining and natural resources development, representatives of African Chambers of Mines and Industry, African Private Sector, Academia, UN agencies and NGOs and other partners will join Ministers Responsible for Mineral Resources Development to discuss the implementation of the Africa Mining Vision.

At their disposal they will have a major new report on Minerals and Africa’s Development. The report will become the standard reference on which to base templates, toolkits, guidelines and briefing notes for African policy makers, government officials and other stakeholder involved in formulating and implementing new developmental mineral regimes.

The conference will also agree an Action Plan. Now is the moment when Africa can tilt decisively towards development: it’s time to turn the Africa Mining Vision: into Action.

By Mark Jeffrey