The State of the Mining Industry in Africa

Published on 13th February 2018

South Africa’s mining industry was shaken to the core when close to 1000 mineworkers were trapped underground at the Sibanye Gold Mine in Theunissen, Free State province. This unfortunate incident is said to have been caused by a massive power cut following a storm that hit the area. It was a huge relief and immense pleasure to learn that all the mineworkers who were trapped were brought to the surface by Friday morning.  We thank the workers for their courage and commitment during this ordeal. We also extend our gratitude to their loved ones for their patience during the rescue process.

We are also indebted to the rescue workers and the management of the mine for ensuring that there were no fatalities and that all the workers were brought to safety. We must in the same breath, acknowledge that this incident should never have happened. We must take very strict precautionary measures to ensure that such incidents do not occur in the future. I trust that the mining executives and all other relevant stakeholders will investigate the matter and take punitive measures if there was any act of negligence.

We must always bear in mind that where there are no workers, there can be no mining. The lives of the mineworkers must come first. Their lives matter. Our own icon, the late President Nelson Mandela, was once a mineworker at the Crown Mines in Johannesburg. As we celebrate the Year of Nelson Mandela in what would have been his 100th birthday, let us ensure that we establish a lucrative mining industry that is beneficial to all. Let us advance the spirit of goodwill, fair labour practice and mutual beneficiation in the mining industry.

The South African mining industry has been the cornerstone of our economy since the discovery of gold and diamonds in the nineteenth century. Despite the challenges we have encountered in recent years, I strongly believe that this industry has a great potential to play a meaningful role in creating a better and more prosperous South Africa in the foreseeable future.

The people of South Africa adopted the National Development Plan (NDP) as the overarching plan of the country. The NDP, our Vision 2030, recognises mining as a strategic industry with a great potential to create a more dynamic, inclusive and faster growing economy by 2030. The NDP aims to ensure that all South Africans attain a decent standard of living through employment creation, elimination of poverty and reduction of gross inequalities in our society. The mining industry can be a major catalyst for us to overcome these challenges.

There is a symbiotic relationship between South Africa’s NDP, the continent’s Agenda 2063, and the United Nation’s Sustainable Development Goals (SDGs). It is in this respect that I am pleased with the growing stature of the Investing in Africa Mining Indaba. I recognise this Indaba as an important annual forum for governments and businesses in the mining sector to have candid debates and collectively seek strategies to grow our mining sector and, by extension, the economies of African countries. 

This event has become an annual pilgrimage for the key stakeholders in the industry across the continent. This augurs well with our vision as the South African government and for the African continent as a whole. Our objective is to promote active participation and support of key stakeholders in the mining sector in order to steer the industry towards a sustainable development trajectory. We must ensure that the exploitation of our mineral resources benefits the host nations and that the environment is protected from permanent damage.

The mining sector is a strategic sector that has been targeted to contribute towards the continent’s socio-economic growth plans. In 2009, the AU Summit adopted the Africa Mining Vision, which is a strategic plan to ensure the sustainable exploitation of the continent’s natural resources.

Our continent is enriched with a variety of mineral resources, yet multitudes of our people are languishing in the doldrums of poverty. Africa Mining Vision is positioned as Africa’s own response to tackling the paradox of mineral wealth existing aside by side with poverty in many African communities. It is through the implementation of this blue print that Africa can steer its mineral sector towards a sustainable trajectory.

The Africa Mining Vision encourages the development of a knowledge-based African mining sector that catalyses & contributes to the broad-based growth & development of, and is fully integrated into, a single African market. It also envisages a sustainable and well-governed mining sector that effectively garners and deploys resource rents that are safe, healthy, gender and ethnically inclusive, environmentally friendly, socially responsible and appreciated by surrounding communities.

Our mining sector can become a key component of a diversified, vibrant and globally competitive industrializing African economy. In order to achieve this vision, African governments need to use their mining laws to implement it while explicitly expressing their individual national requirements for domestic and international investors to exploit their mineral endowment.

Mineral regulatory frameworks should be clear and transparent with easy to understand licensing arrangements, which guarantee investors security of tenure supported by a transparent legal process. Investors should be assured that their exploration and mining rights will allow them to develop projects which will allow them to trade their produce on profitable terms. At the same time, regulatory regimes must be used to transform ownership and ensure a much more equitable distribution of mining value created for citizens.

Based on the report on a recent study by Deloitte on Mining in Africa, there are approximately thirty mining projects to be developed on the African continent by the end of 2018, totalling an estimated minimum of 18 billion US dollars. Most of these are expected to reach full production by 2018 across different commodities, including Nine copper mines, Four gold mines, Four diamond mines, Three coal mines, Three platinum mines, Two uranium mines, One iron ore mine, One nickel mine, One zinc mine and One potash mine. Approximately 10.5 billion US dollars has already been spent on these projects, with about 29% invested in South Africa, 23% in the Democratic Republic of Congo (DRC), 8% in Mauritania, 8% in Namibia, 8% in Zimbabwe and 7% in Zambia.

The development of mining projects cannot be the sole domain of the mining investor. African mining countries and mining corporations must establish long term sustainable partnerships that are beneficial to both shareholders and citizens of the host country. Mining must create a nexus between meeting shareholder expectations, stable regulatory regimes, sustainability and supporting the attainment of the host nation’s development objectives, the socio-economic contribution and investment in the people residing near mining operations, investment in local development projects using various instruments aimed at localizing the mining sector’s benefits. This enables mining projects to play a crucial role in supporting  national economic development aspirations through a shared vision.

Modern day corporations rely on a social contract with their social partners to ensure their operations are accepted within society.  To fully comprehend the social license to operate all stakeholders of a mining company this includes directors, financiers, fund managers, investment advisors need to ensure a Social Due Diligence (SDD) has been conducted successfully before and continuously during the life of a mine to ensure uninterrupted and successful business practice. 

The basis of a social license to operate is premised on micro level details as opposed to a higher level approach and a need for mining companies to get a better understanding of the local environment,  to ensure the fair and transparent sharing of the Mine’s benefits with the local population, to have a clear understanding of land rights, to understand competing interests between illegal and artisanal miners, to be aware of the potential environmental impacts which may emanate from the mining project and to safeguard the mining company’s reputation from other communities where it also has operations. 

Most entities have already nestled this awareness within their businesses by establishing Sustainable Development (SD) or Corporate Social Responsibility (CSR) departments and publishing their socio economic development programs in their annual reports for society to recognise their socio-economic contribution.

Government’s central role is to ensure mineral resource exploitation contributes towards long – term political and economic stability. The African Mining Vision is such a  vehicle to take us there, as it recognises government’s role in the integration of the mining industry into a nation’s economy through the development of mineral linkages to other sectors of the economy and the advancement of the country’s geo-surveying capacity.

As we deliberate in this Indaba, I trust that we will be able address difficult questions relating to the rapid changes brought about by new innovations in the mining industry. The increasing rise of Electric Vehicles is contributing to a global demand of cobalt and the associated plug in car battery storage solutions has boosted the global demand for lithium. While this is exciting, we must understand what it means for traditional minerals such as those used in our traditional fuel emitting vehicles, platinum being used in catalytic converters to decrease fuel emissions.

We must ask ourselves how will we manage the impact on jobs as a result of lower demand of the conventional commodities and how companies will deal with the negative impact on the value of their portfolios. The Investing in Africa Mining Indaba is such a convenient platform for governments and the private sector to deliberate on such pertinent issues in the mining industry. We must objectively assess the impact of mining in our economies and plan its future growth on the continent.

In my capacity as the Chairperson of the Inter-Ministerial Committee (IMC) for the Revitalisation of Distressed Mining Communities and Labour Sending Areas, I will do my best to unblock any obstacles to development and steer the sector towards the attainment of our collective vision. As leaders of various African governments, we must harmonize our efforts and cherish a common vision for the mining sector. We must garner increased foreign direct investment and establish a strong relationship with the mining companies working on the continent that promotes our social and economic goals

We are in need of increased trade and investment in order to be on par with the growth targets as set out in the NDP, the AU Agenda 2063, as well as the UN’s Sustainable Development Goals. The more thriving our mining companies are in business, the better the economic standing of their countries.

Let the mining industry flourish to inspire rapid economic growth in Africa! 

By Jeff Radebe,

MP, Minister in the Presidency for Planning, Monitoring and Evaluation

Republic of South Africa

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