The annual mining indaba – a Zulu word for gathering - at Cape Town in South Africa is an African success story: it is a unique forum for meeting Ministers from virtually all African countries involved in mining and Chief Executive Officers (CEO)s from mining companies, large, medium and small. It also brings together the independent voices of expert commentators, international development organisations and regional or international Non-Governmental Organizations (NGO)s. With more than 7,500 delegates this year’s three day event – with the theme of ‘Investing in African Mining’ - is the African counterpart to the kind of mega-networking event that can be found in other continents where mining is playing a growing role in fostering economic development and poverty alleviation.
Yet some are desperately unhappy about it. On the first day of the event, which I was invited to attend, a crowd of demonstrators marched along a nearby street and entered the area outside the conference building, shouting and chanting, holding up placards for delegates to see (please see videos above). Hand-held loudspeakers carried their words through the air punctuated by chants that might have come from Shaka’s Zulu army as it prepared to rout an enemy. Wearing orange and blue T-shirts these men and women dazzled the bystanders with their energy and enthusiasm. They reminded me of striking employees I once saw in Santiago de Chile outside my hotel, complaining about pay, and banging pots and pans, singing happy songs. At first I thought they were having a party. Here too, there was singing, chanting, banging of drums and gyrating human bodies. Looking into their eyes, you could see their commitment – but remarkably given the uncompromising words on their placards there was no hint of violence. In the best sense, it was democracy in action.
The slogans on the placards were uncompromising: “Our Mineral Resources – Our Future!”; “If it can’t happen in Canada why can it happen here?”; “Remember the Miners of Marikana!” (in reference to the platinum mine in South Africa where 37 striking miners were shot by police last year). The demonstrators referred to themselves as the Alternative Mining Indaba. The protesters were claiming that the government and the mining sector were placing profits ahead of people, the environment, and sustainability. They were addressed by the Anglican Bishop of Pretoria, Joe Seoka, who told the audience on the steps of the conference centre: “We are also objecting that this indaba only has the government, the investors (in the mining sector) and those who control the mines. There are no union or labour representatives”. He claimed that the real owners of the mineral resources – “the people of South Africa” were not represented.
The demonstrators’ actions and slogans highlighted four issues for me: firstly, the differences between South Africa and the rest of the continent; secondly, the incidence of conflict in the mining sector; thirdly, the need to manage expectations and the role of education in this process, and finally the role of the small scale mining sector. Mining in South Africa has been established on a large scale for many decades, but for a fair number of countries represented at the indaba mining is a much more recent industry. The long commodities boom in the last decade has triggered investment in new areas, and suddenly countries like Madagascar, Ghana and Mozambique face exciting new prospects for revenues and spin-off development from their mining industries.
By contrast, investment in South African mining during the same period has been flat. Ministers from many countries were making it clear to delegates that they welcomed investors. Many were in the process of updating their existing laws or introducing new ones to respond to the expected investment flows. But, there is no denying that like South Africa they are very sensitive to any suggestion that the ‘people’ are not getting their fair share of the benefits, even where the benefits from production have not yet emerged. A second aspect that strikes the outside observer is the nature of conflict in the mining sector. The Marikana tragedy and subsequent strikes have highlighted the extreme dissatisfaction by many workers about job cuts and pay in the platinum, gold and coal industries. This is unlikely to go away soon as a source of conflict. Nor is this a uniquely South African problem. There have been conflicts in other parts of Africa. Tanzania is one example of this. There are a myriad of reasons for these conflicts, which are quite different in character from the kind of military conflicts we have seen in the past. If the costs of mining are local, there will be resentment when the benefits appear to accrue to and remain at the centre. Perceptions are usually local in countries where the nation state is a fairly recent fact. A speaker from the International Finance Corporation (IFC) was candid in telling delegates he expects these conflicts to increase in the near term. It is a small step from this to the third topic – how to manage expectations? The demonstrators rightly thought that the lion’s share of benefits from mining should go to Africans. But this is hardly original, and their governments would surely agree. At the same time, if the same people want the capital and expertise from foreign investors, they need to understand what investors expect and how arrangements are typically designed to keep both parties happy, preferably over the long term. Or they can go it alone, taking much longer to develop the same resources and ‘learning by doing’, a costly route but certainly one that some might prefer to take. The authors of the African Mining Vision have done a lot to try to raise awareness of these issues among Africans, emphasising the importance of education to ensure that the right expertise is present in Africa to reduce dependence on outside sources. It was a pleasure to see at the indaba how much credibility this project has built up in a very short time. They are in the forefront of thinkers who believe that specialist education should be based as much as possible in African institutions rather than abroad.
Partnerships between existing education providers and such institutions can speed up the transition to this desirable goal. The category of ‘artisanal and small scale miners’ or ASM is now understood to include tens of millions of workers around the world, analogous to subsistence agriculture. The Ghana Minister for Mines was openly positive about the contribution such workers make to the country and generally there is more appreciation that these largely unregulated workers are a source of benefits rather than a problem. On the fringes of the indaba the Inter-Governmental Forum (IGF) (an EI Source Book partner) organised a constructive debate on issues that included this one. The World Gold Council organised a similar event but more exclusively focussed on ASM. Many NGOs participated in the resulting debates.
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The demonstrators arrived just after South African Minister of Mines Susan Shabangu had given her opening speech to a packed hall of thousands of delegates. Her speech is uploaded to the website so you can read it word for word. Afterwards, the Minister and her senior colleagues held a press conference across the road in the Westin Hotel. I was privileged to be there and hear how she fielded some tricky questions. The main subject was the proposed ‘Mineral and Petroleum Resources Development Draft Amendment Bill’, circulated for consultation and designed to amend the major Act for the sector of ten years ago.
More of this below, but to a non-South African, the Minister’s comments on the Kimberley Process Certification Scheme were extremely interesting. She has taken the chair of this Scheme – which was one of the very first initiatives to use transparency requirements to track so-called ‘blood diamonds’ (rough diamonds used by rebel movements to finance wars against legitimate governments) and restricting their import from states where they were used to support conflict. Faced with a critical question about the achievements of this Process, which continues to attract international criticism, the Minister robustly defended it, claiming that it had brought about peace in Africa; that it had helped to bring about stability in several countries and contributed to ensuring that Charles Taylor (the former President of Liberia) had been brought before the International Court in The Hague. On the deaths at Marikana last year, a journalist put a question to the Minister that speculated about a possible repetition if unrest breaks out again in South African mines. She invited the general secretary of the National Union of Mineworkers to comment, which he did (an indication that unions were in fact present at the indaba; indeed, the delegation was staying at the same hotel as me). The hot topic at the press conference was the draft amendment Bill, aiming at changing South African mining legislation itself [see above], and the Minister received a number of questions on this. The intentions of the Bill are to remove ambiguities in the existing law, to streamline administrative processes, and to improve the regulatory regime. Critics argue it does the opposite. It sets up an export licensing system probably aimed at iron ore and coal, although it is not clear from the draft which minerals it is targeted at. It requires ministerial consent prior to the transfer of any interest in a listed company which holds a prospecting or mining right. On the hydrocarbons side, the Bill abolishes the state regulatory agency for petroleum, and transfers its powers to nine regional managers in the Ministry itself. It also gives a free carried interest to the state in all new exploration and production licences. The latter is perhaps unsurprising given the current level of interest on the African East Coast, but the institutional change is a bit surprising. Indonesia has recently done something similar, but no-one seems to think it is an improvement on an independent regulatory body. The export restrictions are interesting. They fly in the face of the assumptions on which bodies like the World Trade Organization (WTO) were based. Yet, with respect to strategic resources such as minerals, there are quite a few governments (and not just in Africa) that would prefer to see them used at home. The arguments are clearly political and not economic – or at least that is how it appears to a non-economist. They may create problems for South Africa in relation to its (WTO) membership, but apparently that is something which the drafters are prepared to face, if such problems do arise. There were many grumbles from investors in the corridors at the indaba about the investment climate in South Africa. The economic facts certainly support their concern. The dilemma that the Government faces seems to be one of taking measures that ease the many social tensions around the mining sector in the country without causing too much damage to the investment climate: some damage seems to be a price they are prepared to pay. To be fair to them, it is an incredibly difficult balancing act they have to perform.
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China! Everywhere one hears of the Chinese in Africa. At the indaba there was a grand reception held by the Ministry of Land and Resources in China, with a number of Chinese mining companies present. They gave me a lapel badge which I wore during the reception. Since 2008, Chinese investment in African mining has gone from nowhere to having a high degree of visibility, challenging the traditional hegemony of the Western mining companies in Africa in the process. The investment model has usually been a ‘resources for infrastructure’ one. In return for investment in infrastructure the investor acquires rights to explore, extract and dispose of the resource (in very simple terms). For Africa this is attractive since it has an infrastructure deficit in most parts of the continent. Many countries simply cannot develop their potential because of the infrastructure constraints. Mining projects require enormous amounts of infrastructure and have the potential to act as a catalyst for wider economic development. So, now, non-Chinese investors are taking time to review this approach. One of CEPMLP’s Global Faculty, Stéphane Brabant, gave a presentation on just this subject, ‘Resource-for-Infrastructure Deals’, which attracted a great deal of attention. Stéphane (a partner at Herbert Smith Freehills) reviewed specific examples of this approach to investment, explaining their pros and cons. Happily, he was able to relate this to both Francophone and English-speaking parts of Africa.
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One thing that the Alternative Indaba protesters have not understood is the extent to which the indaba now attracts independent minds and critical thinkers. For an academic like myself it is becoming the real value of participating. Whether these are academics, consultants, representatives from NGOs, international institutions, or journalists, these independent and critical thinkers appear to be growing in number and do much to make the event a stimulating one. At one reception I met Duncan Clarke and we talked about his latest book on Africa, Africa’s Future: Darkness to Destiny. Duncan is always keen to challenge simplistic but widely prevalent (usually Western) views of Africa. His last book ‘Crude Continent’, about oil in Africa contained some rare, complimentary remarks about Angola, which has often been criticised in relation to transparency. His views were much more nuanced and highlighted the many challenges faced by the country since its civil war in the not too distant past. Elsewhere, our Global Faculty members Magnus Erickson and David Humphreys were giving talks that sketched out overviews of the mining sector. They were panoramic and highly informative, as well as being independent and critical. David was a former chief economist at Rio Tinto and then at Norilsk Nickel. Like Magnus, he is now an independent consultant (when he is not visiting CEPMLP to deliver lectures to enthralled students). Other independent minds at the indaba included academics from several Australian universities, such as Western Australia and Curtin, both in Perth, and Queensland, which has a highly regarded Centre for Social Responsibility in Mining, a partner to the Source Book; also present were professors from McGill University in Canada, and from the ever-dynamic (& EI Source Book partner organization) Vale Center for Sustainable Investment at Columbia University in New York. It was a real delight to see so many CEPMLP alumni and global faculty members at the indaba. Leonard Kalindekafe, who obtained his PhD with us some years ago, is now the Permanent Secretary of the Ministry of Mines in Malawi. He introduced me to the Minister, the Hon. John Bande, and some of his colleagues at the Inter-Governmental Forum which he Chairs and which is an EI Source Book partner organization. It has blossomed recently and now has almost 50 member countries. They have produced a Mining Policy Framework which is well worth a review.
Why was I there? I gave a talk on public-private partnerships in mining education at the invitation of (another EI Source Book partner organization) The World Bank, which held a two day session before the formal opening of the indaba. The idea of this (which will lead to a report in the coming weeks) is that education to develop skills in African mining can be increasingly based in African institutions, rather than abroad, and facilitated by funding from the private sector. The topic is rooted in the African Mining Vision and aroused a lot of interest among participants in the well attended event. This is an ongoing study which will I hope feed into the debate on specialist education in Africa, please see below. As you can see from my own thoughts above, I do not think the indaba is a victim of its own success. Probably more could be done to involve parties who were not present or at least not very visible. However, it remains a terrific advert for South Africa on the continent and globally, and for visitors like myself it was a unique learning experience. I am delighted I went there, and hope I can return.