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African Nations Sense Upper Hand In Minerals Stand-Off


African Nations Sense Upper Hand In Minerals Stand-Off
Africa’s is the richest continent but it’s wealth is being stolen.

AFRICANGLOBE – African nations with rich reserves of copper and cobalt needed for the shift to electric vehicles sense they have the upper hand in negotiations with mining companies that are struggling to secure better terms.

Days of talks at the Mining Indaba in Cape Town – Africa’s premier mining investment conference – yielded no tangible breakthrough between the miners and governments increasingly keen to reassert control over their natural resources.

Copper and cobalt reserves are giving nations such as Zambia and Democratic Republic of Congo confidence because of the difficulty in finding supplies elsewhere to meet the expected surge in demand. This has emboldened them to seek higher tax revenues from foreign mining companies.

Mark Bristow, CEO of the newly enlarged Barrick Gold, emerged this week as the big miners’ most prominent voice, holding meeting after meeting with mining ministers, culminating in a grand dinner on Wednesday night.

But Bristow declined to be drawn on when he might get a deal in the toughest jurisdictions of Democratic Republic of Congo and Tanzania, whose governments are demanding terms the international mining companies say are untenable.

“You can’t negotiate with a deadline, especially in Africa,” he told reporters. The challenge, he said, was to avoid undoing decades of progress as international lenders start calling in loan repayments, piling the pressure on nations, such as indebted Zambia, and populist governments make sweeping promises to their electorates.

“Everyone has a responsibility to ensure the progress we have seen since the end of the Cold War across Africa,” he told reporters.

“One of the biggest challenges right round the globe is populism and people hanging on to power by promising things that are improbable when it comes to delivering. That puts a lot of stress on a lot of things.”

Bristow has however made clear he is prepared to get rid of less profitable assets, which may be in Africa.

After Zambia announced new mining taxes, Barrick said it was considering all options for its Lumwana copper mine there because the changes would make it hard to generate adequate returns.

New Taxes

Zambia says it is open to discussions but will enforce the new taxes to maximize earnings from its own resources.

While Bristow has been the big miners’ most audible representative in Cape Town, nations rich in mineral resources were represented by Nana Akufo-Addo, president of Ghana, Africa’s biggest gold producer after South Africa.

He said countries such as his had “come of age” and international companies should no longer expect to be given unusual tax advantages in return for the right to mine.

“The people of Africa do not have to be poor for others to be rich,” he said.

But as far as the miners are concerned, Democratic Republic of Congo and Tanzania are demanding far too much.

Gold miner Acacia, majority-owned by Barrick, is in talks with the Tanzanian government over a $190 billion tax claim.

Tanzania sent no senior officials to the Indaba. And Congo stuck to its guns.

On stage with Bristow during a panel on Congo’s new mining code, the secretary-general for mines, Joseph Ikoli, said that, while the government was always open to discussions with its partners, the law, now approved, cannot be changed.

Doing so would require sending it back to parliament, and analysts believe the law’s popularity with the Congolese people make rolling it back politically unpalatable.

In the light of these difficulties, miners said it would take years to re-establish trust, and investment would be driven away for decades. Industry would look for ways to make electric vehicles without cobalt, for example, because so much of it is concentrated in Congo.

“If you look at a map of Africa, the mines are not necessarily built where the best geology is,” said Daniel Betts, managing director of west African gold miner Hummingbird. Instead, they tend to be built where there is political stability.

Many of the African governments remain confident, however, that companies will not go elsewhere, especially once they have already invested heavily in mines.

Asked about foreign companies’ complaints that their business would be damaged by Zambia’s tax changes, Zambia’s Mining Minister Richard Musukwa was dismissive.

“They are always cry babies,” he said.

However, other African nations in need of the kind of infrastructure development and employment big corporations can provide are offering tempting terms.

Ethiopia, for example, is rolling out pro-business reforms after Prime Minister Abiy Ahmed swept into office nearly a year ago.

The nation’s Mines and Petroleum Minister Samuel Urkato said promoting the mining sector had become a priority and indicated further tax incentives were likely.


By: Barbara Lewis And Joe Bavier


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