African mining: the future beyond the 2016 Indaba in Cape Town

By Editorial Board - 23 February 2016 at 7:01 pm
African mining: the future beyond the 2016 Indaba in Cape Town

The 2016 Mining Indaba was held February 8th to 11th in South Africa amidst a crucial time for the African minerals industry, the African continent, and the wider international economy.  The Indaba evidences the immense growth of mining in Africa’s recent past, but questions remain surrounding future of the industry more broadly. Though the African continent enjoys extensive resources – holding approximately a third of the world’s mineral reserves  – the sector has been embattled by concerns over how best to manage the growing export demand from Asia, worker conditions, as well as mining’s broader place in the African economies of the future. To explore the questions surrounding African mining, an overview of Indaba is first required.

Mining Indaba organisers spoke of a desire to achieve numerous aims for the sector.  “We are proud that Mining Indaba has been the platform providing the catalyst for expansion. After two decades, it is a benchmark of its kind, having become much larger and more significant than simply just an event”, said Jonathan Moore, Mining Indaba Managing Director. While a cynic may remark labelling an industry conference a “benchmark” and more than “just an event” is merely good PR; the statistics behind the Indaba affirm its significance to African industry.

Officially titled the Investing in African Mining Indaba, the Indaba is now held to be the largest mining event in the world. Operating for over 20 years, with 400 sponsors – with leading miners Anglo American Platinum, Eurasian Resources Group, Newmont Africa, and Rio Tinto among many others represented – and over 7,000 professionals in attendance, the event affirms African mining is truly big business; and set to grow ever bigger. Yet, though the statistics speak for themselves, the event need be viewed in the context alongside the challenges that remain in Africa’s future. If the region can effectively navigate these challenges the promise of mining’s future on the continent may be every bit as bright as the Indaba sought to suggest. Yet, if unable to be addressed – and especially as a number of issues grow more urgent over time – the stability and ongoing profitability of mining within the region is far from guaranteed.

Foremost of these is for the mining sector shall be to maintain a national and regional control over the industry that is of growing need to the world. As Jonathan Moore stated, “As the whole mining investment value chain has been drawn in to participate in recent years, Mining Indaba has truly become where the world connects with African mining.” With a growing global desire for Africa’s mineral wealth beyond the continent – and most notably from the rising superpower of China – the capacity for African mining to address structural issues surrounding its current challenges – and in doing so seeking to ensure future security and stability of the sector – shall be crucial. These loom in a number of areas.

The correlation between economic progress and transparency has been discussed by Africa Times before. Within the African mining sector it is an especially pertinent issue. Though Kenya may aspire to become a “regional hub” of African mining, the capacity to effectively grow a transparent and equitable mining industry within the East African nation shall not be helped by the perception its public sector is one of the most corrupt in the world. Though Zambia may have sought to put behind it the uproar that arose out of alleged abuse of workers in Chinese-owned mines back in 2011, the emergence of a bribery scandal in late 2015 implicating Copperbelt Minister Mwenya Musenge and Mines Minister Christopher Yaluma affirms confidence in the the overall transparency of Zambian mining remained troubled.

Further, while the huge investment and desire for African mineral resources by Beijing has been well documented, the capacity for Africa to respond in event of a heavy withdrawal of Chinese capital from Africa remains uncertain. While brief departures and absences prior may have been withstood, the rapid growth both of African mining contrasted with an forecast slowdown of Chinese economic growth – including the tremors and shocks to the world economy such a slowdown is expected to bring – means it is of growing importance Africa retains a strong regional identity both in its political organisation and economic coordination. As trade between African nations stood at just 10% in 2012 – at such a low level Africa was held to be “the most fragmented continent in the world” –  the shift towards a far greater economic cooperation offers incentive both against unwanted external influence, and for greater economic growth among African nations. In turn, notwithstanding the current strength of African mining, recent history in the mining sector affirms past performance is no indicator of future achievement.

In 2015, iron ore production fell heavily in Australia, a nation that made the mistake of pinning economic expectations of economic growth largely upon a resources boom for the past 15 years. Though this has been a worldwide trend, the danger for Africa is making the mistake in this forthcoming decade that Australia made in its last; the failure to anticipate or plan for an alternative. An insight into two of Africa’s leading economies is telling. In 2015 production of iron ore in South Africa fell by 17.1 percent.  Further North, Nigeria experienced a stark decline across its industry from 2012 to 2015 from earnings of over 300000 million NGN to below 150000. Within just the space of three years, Nigeria experienced an industry-wide contraction and halving of revenue. Not only does this pose problems in the short term (such as job losses), but in the long term has broader implications for the Nigerian nation. With the Nigerian government having indicated prior their aspiration to see the sector reach 10% of GDP in 2020 – the impact of a rapid and substantive downturn in mining across Nigeria’s broader economy and long term economic forecasts is significant.

News of future economic growth is always welcome in Africa, especially within a sphere that can grow wealth and jobs from a unique and exclusively African resource. In turn, no nation or region on earth can claim the perfect administration of their minerals sector, but the rapid growth of mining on the African continent means the need to match that rapid growth with effective regulation is a unique one. Therefore, notwithstanding the turbulent nature of the minerals industry, where can Africa capitalise on growing long term stability while the short term offers much promise? Alongside issues of corruption and transparency, the questions of job security and safe working conditions has also been prominent in the sector. Accordingly, though firm details are not yet announced, the Mine Health and Safety summit to be held in November  announced in the Indaba shall offer an avenue to air these issues, as well as grow awareness of their industry issues more broadly.

Through a greater reach of bodies like the Mine Health and Safety Council there is a practical and straightforward avenue for African nations to grow their mining sectors safety, and therefore their sustainability as an entity. While this does not provide a catch all answer for other issues – nor can it address the dangers posed by nations betting too much of their future on present mining wealth – a more secure structure of industry does bring it the capacity to more effectively weather economic upheaval. As a region of immense potential for growth in mining and other sectors, the greatest issue for Africa now may ultimately be not worrying about future economic growth, but instead ensuring the infrastructure is in place to maintain it as it arrives.

Editorial Board

Editorial Board

Africa Times is an independent participative online news site for Sub-Saharan Africa. We aim to empower all African voices through publishing content by a range of people, from academics to bloggers. We are dedicated to bringing the world an African view on life, up-to-date African news and analysis.

Twitter: @_AfricaTimes

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