Mining in Africa: developments and outlook 2018

2018-08-23T13:03:11+00:00 August 23rd, 2018|News|
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At LEX Africa’s most recent seminar, members discussed challenges and changes in this progressive sector

African Chrome Fields

African Chrome Fields’ deposit in Zimbabwe is one of the major investments in the country after the political situation has improved.
Image credit: African Chrome Fields

Issues between communities and mining companies are not unique to Africa, particularly in instances where rural land is explored for natural resources.

Chris Stevens, head of mining and resources practice at Werksmans Attorneys – a LEX Africa member in South Africa – chaired an in-depth panel discussion on this and other topics at a seminar held in Johannesburg in June.

“We think community, social, labour and environmental issues are purely in Africa and the rest of the world is pristine and clear of all these problems. But it’s not true. Even in pristine places like Australia and Canada, they have community issues, they have indigenisation issues, they have labour issues, they have terrible environmental issues,” Stevens said.

Stevens posited that the reason why more community issues could be found in Africa than the rest of the world, is because mining companies often seek to develop remote rural areas “…where there is no infrastructure, no towns and often where there are existing indigenous communities that operate according to a specific set of customs and laws, burial traditions and spiritual and religious connections to the land…” that transnational mining companies have to be cognisant of.

Evans Moyo, partner at Scanlen and Holderness – a LEX Africa member in Zimbabwe – said as investor confidence grew in the country (owing to the political change of leadership), the overarching sentiment for mining companies is that ‘Zimbabwe is open for business’.

Moyo said the effect of mining on Zimbabwe’s economy could see the sector accelerate growth. Gold, diamonds, platinum, chrome and lithium form part of Zimbabwe’s 60 natural resources that, if mined, could jumpstart foreign investment in the southern African country. Presently, Zimbabwe’s mining strategy produces an estimated 60% of the country’s annual foreign exchange earnings.

Meyer van den Berg, specialist lawyer in Mineral Law at Koep & Partners in Namibia, said the country’s mining industry indirectly contributes to the livelihood of about 100 000 persons. While mining and exploration is mainly undertaken by the private sector, Epangelo Mining Company is also involved in the industry albeit in a limited manner.

Epangelo is a state-owned mining entity that was created to be a local leader and the largest diversified natural resources company in Namibia’s mining industry.

Van den Berg said new developments in the sector include exploration from Swakop Uranium and positive growth gold production from B2Gold. He said the sector also sees an increased interest in battery minerals mining such as lithium, cobalt, cadmium, graphite and nickel. There was also interest in processing of tailings and consistent interest in the mining of other industrial minerals, dimension stone and semi-precious stones.

In Ghana, mining retained its position as the top domestic revenue earner. The sector accounted for 16.3% of all domestic revenue (together with quarrying). Divine Letsa, head of the construction, infrastructure and transport at Bentsi-Enchill, Letsa & Ankomah told the panel that the total mining fiscal receipts amount to an estimated USD480-million. He said according to Ghana’s revenue authority, there was an increase from GHS696.9-million to GHS969.6-million in corporate income tax receipts and an increase from GHS550.7-million to GHS702.4-million in mineral royalties.

“Government holds a free carried interest of 10% in all mining companies in Ghana,” he added.