Mineral resource extraction in Africa: Continuity and shifts, lessons

Mineral resource extraction in Africa: Continuity and
shifts, lessons

Africa-Canada Forum Symposium
Africa matters: Developing an agenda for Canadian action

September 28th to October 1st, 2008

Abstract

The geological potential and distribution of Africa’s extractive
resources have historically made a good argument for the rush on the
continent. During the period preceding colonial rule, European
governments with immediate and long‐term interest in Africa’s
extractive resources grabbed whatever they thought spelt profit and
value for their economies. They subsequently ran up their flags in
different parts of the continent to establish their political dominance
in order to guarantee permanent commercial influence over Africa’s
extractive resources.

The domination and control of the continent’s extractive resources
through colonial (or apartheid in the specific case of South Africa)
has been replaced by the processes of globalisation in which African
governments participate mainly as receptors of terms and conditions of
trade and investment that prioritise the interests of transnational
capital and external market above that of the continent, its people and
the environment. The distortions reproduced by the processes of
globalisation have generated constant changes and contradictions, even
among the very beneficiaries of the process.

To this en! d, decades of resource extraction in Africa has been
characterised by shifts and continuity. In the specific case of mining,
the context of this paper, important shifts and processes are taking
place over the last decade in Africa not only at the level of
particular nation state or specific policy issue but also in key
international policy making institutions, actors, and policy sites.
While some of the shifts represent recognition of failure of existing
mining frameworks for Africa and therefore offer possibilities and
opportunities for policy autonomy and alternatives which have been
constrained in the past 30 years by policy prescriptions under
structural adjustment, majority of the shifts constitute fundamental
elements of repositioning and consolidating the neo‐liberal agenda for
easy access and control of Africa’s mineral resources.

This paper explores elements of the shifts and continuity and their
bearing on the relative strength and solidarity of Afric! an countries
as well as African civil society, in particular the Afric
a Initiative on Mining, Environment and Society. The paper opens with a
brief discourse of the model of mining in Africa and the balance sheet.
It proceeds to examine the shades of continuity and shifts and conclude
with lessons from AIMES. 2

The model, the balance sheet, and the continuity

Africa and its people should necessarily be the main beneficiaries
of the abundant and rich mineral resources of the continent. Extractive
resources should serve as catalysts and contribute significantly to the
social and economic development of individual countries and communities
in mining areas without undue damage to the diversity of the
environment and social relationship of the people. Unfortunately, the
history of corporate culture of mining in Africa points to the
contrary. From colonial period through independence to structural
adjustment, the model for mineral resource extraction has been
inconsistent with the developmental role of mining.

The chosen model of mineral extraction has over time sought to
prioritise the interest of transnational corporation, their local
agents and political elites above integrated national development,
citizens’ interest and the environment. Essential elements of the
prioritisation include policies which offer protection and increased
incentives for transnational corporation while providing arbitrary
powers for governments.

While post‐independent attempts at nationalisation and increased
state participation may have influenced the ownership structure of the
mining industry in Africa, not much has been achieved in translating
the mineral wealth into building the productive capacity of national
economies and the environment. In areas such as South Africa where
there has been some manifestation of the impact of mining in national
economic transformation, it has occurred with great human and
ecological exploitation by the few who held capital and political
power.

The current process of liberalisation represents a high point of
continuity of the preponderance of corporate interest and their
national agents on Africa’s mineral resources. The process creates
conditions and imposes further lowering of national standards through
the dismantling of the machinery of the state and the constraining of
the space for participatory and predictable public policy choices. In
the global context, for instance, trade related investment measures
under the World Trade Organisation (WTO) and the Economic Partnership
Agreements (EPAs) such as equal treatment while they facilitate the
movement and spread of transnational capital also act to constraint
development of domestic capital and state autonomy to policy choices.

In the specific case of mining, there are efforts to foreclose any
flexibility in national mining policy choices through the promotion of
irreversible investment agreements, and mining contracts across the
continent of Africa. The dominance of corporate interests through
imbalances of trade a! nd investment relationship, and their
accompanying poor balance sheet of the benefits of mining accruing to
African countries represent the continuity. 3

Shades of the shifts

In the experience of Africa, and much of the world, this continuity
has been characterised by constant shifts between different actors and
arenas of decision‐making. This paper isolates two of such shifts for
discussion, both of which have implication for the relative strength of
state capacity for policy choices and civil society advocacy. The two
are shifts of competing interest and shift of discontent and
resistance. On the one hand, the nature of the process of
liberalisation reproduces competing interests among its key architects
and drivers which then triggers a shift of competing interest. On the
other hand, the shift of contestation and resistance is a derivative of
the discontent generated by the process of liberalisation.

Shift of competing ! interest

The rise of the new powers in the South, in particular China and
India, as well as the US Foreign Policy swing masked on War on Terror
(WoT) best illustrate the competing interest among the architects and
drivers of liberalisation. The rise of China and India on the back of
the neoliberal agenda has put up a new challenge to the known powers in
Africa’s mining sector‐Europe, Canada, Australia and South Africa.

With a significant increase in the consumption of various metals and
minerals (20% of total world aluminium flow; 23% of alumina; over 20%
of copper; 10% of nickel; around 22% of zinc; nearly 30% of crude
steel; and one third of the world’s iron ore‐[World Mining Stocks,
November 2005], China has turned to Africa as a favourable supply
destination. Since 2000, more than 700 Chinese companies (large and
small) have set up operations in Africa. China’s trade with Africa
increased by three times, making China the third largest trading
partner for Africa. A large chunk of this investment is go! ing to the
extractive sector, in particular mining and oil. Chinese mining
companies are shopping for platinum in Zimbabwe, copper in Zambia, iron
ore in South Africa, gold in Ghana, oil in Gabon, Angola and Sudan.
Indian mining companies are also growing in Africa Tata has taken over
Highveld in South Africa and the Indian state company NMDC is investing
in Kahama, Tanzania.

Within this last decade there has been a swing in the Foreign Policy
of the United States of America. With the War on Terror affecting oil
flows to the US market, it is turning attention to Africa as
alternative source of oil supply. The US has described the stretched
from Namibia to Mauritania as the New Persian Gulf. As part of its
geo‐political strategy the US is planning to establish military bases
along the new oil corridor in Africa and the President of Liberian is
reported to be bidding for Liberia to become the centre for the new US
Africa command. It is thus no coincidence that so! me of the new oil
discovery countries have become close friends to the United States;
Ghana is typical of this new relationship.

Notwithstanding the fact that the size of capital investment from
China and India in Africa’s mining sector does not compare with that
from Canada, Europe or South Africa the rate of increase coupled with
the swing in the US foreign policy is sending shock waves to the old
players who are also responding by repositioning their strategy for
Africa. Europe is responding by intensifying its negotiations on the
Economic Partnership Agreements with Africa. Through the negotiations,
Europe is cleverly fragmenting the continent into smaller economic
units based on strategic commodities or relative weaknesses of the
region.

This arrangement is meant to diminish any potential of collective
opposition to the agreements. Within the framework of harmonising the
mining policies of the Southern Africa Development Community (SADC),
the European Union (EU) is providing what it called technical support
under its tr! ade and investment promotion in the region.

Perhaps in response to these shifts, Canada has also been
repositioning its strategy for Africa’s mining sector. As part of the
repositioning, Canada has begun bunting one of its key instruments in
Africa i.e. Foreign Investment Promotion and Protection Agreement
(FIPA). These are government to government agreements which serve as
clearing house for the transmission of Canadian corporate interest into
foreign countries. Canada has so far signed about 23 of such investment
agreements with a number of developing countries and is set to extend
the policy programme to Africa beginning with Tanzania, Madagascar,
Ghana and Nigeria.

The Embassy Canadian Foreign Policy Newsweek (March 19th,
2008) reported that Canadian mining interests abroad are at the root of
the government’s recent push to sign Foreign Investment Promotion
and Protection Agreements (FIPA) with developing countries, a
drive that now ! includes Tanzania and Madagascar.
This move is inten
ded to promote and protect about 1,200 Canadian mining companies
operating in about 100 countries, including a large number of African
countries.

These strategic policy moves point to a competition not just between
the new and emerging economic powers but also competition between old
and known architects of liberalisation. Behind what seems a typical
resource capture is a political hegemony, designed to offset each
others’ influence on the continent. Both the new and old are applying
common but differentiated approaches to securing sufficient space on
the continent. While all of them are benefitting from the open‐ended
liberalisation, the new southern economic powers China and Indian are
relying on South‐South rhetoric coupled with what they describe as
"humane grants and loans."

The US is falling back on its War on Terror to make new friends in
order to access Africa’s mineral resources. Europe is making efforts to
build legitimacy o! f liberalisation with essentially the worse form of
the same old core policies of deprivation. Canada is combing partial
strategies from Europe and the new southern economic powers.

The strategic moves also point to the significance of the region as
an important site for policy making and by that also a key source for
the possibility of rolling back the colonial experience. 5

Shifts of discontent

The lived experience of three decades of structural adjustments and
liberalisation of trade and investment has began to push African
governments and known architects of capitalist globalisation towards
recognizing that the model has not met its stated objectives. During
the last decade, this recognition of the weaknesses of the model
triggers shifts of discontents on the continent. In the 1980s, the
champions of capitalist globalisation argued that liberalisation of the
mining sector was intended to serve as catalyst for the economic growth
and! development of mineral endowed African countries through
employment g
eneration, technology transfer, increased government revenue and
foreign exchange earnings. Even when it was obvious that the framework
did not offer any promise of national economic transformation through
sustainable development African countries welcome the concept. They
subsequently organised resources and the machinery of the state to
liberalise, de‐regulate and privatise the mining sector.

Today, the same architects of liberalisation are admitting that the
continent has not benefited from the long years of liberalisation and
are therefore putting forward proposals for a review of Africa’s mining
policy framework. The United Nations Economic Commission for
Africa (UNECA) is leading a process for mining policy review in
Africa. A maiden Africa Union (AU) Ministerial meeting is
scheduled October 13‐17th, 2008 in Addis Ababa, Ethiopia. SADC has
already engaged in a process of harmonising their mining policies and
the institutional s! et up for the delivery on the policy in the
region. UEMOA has concluded a harmonised regional code which
essentially set up some floors and ceilings for fiscal provisions in
national mining codes.

The Economic Community of West African States (ECOWAS) has
just begun its regional mining code process under the aegis of Oxfam
America. The African Mining Partnership (AMP) an
implementation arrangement of the mining chapter of NEPAD has been
running parallel to the Africa Mining Indaba for the past five
years. African governments are also disappointed when they came face to
face with the reality of the recent commodity boom and the
unprecedented mineral price surge that push all the windfalls on
corporate portfolio after several years of dedicated liberalisation.
This disappointment has triggered calls for reviews of mining contracts
and specific fiscal provisions. Liberia, the Democratic Republic of
Congo, Tanzania, Zambia, Sierra Leone, Ghana,! and Mali have either
concluded or are negotiating a review of their m
ining contracts and specific fiscal provisions. 6

Shift of Resistance: Lessons in the context of the Africa
Initiative on mining, Environment and Society (AIMES)

Founded in 1998 at conference organised by Third World
Network‐Africa, AIMES is a network of African organisations and
individuals in association with their global partners in the north and
south engaged in extractive sector advocacy. It offers a framework for
collaboration to promote and strengthen collective actions that advance
community interest, environmental sustainability and development in
relation to the extractive sector, in particular mining.

Ten years ago when AIMES was established, advocacy on Africa’s
extractive sector, in particular mining was dominated by Northern NGOs
and community based organizations which were primarily concerned with
resistance to the destruction of community livelihood and the
environment. AIMES took off on the same path and platf! orm of
resistance. AIMES has been engaged primarily in resistance to the way
non‐renewable resources were being depleted, the quality of life of
communities affected by mining, and the environment. Therefore, much of
the discussions tended to centre on specific experiences and responses
to the livelihood and environmental questions.

The question of integrated national and regional development through
mining and the political relationship in terms of the space for
citizens in policy choices were not strongly brought to the discourse.

Today, there is a significant shift from mainly resistance to a more
conscious alternative agenda. AIMES has over the period brought more
sharply to the regional, continental and international stage the
broader and more fundamental issues of the role of mining in integrated
national and regional development by raising questions around: the
distribution of cost and benefits of mining; the triangular
relationship between the so! cial, economic and environmental
objectives of mining; the more centra
l role of human rights as key international standard for mining; and
the political relationship between the principal actors in the mining
sector‐the state, mining companies, local communities and labour in
determining public policy choices.

Both the long trajectory of resistance and the most recent
alternative agenda have their own dynamics. On the one hand, the
resistance and alternative agenda has cumulative positive outcomes.
Through years of resistance, AIMES has position itself as a pan‐African
political institution and platform for discourse around mining in
Africa. Its discourse has inspired confidence among numerous mining
activists. Its structure and modus operandi have been replicated in a
number of mining and oil extraction countries especially the National
Coalition on Mining (NCOM) in Ghana; the Host Communities
Network (HoCoN) in Nigeria; and the National Extractive
Advocacy Network of Sierra Leone (NEANS) in ! Sierra Leone. Its
collective agenda has led to key policy outcomes. In 2002, AIMES
collective agenda in Tanzania contributed in mounting pressure to free
some colleagues who were put on sedition charges. They have since
remained free persons.

In 2005, our collective agenda in Zambia contributed to the debate
on review of the fiscal policy of Zambia. This debate subsequently
translated into an upward adjustment of the Zambian royalty tax from
0.6% to 3% for copper mines. In Sierra Leone, our collective resistance
contributed to pressure the government to release its own investigation
report of corporate abuse perpetuated by Koidu Holdings a South African
Mining Company operating in Sierra Leone. The rotation of annual
meeting of AIMES has become a platform for knowledge sharing, building
confidence, exploring policy options, re‐framing issues and for
organising for intervention in political processes.

On the other hand, the success comes with some challen! ges. The
question of alternative, fundamental as it is for a better de
al for Africa and its people, presents a challenge to how a collective
alternative agenda addresses the immediate needs and struggles of local
communities. For instance, how do you work with communities to promote
an alternative agenda when their immediate priority is to stop a
company from polluting their water source? The strategy during the last
few years has been to develop two strand agenda; one which is
collective and focusing on common platforms and the other which is
specific to individuals and constituencies.

Secondly, there is often an overlap or tension between building
democratic culture and local institutions for alternative and the more
technocratic approach adopted and advanced by some other NGOs, in
particular northern NGOs in collaboration with their local partners who
may also be participating members of AIMES. For instance, while Publish
What You Pay (PWYP) and Extractive Industries Transparency Initiative
(EITI) address the question of transpa! rency in payments made by
transnational mining companies and receipts by governments they are
very much limited in terms of addressing the levels of payments.

Their remit seem to accept the status‐quo of the fiscal regime and
merely blame the lack or inadequacy of the transformative role of
mining to lack of public knowledge of payments made or receipts by
governments. This frame of reference ignores the fundamental logic of
the flawed regime of mining in Africa.

Today, there is convergence of opinions about the results of thirty
years of structural adjustment and liberalisation of the mining sector.
This convergence is a significant shift. However, the convergence of
opinions is not the same as the convergence about how we approach the
future of mining and what the results should be. A number of questions
could be asked in relation to the different processes currently
ongoing. Is the EU perspective of regional integration fit to Africa’s
notion of ! regionalism? How consistent is the concept of the US Africa
Command to the original notion of the African High Command now African
Standing army, is Africa’s oil resources not the defining factor rather
than the human and territorial security of the African?

How alert are Africa and African policymakers that the humane
capitalism of China or the so called northern values promoted through
foreign direct investment are not their own perceptions which on the
surface appear good but are in fact bad for Africa? These questions
suggest that the approach to the future role of mining despite the
convergence of opinions could mean further erosion of national
standards and capture of ownership of domestic public policy space.

The ECOWAS‐OXFAM America mining code drafting experience best
illustrate how these processes may serve as capture of domestic policy
space. Early this year, we read in the media that Oxfam America and the
Economic Community of West African States (ECOWAS) agreed on April 4,
2008 to collaborate on creating a comm! on mining code for all of West
Africa’. It also said that ‘Oxfam America will oversee the
participation of civil society representatives in the drafting of the
new mining code’. We were very much surprise and concern to learn about
such an agreement at a time we were all united in our opposition to any
form of policy capture that compromises domestic ownership. Our
concerns about the agreement of ECOWAS with Oxfam America are based on
three main elements, which we have proudly made public:

The role that the agreement ascribes to Oxfam America in ECOWAS‐West
African CSOs relations undermines the building of a strong citizenship
culture and its expression in relations between ECOWAS and citizens and
their organisations in the region. The role is colonial and patronizing
and it violates the Southern Campaigning and Advocacy principles that
the global Oxfam family adopted some years ago. Oxfam America’s overall
role in the project strongly manifests some of the very forms of
donor capture of policy making that African government
s supported by their citizens as well as many solidarity voice and
actors from the global North have been campaigning against.

Considering that ECOWAS’ foray into mining policy is relatively new
the design and time table of the project places ECOWAS at the risk of
missing out on a historic opportunity to contribute and benefit from
the continental review of the experience of mining codes across Africa
which has been initiated by the ECA and AU.

The processes are however opportunities for changing the focus and
substance of mining to reflect the interest of the larger African
population away from the parochial interests of local elites and the
mining companies. The collective agenda to intervening in the processes
is an agenda of alternatives parallel with resistance. This
alternatives agenda we believe allows us to look further into the
future in our conception of minerals and mining. But it also requires
more than ever before a much broader alliances building ! beyond
extractives and the narrow geography of Africa without compromising the
strength of our own internal unity as a Pan‐African grouping of
communities and NGOs.

From Africa Files