Mining reality is far more nuanced than predators and victims
BUSINESS DAY – Published: 2012/02/13 08:01:42 AM
THERE is nothing quite like a mining road show to get emotions stirred up. This year’s Mining Indaba did not disappoint. Not only were Congolese mining officials beaten up by protesters for being part of an allegedly rigged election last year, but civil society was out in force with its own event, a platform from which to give the capitalists a drubbing.
The civil society debate was, as always, about predators and victims, with the mining companies on one side, the communities on the other and governments somewhere in between.
Political expedience — and history — tend to allow such narrow characterisations of the actors, but the current reality is far more nuanced.
Mining companies have built roads, railway lines, power stations, airports, houses, clinics and schools. New towns are emerging in Zambia, Mozambique and other parts of Africa on the back of mining, creating demand for local goods and services.
While the driver of infrastructure building may be self-interest, it provides associated benefits, often giving an economic lifeline to communities in remote regions.
Dazzled by the apparent profits being made by mining companies, governments and communities expect a lot, ignoring high and rising production costs and the long-term nature of an industry that has to consider all the commodity cycles, not just the boom times. The focus is usually on how to extract more of those profits rather than how they could best benefit future economic development.
The problem is made worse by a lack of transparency on revenues and spending priorities. Mostly, royalties and taxes do not directly benefit the affected areas.
Even as governments put pressure on mines to beneficiate, often they cannot supply sufficient power for the mine, let alone a smelter or refinery. Local content and procurement demands are not accompanied by supply-side measures to address the lack of capacity and skills that forced companies to source goods from SA or overseas in the first place.
Debates about resources in Africa appear to assume that the state is best placed to improve the lot of people in underdeveloped countries. But the evidence suggests that Africans will improve their own lot if there is a proper framework and catalyst for economic activity.
Mining companies are now focusing on how they can be that catalyst rather than the sole source of opportunity. They are also seeking new models that will enable them to add more value to their non mining investments and reduce dependence on the mine.
Talk to any leading mining boss and you will find local development is no longer about pacifying the locals with whom mines co-exist, but about the long-term security of investments.
In the past, community issues tended to be added on to the job of a busy manager. It tended to be a hit-and-miss affair. Now companies such as Anglo American are putting in dedicated teams with the time to talk to communities and local governments to build relationships and improve the effectiveness of their interventions.
Politicians, too, are starting to look at mining as a catalyst for development rather than just as a cash cow.
At a conference in December, African mining ministers joined United Nations agencies, the African Union and others to debate how to build better economies with resource revenues. The discussions were based on the Africa Mining Vision, drawn up by the parties in 2009.
Suggested options include establishing sovereign wealth funds, setting up development corridors along mining routes and developing sideways linkages to the services industry rather than focusing only on industrialisation. They also suggested mining be treated as a cross-cutting sector, rather than as a standalone industry.
Unfortunately, African Union-linked processes seldom survive contact with the ground. But what is important is that the two sides seem to be getting closer in their thinking.
Resources-driven development has become more critical than ever given the high levels of interest internationally (about 240 listed companies on the Australian Stock Exchange alone have projects in Africa) coupled with high commodity prices. Hanging on to knee-jerk stereotypes will be a drag on this thinking.
• Games is CEO of Africa At Work, a research and consulting company.