With a massive increase in mining imminent for the “transition” minerals required for global decarbonisation, African countries should not to fall into the same value traps as they did previously, where communities were left out of the benefits, the Mining Indaba heard yesterday.
The conference heard yesterday that the global transition to renewable energy and decarbonisation is resulting in massive shortfalls in certain minerals such as copper, nickel, cobalt, lithium and graphite, and many African countries hold significant unmined reserves of these minerals.
Daniel Mulé, Oxfam’s policy lead for extractive industries tax and transparency, told delegates that the international civil society organisation has scaled up work to promote and accelerate a just energy transition, and also as it pertains to extraction of minerals that will be required for the transition.
He said there were serious risks with mineral extraction in Africa that would need to be addressed, to prevent “greenwashing” by countries and companies in the extraction of these minerals.
Firstly, there needed to be broader support and investment in the circular economy and recycling, and an acceptance that not all the mineral requirements need to be mined and used for the first time in the transition. Development of the new mineral reserves would come at great costs, he said.
Secondly, mineral extraction needed to take place without a negative impact on indigenous communities, something that had happened in previous mining booms in Africa.
He said that already some 700 “transition mineral” projects were located in places that would impact indigenous communities.
Of 45 battery mineral companies surveyed, only one had a policy that even mentioned the need for free prior community consent for development, Mulé said.
He said mining companies also needed to avoid the too aggressive use of tax incentives and tax avoidance structures, so that the benefits of the mining did eventually reach the communities where the minerals were being mined.
He said it was important that the communities affected be put at the centre of mining developments.
He said also that corruption, despite initiatives by many African countries, remained an issue in the African mining sector, and a large proportion of the minerals being extracted on the continent were in countries with weak governance and oversight.
Vanessa Ushie, the acting director of the African Development Bank’s African Natural Resources Management and Investment Centre, said the landscape of mining on the continent was changing fast, and African countries should consider not developing policies on the extraction of “green minerals” on their own, but rather as a collective.
This would promote policy certainty for the investors, and would ensure the continent stood to gain from the value chain of the mining development.
She said some regional economic development frameworks were already incorporating new mining policies for “green minerals” and this should be encouraged.
She said the trend of vertical integration by some vehicle and other renewable energy equipment manufacturers to ensure accountability and sustainability of their products would also help manage the risks associated with the failures of previous mining policies on the continent.
The increasing focus by the investment community on improved ESG (environment, social and governance) would also help reduce the risk of mining investment in Africa.
“We can’t get away from good governance. Certainty in licensing and contracts is what attracts the investors,” she said, as previously, a problem was the sudden overturning of mining policies every time there was a regime change.
She said the African Development Bank would do what it could to further collaboration among countries to prevent the problems of the past associated with mining from reoccurring.
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