African esource mapping raises questions about benefits

The World Bank says its controversial plan to map Africa’s resources will increase production and help African governments negotiate business deals, but the project raises concerns that the public data will be available for warring factions and the information could be used to increase military strategies in volatile regions through the mining of conflict minerals.

The “billion dollar map”

The World Bank announced its $1 billion plan to approximately 7,800 mining investors, bankers, and lawyers at the 20th annual Investing in Africa Mining Indaba conference  in Cape Town in Februrary.

The plan will use satellites and airborne surveys to map the unexploited resources across the continent, and all the findings will be made available in a public database.

Representatives from the World Bank told Reuters that the mapping would benefit policy makers, investors and African governments. However, as global commodity prices fall, tensions between investors and receiving countries are already quite high and a mapping plan may further increase insecurity in certain regions.

Conflict minerals

mining-slideshow-teaserConflict minerals – such as diamonds and coltan – fund violence and internal conflicts in many regions across Africa and have been a global concern for the better part of the last decade.

In particular, the central and Eastern African region including the Democratic Republic of the Congo, Uganda, Rwanda, Angola and the Central African Republic have been affected by the mining of such minerals.

In these regions, government militaries, rebel groups and militias seize the land to extract resources which can then be used to finance civil conflicts.

Although unrest is still a threat in West Africa, international mining companies continue to operate in the region. The Globe and Mail reports that since 2009 Sama Resources Inc., a Montreal-based company, invested $14 million to explore the Ivory Coast. Two Canadian-owned gold mines have also begun production in the Ivory Coast.

Benefits for recipient nations and governments

Paolo de Sa, a senior mining unit manager at the World Bank told Reuters that African governments would benefit from the mapping plan because the improved knowledge would allow them to better negotiate with mining companies.

Some African governments are increasing their demands on mining companies. The Minister of Mineral Resources for South Africa, Susan Shabangu, said the South African government plans to take a 20 per cent stake in all future oil and gas projects, stating that the percentage is not negotiable.

However, the Wall Street Journal reported that just as African governments announce plans to raise tax rates and adjust ownership structures in the mining industry, mining companies responded with warnings that such measures will dissuade high-risk investments.

Global mining investors say the investment environment is changing and that investors have become more demanding of the projects they support. Various gold and platinum mining companies have recently been forced to shut down mines and lay off workers in response to low prices.

Elaine Dorward King, vice president at the Colorado-based Newmont Mining Corporation told the Wall Street Journal that the company was spending more to find less.

Security unrest in African mines

The African mining industry has received attention over the past months as various mines have erupted into labour strikes, most of which are located in South Africa.

About 80,000 miners walked off the job at the Anglo American Platinum, Impala Platinum, and Lonmin mines in late January, demanding a minimum wage increase to 12,500 rand (about $1,200 USD per month). The companies say the demands, amounting to more than double the current minimum wage, are unrealistic.

South Africa produces 80 per cent of the world’s platinum, and according to Press TV, the current protests are costing the country $36 million daily. BBC reports that South Africa’s mining sector employs over 500,000 people and accounts for nearly one-tenth of the GDP. Similar protests occurred in 2012 in which police shot and killed 34 protesters.

Canadian mining in Africa

According to a report released by Ernst and Young this week, Canada was one of three biggest sources of acquisition deals in the African mining sector during 2012.

The Globe and Mail reported that mining explorers spend less than $5 per square kilometre in Africa compared to $65 per square kilometre in Canada, Australia and Latin America.

Former Quebec premier Jean Charest said Africa is certainly on the minds of a lot of Canadian mining companies. Charest, who negotiated a complex deal for a mining company in Senegal, attended the Mining Indaba.

He said that more Canadian companies than ever see greater opportunities than risks in the African mining industry. However, the current trend at the moment seems to be investing in West African mining rather than South Africa, says the Globe and Mail.

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