Columnists

Sting in mineral wealth sharing deals

mining

Africa must ensure that mining deals benefit citizens. FILE PHOTO | AFP

As I write this piece, the Mining Indaba, which is one of the most highly anticipated events in the mining industry, bringing together mining professionals across the world, is happening in Cape Town.

I find myself reflecting on the mining industry in Africa and the broad trends happening in this important sector.

I, in collaboration with some civil society actors, have, lately, been involved in a study on corruption in granting of mining and natural resources concessions in Africa, and how foreign players and governments collude with some elites to exploit the continent's mineral resources.

The trends you will see and what you will read in the literature on the subject reveal that although rarely documented, corruption in the allocation of mining concessions and licences is widespread.

In Kenya’s case, some of the questions we are interrogating in the study include the following. What do we know about the corruption dynamics that underpinned negotiations of oil exploration and mining concessions that are in place today?

Was there transparency when we granted oil exploration blocks in northern Kenya or in the doling out of geothermal permits and concessions to foreign geothermal mining entities in places such as Menengai, Baringo and Longonot?

One of the biggest issues being debated and discussed at the Indaba is the continent’s vision for mining and minerals. What does the current cross-continent supply chain look like? What can foreign investors do to support Africa’s own ambitions?

But what I found most illuminating in the debates and reports are the discussions on topics such as control of minerals in weak governance environments, and the increasing presence of Russian mining companies in Africa and especially the recent exploits of the mercenary entity, Wagner Group on the continent.

Read: State widens tax net to capture artisanal miners

I read somewhere about the expanding interests and activities of Russian companies in Africa and an emerging trend whereby Western companies are withdrawing from mining mainly due to sanctions.

Indeed, exploitation by Russian mining firms and the tactics they employ have become a major topic of discussion because Moscow’s engagement in mining now spans across the continent, with major activities in countries happening in Central Africa Republic (CAR), Sudan, Angola, Zimbabwe, Namibia and the Democratic Republic of Congo.

Investigations group, the Blood Gold Report has just recently published a report documenting how the Wagner Group has expanded mining activities by trading mineral concessions with provision of protection and security services to African elites and leaders — especially in countries with weak governance regimes.

Reports approximate that Wagner’s mining operations in the Central Africa Republic could see the mercenary group’s operations bag an estimated gross value of gold deposits amounting to $ 21.8 billion.

In Sudan, Wagner has taken control of a major gold refinery that has made it become the dominant buyer of unprocessed Sudanese gold, with multiple accounts of Russian military transport planes carrying processed gold out of the country.

I also read somewhere that Moscow’s interest in Sudanese gold has led to further military cooperation between Moscow and Khartoum with an agreement to build a Russian naval logistics hub near the port of Sudan, laying the foundation for further mineral extraction operations.

The Gold Blood Report has reported that in Mali, Wagner forces are being paid in cash by the military regime that took over power in 2021.

The policy implications for Africa are clear.

What can African countries do to ensure that their mining assets give maximum benefits to their citizens instead of being exploited by countries like Russia to advance geopolitical interests?

The Blood Gold Report says Russia has earned more than $2.5 billion since its illegal invasion of Ukraine in February 2022. What strategies should countries adopt and how should policymakers approach the exploitation of minerals needed for the global energy transition?

What steps must we take to guarantee citizens maximum benefits from critical minerals such as lithium, cobalt, copper, manganese and nickel as well as bulk minerals such as coal, iron ore and bauxite?

Read: State sets up special police unit to combat illegal mining

What I find missing from the debates is the dearth of discussion on the subject of sovereign wealth funds to manage mineral resource revenues generated in the continent.

We must debate how to review and come up with better sovereign wealth fund frameworks because most African countries with significant resources are being coerced into signing lopsided production-sharing contracts.

The writer is a former managing editor of The EastAfrican.