Can African countries create a new mining order? [Business Africa]
Mining agreements have long been plagued by accusations of unfair terms, where one party – usually investors- wins at the expense of host countries.
Now armed with critical minerals such as cobalt and lithium, African countries are out to rewrite their mining contracts.
They are demanding more in taxes, royalties and profits.
Endowed with the world’s largest cobalt reserves, the Democratic Republic Congo is renegotiating a $6 billion infrastructure-for-minerals deal signed in 2008 with Chinese miners. Through the state auditor, Kinshasa has demanded that the infrastructure investment increase to $20 billion.
The country had already signaled that it was no longer business as usual for miners when it introduced a new mining code in 2018 that rattled Swiss giant Glencore.
In Botswana, President Mokgwetsi Masisi has threatened to sever ties with diamond miner De Beers over profit sharing.
Under the current agreement, the government sells 25% of diamonds mined by Debswana – their joint venture – with the remaining 75% sold by De Beers.
Other mining economies such as South Africa, Zambia, Guinea and Angola have reviewed or looking to renegotiate the terms of their mining agreements with investors.
While the World Bank and IMF advocated liberal mining codes favorable to investors in the 1990s, African countries are now pushing back, demanding more from their resources.
Marisa Lourenco is a political and economic risk analyst with a focus on mining, technology and energy. She joins the show with insights on whether an African-led mining order is possible.
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