Mining in Africa: Communication is key to navigating Africa’s complexities
As developers look for opportunities in larger mining projects in Africa, developers are faced with various levels of complexity that place new hurdles in their path.
Andrew van Zyl believes the mining future holds great prospects for mineral development beyond the historical focus on gold and diamonds.
Speaking at SRK Consulting’s 360 Mining Perspectives last month, Van Zyl said that a mine site in which the end-product can be easily flown out lends itself to a “fairly small operational footprint, a reasonably controlled environment, and a manageable number of interactions with the stakeholders around the mine,”.
It is only when a developer moves towards bulk commodities will the complexity of the situation materialise.
“With commodities like iron ore, mining operations start developing a substantial footprint – often becoming a strategically significant player in the host country’s economic landscape regarding energy and water provision.” Said Van Zyl.
A large initiative in a small economy, such as the Sundance iron ore project, on which SRK served as technical advisors to the government of Cameroon, was conceived as a $7 billion project in a $25 billion economy, which “immediately becomes strategically important to the host country”.
“A mining company taking on this scale of project must address myriad technical and contractual complexities that can’t simply be contracted out; the relevant government agencies are going to want to interact with you directly on these matters, and you must have the insight and capacity to take on this responsibility.”
This means more interaction with government and communities over detailed issues such as compliance and infrastructure, resettlement, employment policies and social investment.
In developing economies, the legal framework often does not accommodate the contractual minutiae that a large mineral project will entail.
“This makes certain activities or arrangements neither legal nor illegal,” he said. “The starting point is then to be part of creating the legal basis for establishing whether and how the details of the project can be implemented. An example might be the mine’s sharing of responsibility with state departments for a train line and load-out port.”
For a clearer picture of local pressures, mining companies must understand broad global trends.
As an example, of Africa’s population is still going to grow relatively rapidly, this will drive the demand for water, food and electricity.
Alongside this, communication technologies are getting faster, simpler, better and more effective.
“We need to ask: How is this going to affect the mining industry in general and the project in particular?” said Van Zyl.
“Most of the world’s as-yet-uncultivated arable land is in Africa; a growing population across the continent will compete for this with outside countries wishing to secure their own long-term access to food. Africa’s low energy consumption per capita is another factor that will change dramatically as more capacity is installed, driving higher standards of living, better education and life expectations.”
With rapid growth comes what Zyl describes as a “valuable opportunity for companies to talk to governments, regulators, communities and other parties about projects and their implications”.
“This process can lay the foundation of understanding who needs to be engaged, what the legal framework looks like, what kind of contracts need to be in place, and what level of capacity-building must be done.” Said Van Zyl.
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