Minerals and Africa’s Development - Africa Mining Vision

1 Economic Commission for AfricaAfrican Union Minerals and Africa s DevelopmentThe International Study Group Report on Africa s mineral RegimesMinerals and Africa s DevelopmentThe International Study Group Report on Africa s mineral RegimesEconomic Commission for AfricaAfrican Union United Nations Economic Commission for Africa , 2011 Addis Ababa, EthiopiaAll rights reservedFirst printing November 2011 Material in this publication may be freely quoted or reprinted. Acknowledgement is requested, together with a copy of the and printed by Publications and Conference Management Section (PCMS), Economic Commission for photo: IC Publications/African BusinessOrdering informationTo order copies of Minerals and Africa s Development : !e International Study Group Report on Africa s mineral Regimes by the Economic Commission for Africa , please contact:Publications:Economic Commission for Box 3001 Addis Ababa, EthiopiaTel: +251 11 544-9900 Fax: +251 11 551-4416E-mail: ixForeword xiiiAcknowledgements xiiiExecutive Summary 11.

2 Introduction 52. Africa s Minerals : history and search for direction 9 Evolution of African Mining 11 Mining on the eve of the colonial period 11!e colonial creation of export Mining 12!e role of the colonial state in African Mining 13A"er the Second World War 13!e early post-colonial decades 14A more liberal space for foreign investment 15 What was needed in the 1990s? 15 Results of reform mixed at best 17 From past results to renewed approaches 193. Global trends 21 Demand for mineral commodities 21 Global distribution of demand 21 Demand conclusions for the future 24 Supply of mineral commodities 26 Global distribution of supply 26 Supply conclusions for the future 29 Exploration and mine Development 30 Pro!les and control of Mining companies 33 Table of ContentsivMINERALS AND Africa S Development !e International Study Group Report on Africa s mineral RegimesPrices and pro!ts 34 Leading global policy initiatives 36!e China story 36 Old hands: !e United States, EU and Japan 38 India 40 Latin America 42 Policy implications 434.

3 Mining in Africa : managing the impacts 45"e environmental and social impacts of Mining 46!e environmental impacts 46!e social impacts 49 Regulating the environmental and social impacts of Mining 50 Protected areas 50 Environmental and social impact assessments 52 Public participation 54 Access to information 57 Addressing the Minerals and con#icts link 58 Mining and human rights 59 Mining and employment 61 Resource productivity 63 Policy implications 645. Artisanal and Small-Scale Mining in Africa 67De!nition 67"e global position 68 Pro!le in Africa 68 Challenges in Africa 70 Policy challenges 70 Technical capacity and access to appropriate technology 70 Lack of $nancing 71 Inadequate access to exploration and Mining areas 72Di%culties in accessing markets 72 Con#ict Minerals 72 Women s and child labour issues 74 Self-reinforcing nature of challenges 75 Addressing the challenges: Some country initiatives 75 Policy implications 79vTable of Contents6. Corporate Social responsibility initiatives 81 Evolution of CSR as a tenet of sustainable Development 82 Intergovernmental processes and frameworks 82 Other initiatives and frameworks 84 Government legislation 85 Promoting social and community Development 85 CSR and Development e#ectiveness 87 Policy implications 887.

4 Capture, Management and Sharing of mineral Revenue 91 Capturing revenue 91 Overview 91 mineral revenue and tax instruments 92 Tax stabilization 95 Optimizing mineral revenue and linkages through price discovery 95 Managing revenue 96 Revenue impacts 96 Revenue transparency 97 Sharing revenue among local communities 98 Policy implications 998. Optimizing mineral -based Linkages 101 Conceptualizing and quantifying mineral -based linkages 102 Types of linkages 102 Quantifying mineral sector impacts 107 Changing perspectives on mineral -based linkages in Africa 107 Constraints to developing linkages continent-wide 108 Poor resource infrastructure 109 Constraints to trade 109 Inhibitors to downstream value addition 110 Impediments to securing upstream inputs 110 Human resource de$ciencies 110 Spatial linkages 111 Policy implications 1129. International Trade and Investment Issues 115"e context 116Ta r i#s 116 Non-tari# barriers 118viMINERALS AND Africa S Development !e International Study Group Report on Africa s mineral RegimesExport taxes 119 Foreign investment regulation and domestic policy space 121 Performance requirements 122 Performance requirements and BITs 123 Performance requirements in EPAs 125 Expropriation provisions 126 Investor state dispute settlement 126 Policy implications 12710.

5 mineral Management: "e Power of Institutions 129 Rethinking the role of institutions to meet Development objectives 129 Institutions promoting mineral -based linkages 130 Traditional institutional roles in Mining 133 Negotiating contracts 134 Regulating government discretion in awarding mineral rights 136 Other governance challenges 137 Policy implications 13811. Regional and Sub-regional Strategies in mineral Policy Harmonization 141"e integration landscape in Africa 14 2 Moves to harmonize sub-regional mineral policies 14 6 Southern African Development Community 14 6 Economic Community of West African States 14 6 West African Economic and Monetary Union 147 East African Community 14 8 Mano River Union 14 8 Lessons and policy options 14 812. Looking ahead: Key Challenges and Policy Messages 151 Africa s Mining legacy and the search for a new Development approach 151 Optimizing mineral linkages needs a conscious policy approach 151"e global Mining industry: opportunities still exist 152 Boosting the contribution from artisanal and small-scale Mining 152 Preventing and managing Mining impacts 153 Strengthening corporate social responsibility 153 Improving governance 153 Paying attention to implications of international trade and investment regimes 154 Harnessing the bene!

6 Ts of regional cooperation and integration 154 Final words 154viiTable of ContentsReferences 155 Appendices 169 Appendix A: Members of ISG and principal contributors 169 Appendix B :Summary report on the Big Table meeting, 2007 171 Appendix C: Terms of reference of the ISG 177 Appendix D: Extracts from the Lagos Plan of Action for the Economic Development of Africa (1980 -2000) 182 Appendix E: Main mineral deposits of Africa 184 Appendix F: mineral Materials Ranked by Net Import Reliance - 2010 186 Appendix G: State/private control of Mining of selected Minerals 1975-2006 188 Appendix H: State/private control of re!ning of selected Minerals 1975-2006 189 Appendix I: Environmental and Social issues in Mining regimes in selected African countries 191 Appendix J: Canadian Roundtable Process on CSR and the Canadian Extractive Industries in Developing Countries 204 Appendix K: Extracts from YAOUNDE Vision 206ixixAcronymsAfDB Africa Development BankAICD Australian Institute of Company DirectorsAMP Africa Mining PartnershipAMV Africa Mining VisionANZCERTA Australia New Zealand Closer Economic Agreement APRM Africa Peer Review MechanismASM Artisanal and Small-scale MiningAUC Africa Union CommissionBIT Bilateral Investment TreatyBMFOM Bureau Minier de la France d Outre-MerBNP Banque Nationale de ParisCARICOM Caribbean CommunityCARIFORUM Caribbean ForumCASM Communities and Small-scale MiningCDM Clean Development MechanismCIC China Investment CorporationCMC Community Mining CodeCMP Common Mining PolicyCODESRIA Council for the Development of Social Science Research in AfricaCOMESA Common Market for Eastern and Southern AfricaCRS Corporate Social ResponsibilityCSI Corporate Social InvestmentCSIS Centre for Strategic and International StudiesCSN Companhia Sider rgica NacionalDDI Diverging Diamond Interchange EAC East Africa CommunityEC

7 European CommissionECOWAS Economic Community of West African StatesECSC European Coal and Steel CommunityEIA Environmental Impact AssessmentEMDP ECOWAS mineral Development PolicyEPA Economic Partnership AgreementFDI Foreign Direct InvestmentFTA Free Trade AreaxMINERALS AND Africa S Development !e International Study Group Report on Africa s mineral RegimesGATS General Agreement in Trade in ServicesGATT General Agreement on Tari&s and TradeGDP Gross Domestic ProductGEODESA Geo-science Data Compilation in Eastern and Southern AfricaHSRC Human Sciences Research CouncilICEM International Federation of Chemical, Energy, Mine and General Workers UnionICGLR International Conference on the Great Lakes RegionICMM International Council for Mining and MetalsIFC International Finance CorporationIIED International Institute for Environment and DevelopmentILO International Labour OrganizationISG International Study GroupIUCN International Union for the Conservation of Nature and Natural ResourcesJNMC Jinchuan Group LtdJOGMEC Japanese Oil.

8 Gas and Metals National CorporationJP John PierpontKPCS Kimberly Process Certi$cation SchemeLDCs Least Developed CountriesLSM Large-scale MiningMDGs Millennium Development GoalsMIFERMA Societe Anonyme des Mines de Fer de MauritanieMIP Minimum Integration ProgrammeMMSD Mining , Minerals and Sustainable DevelopmentMRU Mano River UnionNAFTA North America Free Trade AgreementNAMA Non-Agricultural Market AccessNEPAD New Partnership for Africa s DevelopmentNGO Non-Governmental OrganizationODI Overseas Development InstituteOECD Organization for Economic Cooperation and DevelopmentPA N FAC T Pan-African Factual Database ManagementPGM Platinum Group Metal PMG Parliamentary Monitoring GroupPTA Preferential Trade AgreementR&D Research and DevelopmentRBS Royal Bank of ScotlandREACH Regulatory Framework for the Registration, Evaluation and Authorization of ChemicalsREC Regional Economic CommunityRMCs Regional Member Countries RRT Resource Rent TaxRSDIP Regional SDI programmeSACU Southern African Customs UnionSADC Southern African Development CommunitySARW Southern African Resources WatchSDI Spatial Development InitiativeSEAMIC Southern and Eastern Africa mineral CentrexiAcronymsSIA Social Impact AssessmentSME Small and Medium Enterprises SRSG Special Representative of the UN Secretary-GeneralTNC Trans National CompaniesTRIMs Agreement on Trade Related Investment MeasuresUN United NationsUNCTAD United Nations Conference on Trade and DevelopmentUNECA United Nations Economic Commission for AfricaUNEP United Nations Environment ProgrammeUNIDO United Nations Industrial Development OrganizationUNRISD United Nations Research Institute for Social DevelopmentUS United StatesUSGS Geological SurveyWA E M U West African Economic and Monetary UnionWTO World Trade OrganizationZCCM

9 Zambia Consolidated Copper MinesxiiixiiiForewordTHE Development OF mineral resources can have very di&erent implications, and consequences, for com-munities, governments, the mine developers themselves and even countries and regions in which Mining activities taking place. A comparative perspective reveals not only the large divergence in the interests of various stakehold-ers, but the wide range of conditions under which mineral exploitation takes place, especially in Africa . !e many competing interests, and outcomes, suggest the importance of a shared Vision to deliberately, and proac-tively, create the policy space which secures the interests of stakeholders at all levels. In Africa , for far too long, it has been taken as given that there are always losers and winners in mineral extraction processes. Certainly the broader interests of some stakeholders, notably communi-ties and perhaps even states, have been far from secure. Africa s high levels of poverty, its severe infrastructural de$cits, and its continuing weak voice in negotiating mineral Development contracts are ample evidence of this.

10 !e Africa Mining Vision , adopted by the Heads of State and Government in February 2009, seeks to change all this. It advocates for Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic Development . At the centre of the Vision is a developmental state that inte-grates the Mining sector into broader social and economic developmental processes. !is is an attempt not only to address the sector s isolation from mainstream social and economic activities, but to create win-win outcomes for all the many lessons to be learnt from the Nordic countries is that resource-based industrialization is pos-sible. But Africa s socio-economic environment is very dif-ferent. Africa faces numerous entry barriers and a dearth of capacity. Yet fundamentally, Africa has to shi" focus from simply mineral extraction to much broader devel-opmental imperatives in which mineral policy integrates with Development policy.