African Mines: how to avoid the extractive trap?

This change will involve strategic overhaul. It will be necessary to establish solid regional partnerships; impose industrial counterparties; develop logistics infrastructure; consolidate government agencies that deal with mining, environmental, social, and tax regulations; and increase the energy supply. These were the levers mentioned by Julien Gourdon, Head Economist at AFD, Associate Researcher at Cerdi, and co-author of “Africa’s Mining Potential,” and by Thomas Lassourd, who directs the Global Mining Tax Initiative within the secretariat of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).

The capacity to activate these various levers is essential. As Julien Gourdon says, “The way in which African countries design their mining policies is still too disconnected from industrial dynamics.” However, he also notes that launching initiatives for mineral processing in the countries where these investments are made will help create greater added value and generate local and regional economic benefits that will in turn enhance the sustainability of investments in Africa.

But ambition is not enough. Without infrastructure and cheap reliable energy, local processing will remain a dream – all the more so because the mining value chain is becoming increasingly competitive. “In many cases, the best economic option will be to maximize mining income so as to reinvest it in other economic sectors in which the countries have comparative advantages,” says Thomas Lassourd. Meanwhile, Philippe Bosse states the need for realistic assessments rather than for overoptimistic promises. He points out the often-mentioned example of Botswana, which some decades ago was able to negotiate the local size of its diamonds with its partners, illustrating a rather successful contractual sovereignty at the time. It acts as proof that a well-designed strategy can open up advantageous opportunities for all parties over the long term.

Artisanal mining remains a blind spot. With over 10 million workers compared to 200,000 in the formal sector, artisanal mining is hardly marginal when we talk about extractive mining in Africa. As Philippe Bosse says, “We must stop thinking of artisanal miners as an informal and secondary category.” Including them in a managed, respectful, and structured strategy is more than essential: it’s in fact vital if the African countries are to remain in charge of the value captured from mining. The challenge is to regulate artisanal mining without crushing it; to support it without dispossessing it; and to make it a lever for local development, often in remote areas.

“We can’t call for an energy transition and refuse to discuss the externalities of the extractive sector in Africa,” stresses Julien Gourdon with regard to the environmental impacts related to extraction. He also points out that the opportunities linked to critical minerals require the diffusion of environmental, social and governance (ESG) standards to promote more responsible and sustainable practices for all. Without these standards, there is the risk that Africa will become the hidden victim of an ecological transition designed elsewhere. Indeed, if States are not solid enough to oversee the environmental practices of mining companies, ESG standards will remain good intentions without real effect.

To integrate and control impact from extraction, AFD Group applies strict environmental and social requirements that have been inspired by international best practices, in particular through careful selection of the mining projects financed. These projects must demonstrate effective consideration of potential impact on the environment and on local communities. AFD Group financing in the mining sector is moreover conditioned on its compatibility with international climate objectives, especially the low-carbon trajectory and resilience to climate change. Thus, only projects aligned with the Paris Agreement can be supported. AFD has also updated its climate analysis methodology, to better take into account the contribution of certain minerals to the energy transition. The aim is to promote mining that contributes directly to the decarbonization of economies while reducing its environmental footprint.

In Senegal and in the Republic of Congo, for example, Expertise France is implementing a grant of €1 million from the French Ministry for Europe and Foreign Affairs to improve the governance and transparency of extractive industries. In Turkey, Proparco, with cofinancing from the EBRD, is helping improve the carbon footprint of a lead, zinc, and copper mine by financing equipment boosting energy efficiency and renewable energies. This project, for which Proparco has provided a loan of $50 million, is expected to reduce greenhouse gas emissions by an estimated 28,000 tCO2/year. AFD, meanwhile, is providing €800,000 to support technical cooperation between BRGM (the French geological survey) and two provinces in Argentina. The project focuses on a hydrogeological study to determine the conditions for sustainable mining of lithium in the salars (salt lakes).

Training is needed before taking back control. Thomas Lassourd points out that sovereignty requires technical mastery. For credible negotiating power, it is essential to have financers, tax experts, engineers, legal experts familiar with mining, environmentalists, and sociologists. “If we don’t build up a solid administrative sector for mining, the relationship between multinationals and the artisanal mining sector will remain unbalanced,” he says. And, as “Africa’s Mining Potential” sets out, the same model can’t be applied everywhere. According to Thomas Lassourd, mining policies must be designed in Africa based on its own constraints as well as on its own undeniable advantages, and not on models that have been prefabricated, imported, or even imposed.

In short, extraction is something neither to reject, nor accept passively as a deregulated practice. As for AFD Group, it promotes another trajectory for African resources: a trajectory in which sovereignty is built gradually, through reflection, negotiation, development of skills, local investment, and the ability to say “no” when necessary. While Africa does not lack resources and is called upon to play a fundamental role in the global energy transition, it faces the challenge of acquiring the tools and infrastructure enabling it to exploit those resources within balanced partnerships that generate positive socioeconomic benefits for Africans.