De-risking the Mineral Resources Sector – Demystifying Resource Nationalism in Africa

According to IISD 2018 Report: “Green Conflict Minerals – The Fuels of Conflict in the transition to a low-carbon economy “:

“The mining sector will play a key role in the transition toward a low-carbon future. The technologies required to facilitate this shift, including wind turbines, solar panels and improved energy storage, all require significant mineral and metal inputs and, absent any dramatic technological advances or an increase in the use of recycled materials, these inputs will come from the mining sector. How they are sourced will determine whether this transition supports peaceful, sustainable development in the countries where strategic reserves are found or reinforces weak governance and exacerbates local tensions and grievances.

Through extensive desk-based research, a mapping analysis, stakeholder consultations, case studies and an examination of existing mineral supply chain governance mechanisms, this report seeks to understand how the transition to a low-carbon economy—and the minerals and metals required to make that shift—could affect fragility, conflict and violence dynamics in mineral-rich states.

Key Findings

At least 23 key minerals will be critical to the development and deployment of solar panels, wind turbines, electric vehicles and energy storage technologies. Many of these minerals are projected to surge in demand in the coming decades, in part due to the global transition to the low-carbon economy.

  • Significant reserves of all of these identified minerals are found in states perceived to be both fragile and corrupt, as defined by Transparency International’s Corruption Perceptions Index and the Fund for Peace’s Fragile States Index.
  • After overlaying a map of global reserves for these keys minerals with measures of state fragility, a picture emerges of potential hotspots for increased fragility, conflict and violence resulting from growing mineral extraction. Regionally, these hotspots are concentrated in South America, sub-Saharan Africa and Southeast Asia.
  • The increased extraction of many of the identified minerals—through both artisanal and small-scale mining and large-scale mining operations—has, in the past and at present, been linked with local grievances, tensions and (in the worst cases) violence.
  • Some of the building blocks needed to ensure the responsible sourcing of the minerals required for green energy technologies, however, are in place or starting to emerge: strong guidance on responsible supply chains, empowered consumers, engaged communities, responsible companies and accountable governments.
For the minerals required to make the transition to a low-carbon economy, there are real risks of grievances, tensions and conflicts emerging or continuing around their extraction. In order to meet global goals around sustainable development and climate change mitigation, while contributing to lasting peace, the supply and value chains of these strategic minerals must be governed in a way that is responsible, accountable and transparent. Achieving this vision will require concerted action from civil society, the private sector and governments”. On 21st March 2018 in Kigali Rwanda, the African Union Assembly of the Heads of State and Government in an Extra-Ordinary summit adopted the African Continental Free Trade Area AfCFTA Agreement that was negotiated from2015. On 30 th May 2019, 30 days after the 22nd AU member State deposited with the AU Commission its instruments of the AfCFTA ratification, the AfCFTA Agreement came into force (it became alive). On 7th July in another Extra-Ordinary Summit of the AU Assembly of Heads of State and Government that met in Niamey, Niger, the AfCFTA operational phase of Trade in Goods was Launched and it is expected that on 1st July 2020 Africa will start trading under AfCFTA. Currently 30 member States have deposited their instruments of AfCFTA ratifications while all AU member States except Eritrea have signed the agreement. In all this everything has been achieved in record time which displays the highest level of political will of Africa Leadership. It is envisioned that the AfCFTA will trigger a huge increase in Intra-African Trade which currently stands at less that 16% compared to 60% for Europe and over 45% for ASEAN countries. More importantly this increased trade will be in manufactured goods than in raw commodities and unprocessed goods. This is therefore a case for African Regional Supply Value Chains that feed into Global Supply and Value Chains to thrive. It is important and very critical that Africa repositions herself to ensure that none of her abundant natural resources is ever again exported as a raw unprocessed commodity. Instruments that will ensure Africa will export goods labeled Made in Africa including Rules of Origin, Intellectual Property Rights, Competition Policies are being put in place. The Regional Supply and Value Chains in the Minerals resources provides opportunity for African countries to add value to their mineral resources. Having African Regional Supply Value Chains that will be linked to Global Supply and Value Chains will require that Africa puts in place governance and  regulatory frameworks that are in sync with International Regulations that govern the Markets of these Minerals internationally.  It is through Regional Supply and Value Chains that will erase the so called Resource Nationalism since minerals (which apparently have no borders) will move freely under AfCFTA as raw materials or intermediary goods feeding into manufacturing and other industries. The Five Key Strategic Minerals of the future that Africa needs to jealously focus on include: cobalt, rare earths, nickel, aluminum and lithium. These minerals were selected by IISD Report case studies  based on their importance to the development and deployment of green energy technologies and the rates of fragility and corruption where current reserves are found. In this regard, Minerals Africa Development Institute (MADI) as a package for De-Risking the Mineral resources sector will be providing training and capacity building programmes in that are in line with Africa Mining Vision under the AfCFTA in the following areas:
  1. Regional Supply and Value Chains,
  2. Home Grown Governance frameworks that will ensure mutual transparency and mutual accountability along the Regional Supply and Value Chains
  3. Harmonization of Policies, Legal and Regulatory Frameworks as well as
  4. Risk Mitigation and Management (demystifying Resource Nationalism)