Africa has riches aplenty, but it's not for the weak
Mining bosses at indaba
Mining companies often have no choice but to cooperate and negotiate with the governments of the day – including those who staged the coups.
Liesl Peyper – It takes nerves of steel to operate a mine in Africa's Sahel region, which has had nine coups in the past three years.Countries in the Sahel region include Mali, Burkina Faso, Sudan and Niger.
At the recent Mining Indaba in Cape Town, the legal advisors of two international mining houses shed light on how difficult, and dangerous, it is to mine in this region.
They often have no choice but to cooperate and negotiate with the governments of the day – including those who staged the coups. This, they admit, is often a juggling act.
The Sahel region is particularly rich in gold deposits and many large international mining companies are prepared to face the risk of political unrest and instability in exchange for handsome profits. Mining is also a major contributor to these countries' state coffers in the form of taxes and royalties.
Conflict
Elison Karuhanga from the Ugandan Chamber of Mines, one of the speakers on the panel, said that mines that do business in conflict-affected countries and find themselves in the middle of a coup should have backchannel talks with the new government as soon as possible.
Karuhanga said: “Use your common sense. Survival is first and foremost. Then make arrangements for business continuity.”
Martijn Bosboom, general counsel for the Australian mining house Perseus, says when war broke out in Sudan, the company immediately reached out to the new government.
"We had to make it clear that we are not taking sides and convince them of our support and cooperation."
Shortly after the October 2021 coup in Sudan, Perseus acquired a gold mine in the northern part of the country. In April 2023, a civil war broke out between the Sudanese armed forces and the paramilitary rapid support forces.
The war continues, and to date thousands of civilians have died and as many as 10 million people have been displaced.
The short-term risks that Perseus had to contend with in the Sudan were the risk of loss of life and safety of personnel and ensuring there was enough food and fuel, says Bosboom. In the longer term, there is the danger of sanctions.
"There are already unofficial sanctions - such as suppliers who do not want to do business with us and banks that do not want to provide financing," says Bosboom.
Important
Abdoul Karim Kabele Camara, director of legal services at Endeavour Mining, says it does count in mining houses' favour that the military rulers know how important mines are for the country's tax revenues.
"So, they are generally supportive," he says.
Headquartered in London, Endeavour has mining operations in Mali, Burkina Faso, Senegal and Ivory Coast, among others.
There are also several other challenges mining companies must overcome, such as making sure they don’t contravene international regulations and legislation.
In a recent publication, titled The Blood Gold Report, the compilers write that countries in the Sahel region have become a home for Russia through the private Wagner group. Mercenaries from the Wagner group have a strong presence in countries such as Mali, Sudan, Burkina Faso and the Central African Republic.
In Sudan, Wagner indirectly became the main buyer of Sudanese gold and in Mali, Wagner is paid an estimated US$10.8 million per month to support the military junta there.
Wagner
The report is highly critical of mining companies' presence in these countries - especially in Mali - where gold mines accounted for more than 50% of the country's tax revenue in 2022.
The authors of the report say although mining companies have a series of corporate social responsibility requirements that they must meet, they have so far done little to renounce their business operations in these countries. Indirectly, the mining company therefore helps to supply Wagner with gold and continues to create an income stream for Russia.
The Sahel region's political stability has been dealt another blow after Mali, Burkina Faso and Niger recently announced they were leaving the Economic Community of West African States (Ecowas).
Military juntas are in control in all three of these countries.
The countries argue that the economic bloc is not providing enough support in their efforts to tackle terrorism. Political experts fear that this withdrawal could give further impetus to the Wagner group's foothold in the Sahel region. – Fin24/City Press