People, profits, politics must top mining agenda

The Mining Indaba in Cape Town is the largest annual global mining industry conference.

Oxfam says the real agenda for African mining and development should include people, profits and politics. Picture: AFP.

JOHANNESBURG - While most people remain optimistic about the mining industry in Africa, the real agenda for mining and development on the continent includes people, profits and politics.

These are some of the more difficult problems faced by mining houses, according to Keith Slack, global programme manager of Oxfam America's Extractive Industries team, who will be attending this year's Mining Indaba in Cape Town.

The conference is the largest annual global mining industry conference and offers politicians, business executives and academics the opportunity to network, while trying to solve some of the challenges facing the industry. The event is also characterised by savvy 'closers' (read lawyers without fancy titles) trying to strike multi-million rand deals.

Slack, who contributes to Oxam's Politics of Poverty Blog, says the key issues faced related to African mining can be categorised into four sections.

Firstly, African countries need to find ways to capture more added-value from the raw minerals they produce and try to use their mineral resources to develop their nations.

"Adding value or 'beneficiation' is critical to helping economies grow and move up the economic ladder," says Slack.

An argument often raised at conferences on development and economic growth is that African countries cannot continue to merely export raw materials - the process of adding value to the precious metals needs to happen on the continent. The gold from our soil needs to be turned into expensive watches, chains and rings by African-owned companies in Africa. It's said that this will significantly boost job creation and profits.

Slack writes: "The continent is riddled with woefully bad deals negotiated between mining companies and governments who either didn't know any better or didn't care. Abusive transfer pricing, in which companies shift profits out of Africa in order to avoid taxes, is a loathsome tactic that cheats poor African countries out of tens of billions of dollars every year."

Peter Leon, the head of the mining sector group at Webber Wenzel, says there has been a recession since 2013 in African mining as demand for commodities from the major importers, such as China and India, has abated and commodity prices are either stagnant or declining.

"The mining industry around the world is in difficult territory and there is huge pressure on mining companies to cut costs," says Leon.

Along with this is the problem of resource revenue management and the associated politics, Slack believes.

He says all transactions with mining companies need to be disclosed to governments and there should be a strict compliance with global anti-corruption regulations.

These are some of the tougher and more serious issues that the Mining Indaba conference of 2014 needs to address in order to push African mining out of the 'resource curse'.

Leon says, "In South Africa, if we don't get our act together mining companies will simply retrench more and the mining industry will decline."

The conference runs from 3 to 6 February and aims to attract investment in African mining by creates an opportunity for international professionals to connect with African mining.