The Loded Continent
Africa's Big Share of World Minerals
CAPE TOWN, SOUTH AFRICA — In 19 African countries, half the exports and
one-third of tax revenues come from mining,
according to the World Bank. And most of Africa's mining potential is untapped. 'Mining has helped transform Botswana from one of the poorest countries in the world to a middle-income country,' says that country's mining minister, David Magang.
There's a new Africa on geological maps.
The gold, diamonds, cobalt, and platinum have always been there. But non-Africans are now welcome to mine and export the mineral wealth - and profit from it. It's as though the continent's post-colonial socialist past never happened. Now mines ministers compete with each other to give incentives to foreign firms. "The country is bestowed with treasure," says Andimba Toivo ya Toivo, mines minister for diamond-rich Namibia. "You just bring your tools." And as America and other nations push trade (over aid) to Africa, mineral wealth will take on a greater luster.
Diamonds may be war's best friend
In several African conflicts, lust for the precious gem has enabled combatants to seek help.
In Angola, rebel leader Jonas Savimbi fueled his army with wealth from the Cuango diamond mines in Lunda Norte. De Beers, the South African diamond giant, was accused of helping him by buying his diamonds. Then De Beers's near-monopoly was undercut by Cuango diamonds being sold on the open market. Last September, two De Beers executives were shot and robbed of $1 million in cash in Lunda Norte.
De Beers has taken security advice from a shadowy company of mercenaries known as Executive Outcomes, led by former South African soldiers. In 1995 Executive Outcomes was invited into Sierra Leone's brutal war. The mercenaries were hired by Valentine Strasser, head of one faction, to roust another and return mines to Mr. Strasser's control. The mercenaries ended the conflict - concentrating on the mining regions - and ushered in the 1996 elections.
The rush to mine Africa in recent years has been led by small, fleet-footed Canadian companies.
Companies and individuals from around the world raise money through the Toronto and Vancouver Stock Exchanges, where the rules are looser than in New York. A report by Metorex Pty. Ltd. estimates 80 Canadian-based mining companies are exploring for minerals north of South Africa and south of the Sahara, followed by 30 Australian and 25 South African companies. The Vancouver Stock Exchange reports 60 of its companies are now active in 18 African countries, reportedly investing $680 million in 1996-97. That's 12 percent of world exploration totals, and the percentage is rising.
Companies raise a few million dollars through penny stocks, some of which are sold to gold and diamond "bugs" (avid investors) by mail order. With other people's money in hand, Canadian mining cowboys fly, canoe, or bulldoze their way into Africa's worst trouble spots. Their moxie has been rewarded with some of the most lucrative deals on the continent.
The richest, but riskiest, mining lies in Congo (formerly Zaire), whose potential in gold, diamonds, copper, cobalt, and zinc has barely been tapped. The world's top producer of cobalt and industrial diamonds, Congo had its most accessible underground resources sucked dry by the late dictator Mobutu Sese Seko.
Now his usurper, Laurent Kabila, decides who receives licenses. He mistrusts the French, British, and Belgians, former colonial powers, so he and his mines minister have adopted a circle of Canadian advisers. Many Canadian companies have won valuable licenses.
"The government of Congo knows that if it's going to make progress quickly in terms of using assets that create jobs, mining is more likely to do it than other sectors," says Joe Clark, a former Canadian prime minister who is part of the Congo inner circle.
Risk of bribery
Endemic corruption is one reason analysts consider Africa to be a high-risk investment. But mining executives insist they never pay a bribe and that they win each contract on merit. "We've had to deal with petty corruption, you know, $100 to get a report typed up," says Ted Webb, vice president of Vancouver-based Tenke Mining Corp. Congo awarded Tenke a license for a lucrative open-pit copper-cobalt mine. The contract was first approved by Mobutu, whose reign coined the term "kleptocracy." But Mr. Webb insists "there were no demands from Mobutu."
"We don't have any hard evidence about corruption in the mining sector," says Stiaan van der Merwe of the South African branch of Transparency International, an anticorruption lobby group. But with all the money to be made in African mining, "We should not be surprised that somewhere - in privatizing mines that previously had been nationalized, in exporting minerals - corruption in the form of bribery is part of it." Mr. Van der Merwe says the potential for corruption is greater when one individual grants mining concessions. In Zimbabwe and Congo, for example, decisions on mineral rights reside with the president.
Mining companies like Africa for its weak environmental rules. When gold prices fell recently, Vancouver-based Casmyn Corp. was able to turn from shaft mining to less-expensive open-pit mining which, by US environmental standards, is much less acceptable, says Gregory Gosson, Casmyn's managing director. Mining executives insist they respect "international environment standards," regardless of where they mine.
Bronwen Jones, an engineering geologist who is a one-woman critic of the industry, says, "There may be good standards in Africa, but the law is not applied. The public is ill-educated, and there are too few watchdogs and inspectors. The mines are rarely fenced, and people get hurt. The mines pollute the groundwater, and there is incomplete disclosure of information.
"For example, uranium and gold occur together and so tailings are often radioactive, but the communities don't know it."
In South Africa, a coalition of trade unionists and environmentalists recently launched a campaign against the world's largest mining group, London-based Rio Tinto. They claim the multinational company exploits workers and abuses the environment and human rights.
Africa's strongest unions are in South Africa, where jobs have been shed as gold prices have dropped from a 1980 peak of $850 an ounce to about $300 today. Unemployment is estimated at 30 percent, and the mining work force has fallen from 550,000 a decade ago to less than 300,000 today.