Africa: Interview – Why American, European Companies Need to Invest in Africa’s Mining Sector – Expert

US Institute of Peace expert, Tom Sheehy, sheds light on mining challenges and opportunities in Africa.

Respected US Institute of Peace expert, Tom Sheehy, discusses the complex issues surrounding critical minerals in Africa, including the role of China and the need for responsible mining practices.

In the shadows of the African mining sector, a complex web of great power competition, security concerns, and conflicting interests unfolds. Amidst this backdrop, the fate of critical minerals hangs in the balance, shaping not only the continent’s development but also the delicate balance of geopolitical power. In an in-depth conversation, PREMIUM TIMES takes a deep dive into the intricacies of this captivating story, where the pursuit of economic growth and resource riches is intertwined with the struggle for responsible mining practices, environmental sustainability, and social responsibility.

To share in-depth insights linking critical minerals and mining in Southern Africa — and the broader African continent – and the geopolitical trends, Tom Sheehy, a fellow in the United States Institute of Peace (USIP)’s Africa Center, had a phone interview with PREMIUM TIMES’ White House Correspondent, Pearl Matibe, on Thursday. He was speaking from Cape Town, South Africa.

Here is an excerpt from some aspects of the interview, lightly edited for length and clarity:

PT: Let’s start with South Africa. South Africa has this unique position as a regional leader in mining and mineral resources. How do you assess South Africa’s role and its strengths as a model for the rest of Africa? Given South Africa’s rich mineral deposits, its established mining sector, and its growing role as a regional hub for critical minerals, how can other African countries learn from South Africa’s experience and best practices in managing and leveraging their mineral resources for sustainable development?

Mr Sheehy: I think there’s a lot to worry about. South Africa has a tremendous advantage in that the mining sector is a major part of the economy for many, many years. But South Africa is challenged. We’ve got significant energy shortages. We also have rail import issues; the South African ports aren’t nearly as efficient as they once were. And that makes a big difference in terms of critical minerals. And so, we’ve seen a decrease in [inaudible] and South Africa. So, the hope is that South Africa can improve its energy, its rail and ports, and then really become a bigger hub to facilitate money throughout the whole region.

PT: And, Tom, you’re right now attending the 2024 Investing in Africa Mining Indaba Conference. Can you share your insights on the current state of mineral exploration and production in the DRC? How has the DRC positioned itself to attract investment to maximise its resources?

Mr Sheehy: Sure. Now, there’s tremendous interest in the DRC. It has a strong presence here. There’s a lot of investor interest in the DRC. But I think we have to be realistic because there are considerable challenges in DRC. There are infrastructure challenges, transportation and power, and a certain element of political instability, which concerns investors. The DRC is opening itself. It wants investment other than China’s, as you know. But Chinese investment is predominant in the cobalt sector. DRC is looking for other partners. So that’s part of its presence here to reach out to other firms, whether they be Western or Asian. They seem to be open for business and they want to diversify their relationships.

PT: Do you see the DRC addressing issues such as regulatory frameworks, environmental concerns, and how any investor might come in and have some sort of community engagement? The reason I mentioned community engagement is because, as we have seen in Mozambique, that while there were LNG international companies coming in, there was little initial community engagement and social responsibility. You tend to have these frustrations that then become the root, or part-cause, and drivers of instability.

Mr Sheehy: Absolutely, Pearl. I think being here at the (Indaba) conference, that’s definitely one of the themes that you’re seeing. Increasing realisation by mining companies is that social engagement is essential if they’re going to succeed; if they’re gonna go and invest hundreds of millions of dollars, even billions of dollars producing critical minerals, they need that community-level support. Otherwise, as you point out in Mozambique, and elsewhere, it can be a driver of conflict. We’ve seen it. The development of critical minerals can be a very positive thing. It can also be a very negative thing. And so, to your question about DRC, it’s a challenge right now. China is dominant in those countries. Companies have challenges. I think the responsible companies have a strong desire to engage with communities, but you could never be assured that that engagement is going to work over the long term. It is challenging, and the DRC also has the issue of artisanal mining. That can be very controversial. Many people are rightly concerned about the labour and environmental element of that. But the seed here at the conference is that it’s important to try to improve, and regularise, to raise the level of labour and environmental standards and the artisanal mines.

PT: I’d like to move to (talk about) Zimbabwe. Given the increasing interest countries have, like China and Russia, for example, in mining and the mineral sector in general, what’s your assessment of the potential that Zimbabwe has for external investors? What is it that audiences should know, globally, in terms of minerals critical for the global economy? Maybe you can tack on to that, what exactly we’re talking about – a couple of examples – what are we defining as ‘critical minerals?’

Mr Sheehy: Well, (on) the term…the United States actually has a formal critical mineral list. It’s composed of 50 minerals identified as critical to its economy and national security. So, it’s copper, lithium, graphite. Those are a couple of the critical minerals, and you mention Zimbabwe. Zimbabwe is blessed with many critical minerals and one of them is lithium. And so, there’s been fairly major investment over the last couple of years in the lithium sector. In Zimbabwe, China has been leading – has been the lead investor. Now, while Zimbabwe has had a great deal of potential with critical minerals, it has really struggled to have the kind of investment climate that attracts foreign investment. Issues with rule of law, corruption, plagued investment in the critical minerals mining sector, and most recently, about ways to impose an export ban on raw lithium. So, that’s an issue here. It’s called Resource Nationalism. There’s a panel here on that. The issue is how Zimbabwe and other countries regulate and mandate the local processing of the critical minerals. And when you put the export of raw lithium, you’re gonna require that a certain level be processed within the country, and that can be a deterrent to investment. If a mining company feels like that’s gonna be onerous, or an economic mandate, it can deter investment. So, I think that a concern many people have is that African countries, while rightfully wanting to maximise value, create certain regulatory hurdles that deter investment.

PT: Interesting. Thanks, for that explanation. I’d like to riff off that a little bit, and ask you about relationships with the United States, it is protecting its own interests as well. But on the other hand, it has other countries which it views as its competitors or other contestants in mining. These countries have been interested in mining for decades, such as China and Russia. So how do China and Russia’s mining interests in Africa, in general, compare to their activities in Southern Africa? Versus, say, Central Africa, or other places on the continent? Are there any unique factors or dynamics at play here in terms of their interest?

Mr Sheehy: Sure. Well, I want to differentiate Russia and China. Russia’s engagement in the mining sector has been fairly recent, instead limited to a fairly small number of countries. And I think the Russian model is too often in conflict countries, whether Mali or Central African Republic, you see the mining being almost a direct security for access to mining rights type of arrangement. And Russia has very little interest in abiding by responsible mining practices, bargain with labour, with transparency. I put Russia outside the realm of risk-responsible actors. African governments welcome Chinese mining activities. They also want to press China on issues of greater transparency and environment because we’ve seen examples of Chinese abuse. So, we’re increasingly seeing pushback on China. We’ve seen President Tshisekedi of the DRC pressing for more favourable terms that are actually carried through for the benefit of the Congolese people. So, China’s big in Congo, around Southern Africa, (and) Zimbabwe. We have to realize that it’s very positive, I think, that the US government is working with companies to encourage the US and also European investment in the mining sector. But the US is far, far behind China. China has been engaged for 20 – 30 years in the mining sector, and the US is very, very late to the game.

PT: A question here regarding US interests. The DRC, which we touched on a little bit, how has the control of conflict minerals – if you want to call them conflict minerals – how has that failed? Is the US only concerned about the higher value chain products like semiconductors and the things that they rely on? Is nothing being done on what is being sourced from conflict minerals – where’s the US sourcing from? I know there’s this whole issue with supply chains. Could you thread the needle for me on that, and is there an easy check on global coltan consumption versus whatever the DRC official reported production should be, or is it a ‘don’t show,’ ‘don’t tell’ kind of situation?

Mr Sheehy: It’s a great concern; human rights, child labour, environmental issues, the cobalt production in the DRC. I think some progress has been made. I think the situation has improved. But then there’s still a far way to go. Now, the US has to make a decision. Do we want to be engaged in trying to improve the situation there, the lives of miners, and mining families? And I think there are programmes underway to try to do that. Obviously, to the extent that artisanal mining can be regularised and improved, that’s better. I would argue that it’s better for the US to be involved; for Western and US companies to be involved in that sector. Because those resources are going to be exploited, whether or not the US is involved. That activity’s been going on for decades. It’s often the sole source of survival for families. They’ll do artisanal mining. Again, the issue is, are we better off having US and other Western companies working to try to improve conditions? And again, that’s going to be a long project. Things aren’t going to be perfect, but I would argue that we’re better off when more responsible actors are involved trying to do the right thing; trying to improve the working conditions.

PT: Tom, do you have any last remarks that you’d like to talk about, any work, or efforts that you and your team have been working on in the sector?

Mr Sheehy: (What) I’d like to get across is just the sense of challenge, of seeing the increasing body of activities actually works to the benefit of the African people because so often in the past, we’ve seen resource extraction fuel conflict, fuel environmental degradation, fuel human rights, labour abuses. And this is a sector that is going to be absolutely essential to African economies, to global economies. And yet, a lot of work has to go into making sure it’s done right. That’s going to take a big strong commitment by civil society, by mining companies, by governments to see that this boom in mining activities works for the benefit of it. So that’s the big challenge, that’s what we’re hopeful to see. I think there’s an increasing awareness of the opportunities but also the dangers. That’s the mission. Hopefully, we can advance things in that direction.

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