ISS TODAY: Mining: Squeezing the goose that lays the golden eggs By Peter Fabricius Pfabric
African countries are claiming a bigger slice of the revenues from their natural resources from mining companies. Is this good and can it work?
Akufo-Addo cited Ghana’s recent deal for AngloGold Ashanti to return to the rich Obuasi Gold Mine after a five-year absence as a good example of a fair deal. It includes fiscal concessions by the government and significant commitments to local procurement and skills transfer by the company. Last year, the DRC increased the state’s stake in all mining companies from 5% to 10%, plus a further 5% on the renewal of each company’s mining right. It also required at least 10% shareholding by Congolese citizens, raised royalties on most minerals, and introduced a new 10% royalty on “strategic substances” . A 50% tax on “super profits” was introduced and 60% of mining companies’ earnings must now be kept in local banks.
And African attitudes have hardened since 2015, after the African Union High-Level Panel headed by former South African president Thabo Mbeki reported that from 2000 to 2010, African states collectivelyat least $50-billion a year in revenue through “illicit financial flows”. Mbeki calculated that 56% of these illicit flows came from mining and other extractive companies.
Though semantics kick in here, it seems that resource nationalism can be a positive. When it promotes national development and even, with luck, beneficiation and industrialisation, it’s a blessing. If it’s a desperate grab for dwindling resources by a failing government – think oil-rich Venezuela – it’s a curse.
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