More examination of African mining policy & contracts

Tuesday, 3 June, 2014

A couple of pieces here from Southern Africa that underline a trend we’ve written about previously in relation to several African countries: major renegotiations with regard to extractives policy in light of the African Union's new Africa Mining Vision.

Today, Malawi and Tanzania.

In Malawi, as reported by the online paper Malawi Nation, it’s the Church that’s sticking its oar in.  The Catholic Commission for Justice and Peace (CCJP), an arm of the Episcopal Conference of Malawi (ECM), released a statement at the end of last week outlining weaknesses in Malai’s Mines and Minerals Policy.  Don’t be deceived, though: CCJP is an NGO, not a Church body in the way the phrase might imply, and the statement isn’t a moral critique. Rather, it’s part of a two-year project by a group of faith-based organisations funding, among other things, research into the social and economic ramifications of extractives policy. 

Presenting a paper funded by the project, the CCJP spokesman criticised the lack of governance structures in Malawi's Policy, lamenting a lack of participation mechanisms for policy formulation, as well as of platforms for consultation and engagement. This latter, you might think, doesn’t bode at all well for community relations in the future. The paper also examines the failure to link policy with other major government initiatives that might be expected to impact it, or to provide means by which to mitigate the problems above - for example, decentralisation initiatives and local government policies.

Read more here, including information on the CCJP’s call to integrate EITI, demands for transparency, and the need for government to get with the programme as regards the so-called “new trend” of mining and democratic governance.

Over in Tanzania, meanwhile, via Mineweb we learn that Sospeter Muhongo, Mining and Energy Minister, has told parliament that government is “talking to miners to get higher taxes and royalties for its 45 million people following growing public demand for more benefits from the country's natural resources.” What that means: reviewing mining contracts to get a bigger share of revenues.

For example, Muhongo said, African Barrick Gold has agreed to start paying a service levy from July that’s “equivalent to 0.3 percent of turnover, significantly higher than an annual payment of $200,000 agreed in the mining contracts" It's also worth noting that only a couple of years ago in 2012, African Barrick also agreed to pay higher royalties following contract reviews.

Muhongo said other such talks were ongoing. Mining companies operating in Tanzania include AngloGold Ashanti, Petra Diamonds Ltd and Richland Resources Ltd (which, we learnt a week or so ago, recently signed a controversial new law forcing to surrender a 50% stake in its operations to state-owned mining corporation Stamico).

The minister added the news that government would also propose natural gas legislation in November, as part of the effort to build a legal and regulatory framework for its its fast-expanding energy sector. This would appear to be of critical importance for Tanzanian development more broadly: according to Mineweb, “analysts said delays in approving gas legislation could stifle future investments in East Africa's No. 2 economy, which has made big gas discoveries offshore.”

The future looks exciting as far as oil and gas are concerned, however: in the words of Muhongo, “by April 2014, some 46.7 trillion cubic feet of gas had been discovered [in Tanzania]... of which 83 percent is in deep-sea offshore blocks and 17 percent onshore". Here’s hoping this is fuel for development in Tanzania and not, as we’ve seen elsewhere, including in “the greatest fraud Africa has ever known”, a driver of controversy, corruption and illegality.