The International Study Group to Review Africa’s Mineral Regimes (ISG) was established by the UN Economic Commission for Africa (UNECA) in September 2007, pursuant to the recommendations of a meeting (“the Big Table”) held in February 2007 under the auspices of UNECA and the African Development Bank (AfDB). The theme of the Big Table was “Managing Africa’s Natural Resources for Growth and Poverty Reduction”. It was attended, inter alia, by Ministers and senior officials from eleven mineral-rich African countries and representatives of the African Union Commission. Its recommendation as regards the establishment of the ISG was one of twenty-two proposed to help address challenges it identified to the mineral and other natural resources sectors of the continent. A list of members of the ISG and of the principal persons who provided research inputs is attached as Appendix A.

“[S]ound governance systems, capacity to administer and monitor the sector, and better linkages …[with other] sectors of the local economy”  were acknowledged as prerequisites for resource exploitation to contribute to growth and development. The pressures arising, particularly in the 1990s, from efforts to attract Foreign Direct Investment (FDI) into the sector, their consequences for the regimes which were put in place as well as changing global conditions and norms were noted as significant parts of the context which call for a fresh set of actions. A summary report on the Big Table is attached as Appendix B.

At its Inception Meeting held in Addis Ababa from 4 to 6 October 2007, the ISG agreed the Terms of Reference attached as Appendix C. The ISG met on four occasions altogether: (i) the Inception Meeting; then (ii) from 19 to 21 May 2008; (iii) on 4 and 5 September (in conjunction with a UNCTAD-sponsored workshop on Foreign Direct Investment in mining); and (iv) from 10 to 12 March 2009.  On each occasion, it received and discussed presentations from members or other invited persons.  In many instances, the presentations were subsequently elaborated in written papers submitted to the ISG.

At its second meeting held in May 2008, it became clear to the ISG that the most productive and realistic way to proceed was to separate the formulation of a framework report setting out fundamental perspectives from the development of detailed tools dealing with particular aspects of mineral regimes. The third meeting produced an annotated outline to guide the preparation of the framework report.  At the fourth meeting, a sub-committee was appointed to draft the report.  The sub-committee met at Langano in Ethiopia from 11 to 16 May, 2009 to consider various inputs which were available at the time and identified areas which required more material. This draft seeks primarily to distill ideas (and in several sections reproduces text) from various inputs submitted to the ISG since its inception and from work done within the UNECA in the past decade.

It is almost thirty years since the OAU, the precursor to the AU, adopted the Lagos Plan of Action for the economic development of Africa. The Plan (extracts from which are attached as Appendix D) presented a strategic review of Africa’s development challenges and potential paths. Its identification of “[t]he major problems confronting Africa in the field of natural resource development” (paragraph 76) rings familiar today:

“ lack of information on natural resource endowment of large and unexplored areas …; lack of adequate capacity (capital, skills and technology) for the development of these resources; a considerable dependence on foreign transnational corporations for the development of a narrow range of African natural resources selected by these corporations to supply raw material needs of the developed countries; the inadequate share in the value added generated by the exploitation of natural resources of Member States …; non-integration of the raw materials exporting industries into the national economies of the Member States thus impeding backward and forward linkages; extremely low level of development and utilisation of those natural resources of no interest to foreign transnational corporations; and disappointingly low general contribution of natural resources endowment to socio-economic development.”

At the AU meeting held in Addis in February 2009, the Heads of State welcomed the formulation of the African Mining Vision prepared under the auspices of the AUC and the UNECA and presented to the First African Union Conference of Ministers Responsible for Mineral Resources held in Addis Ababa on 16 and 17 October 2008. The Vision statement is reproduced in Box III.1

This report seeks to contribute to the elaboration of an updated strategic policy framework for the development of Africa’s minerals as demanded by the Big Table and proposed in summary by the Vision statement.

Chapter II sets out the global context in which this review is being conducted as well as the history which still defines, to a significant degree, key features of Africa’s mineral policy profile.  Chapter III questions the implicit premise of the conventional approach which limits mineral policy to the extraction of minerals and the sharing of revenue from it. The fundamental objective of harnessing Africa’s mineral resources to promote its development calls for a broader framework. Chapter IV considers the impact of the sustainability paradigm on the traditional topics of mining law (ownership, licensing, revenue-sharing and investment protection) and also how that paradigm has expanded the scope of that law.

The ISG hopes that this draft provides a basis for discussions towards an agreed framework report. Its expectation is that the report, when finalised, and the Vision will (as envisaged by the Heads of State Decision in February 2009) guide a subsequent phase in which the AUC, the AfDB, UNECA and other bodies co-operate to sponsor the development of toolkits, templates, guidelines, briefing notes and other instruments with regard to specific matters of significance and concern in the formulation or revision of mineral regimes in Africa.

II.            Mining: An Evolving Sector

A. Overview

This chapter sets out the global context in which this evaluation of Africa’s mining regimes is being conducted. It identifies (a) global market trends; (b) activity and thinking in significant mineral producing and consuming regions; and (c) international perspectives which have a bearing on policy development in Africa. The history which has defined the features of Africa’s mineral profile is presented; as are the evolution of policy and the state of attempts at harmonisation, regarded as a critical tool for addressing constraints and transforming the role of minerals in the African economy.

B. Global metal and mineral demand/supply trends

(i) Demand

Demand for mineral commodities has increased dramatically since the turn of the century. While use of most metals increased by 1 or 2 per cent per year in the 1980s and 1990s, growth rates after the year 2000 were much higher. For instance, world crude steel production increased by exactly one per cent per year from 1990 to 2000, but by 6.8 per cent per year between 2000 and 2007. Most of this rapid growth was due to industrial expansion in China, where raw materials demand increased dramatically as it supplied an ever growing share of the world’s output of manufactured products. Table 1 shows how, as a result, China accounted for an increasing proportion of world metals use.