Africa’s diverse mining ecosystem is under scrutiny

06 August 2023 

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Building on the first article in the series, which explored why “Africa’s 21st Century sustainability is in peril’, Tony Wines, Founder of Turnkey Group, dives deeper into why true ESG leadership is critical to the continent’s mining community. From the vast behemoths of mining to the artisanal and small-scale mining (ASM) operations, Africa’s diverse mining ecosystem will come under investor and regulatory ESG scrutiny like never before as the race for critical minerals needed for decarbonisation, military defence technologies, industrial applications, and luxury goods accelerates.

Mine more, not less

One of the great ironies of sustainability is that to reach true decarbonisation at the required pace, the planet needs more mining, not less. Resource-rich Africa sits at the very heart of this geo-political conundrum. 

The world’s most powerful economies, China, the EU, Japan, the UK, the USA, and the awakening giants of the emerging economies, are in a frenzied race for essential minerals that support the decarbonisation process, 21st-century defence technologies and other future industries.

Cobalt, Copper, Lithium, Nickel, Tantalum, Tin, Zinc, and other minerals will become the oil of the 21st and 22nd centuries as they underpin the clean energy transition and other technological advances to mend a wounded planet. The original “critical mineral” gold itself, with 4754 tonnes mined in 2022, up 2% in 2021, will remain a foundation stone of sovereign financial stability for decades.

The “Great Game”

Meanwhile, African nations have rallied to demand that the aggressively extractive model of capitalism that offers little positivity for host communities, is halted. Some have christened this challenging geo-political problem – with mining at its epicentre – as the new “Great Game,” referring to the 19th century’s race by the most significant European nations for resources, power, and continental influence across the globe. 

How can all of this be turned to the real benefit of African communities, entrepreneurs, and economies across its 54 countries? The challenges are manifold, but pathways of hope are emerging.

In many cases, the surge in mining will depend on the most vulnerable communities facing the harsh, speeding realities of climate change in countries whose historical climate footprints are a tiny fraction of those of the fossil fuel-guzzling, energy-intensive, developed economies of the G7/G20 and OECD. 

The extractive industry

Mining, the very definition of an extractive industry, is often polluting, destroying precious natural ecosystems in its wake and is rife with poor health and safety standards among its workers. Corruption, both small and large scale, gender-based sexual violence and connections to organised crime all exist. As an industry, it will fall under an intense forensic spotlight like never before. 

The news is not all bad as collaborative initiatives, increasingly driven by large asset owners such as pension funds, slowly yield results across different aspects of the mining value chain and mining cycle (exploration, extraction, transport, processing, commercialisation, and mine closure). The mining majors are also aware of the intense ESG spotlight now on them. As illustrative examples of numerous multilateral, regional, and national mining-focused initiatives, highlighting two:

1. In 2022, a group of pension funds working with the backing of the United Nations convened the Global Investor Commission Mining 2030, focused on reforming the mining sector by 2030 to:

  • Retain its social license to operate
  • Meet the needs of society and the low carbon transition, and not cause harm to people, communities, and the environment

2. In 2004, the Alliance for Responsible Mining (ARM) was established with a focus on Artisanal and Small scale Mining (ASM), which contributes to the intertwined global mining ecosystem where the most significant operations and smallest interact; ARMs focus is:

  • The empowerment of artisanal and small-scale miners, their organisations, and the adoption of good practices promoting favourable environments for the inclusion of said artisanal and small-scale miners in the formal economy 
  • Creating voluntary standard systems for production and trade supporting responsible supply chains.

I stress that these are just two examples of many sponsored by The World Bank (IBRD), The International Finance Corporation (IFC), and regional and national development banks, such as the African Development Bank (AfDB)

I have yet to cover many industry initiatives that steer the sector in the right direction. Of course, various United Nations agencies cover the spectrum of peace and security, humanitarian response, development, and environmental concerns and also advocate strongly for higher standards in mining. The term “conflict minerals” is used increasingly in the diplomatic and policy world, where human rights and mining often collide.

Where do we start?

Human rights are an excellent place to start when considering how the largest mining companies can drive ESG leadership going forward to benefit the whole mining ecosystem. 

The thinking and philosophy of the late Professor John Ruggie, special advisor to the former United Nations Secretary-General Kofi Annan and the driving force behind the Ruggie Principles, saw enhanced Human Rights as the fundamental starting point when working with often poor, first-mile communities like those ASM ones which exist across mining globally. 

The entire value chain

African mining chains in emerging economies and least-developed countries are complex. Prioritising ESG in an industry that ranges from true giants such as Anglo American Platinum, BHP, Barrick Mining, Freeport-McMoRan, Glencore Xstrata, Gold Fields, Impala Platinum Holdings, Rio Tinto, and Vale Mining to the most minor ASM operations is immensely challenging. 

Small-scale operations, often informal, sometimes illegal, and mainly operating on land, owned by major mining operations are playing an overlooked role in discovering new minerals, and are essential.

Without real ESG embedded across every level of the mining value chain, from the vast global mining behemoths to the smallest informal operations, inequality, and value extraction rather than structured value creation will continue to curse African mining. 

US law firm White & Case makes the ESG argument well for mining and metals in its September 2022 review of the sector. “A global economic slump would mean a new wave of cost-cutting in mining and metals, in both operations and capex, at a time of further spending commitments to meet increasing ESG demands from multiple stakeholders. From a cost perspective, it is about balancing the trade-off between necessary expenditure and potential losses brought by ignoring or mismanaging ESG factors. ESG is no longer optional or a point of differentiation; it is now the minimum operating standard, especially in the Mining & Metals sector.”

Where can major players find relief by cutting through the ESG complexity while bringing greater responsibility along the value chain through the legitimisation and professionalisation of artisanal miners and their supporting communities?

Turnkey’s Position

After almost a decade into operations, Turnkey Group sees the convergence of Digitalisation, Blockchain, Artificial Intelligence (AI), and Machine Learning as a critical foundation for an immense leap forward in real-time monitoring of ESG data along critical and complex value chains, like mining. 

Also, from satellite data, ground-level monitoring with intelligent mobile devices, and the integration of Geographical Information Systems (GIS) and open-source intelligence (OSINT), we see the world’s wiring, where there is now nowhere to hide egregious ESG violations or accidents.

Forensic architecture is beginning to play a profound role in applying spatial analysis to human rights abuses in various contexts regarding conflict zones and business-driven violations.

In parallel, the increasing focus on ESG, accounting, reporting, and disclosure, with the International Sustainability Standards Board (ISSB) publishing its initial two framework standards for general sustainability and climate-specific financially relevant reporting, brings new pressures on business. 

The good news? The ability to hardwire real-time collection of ESG data into sustainability reporting and analysis functions is becoming real. The mining industry now has every opportunity to help the Global Investor Commission Mining 2030 deliver on its vision of a transformed and responsible industry sitting at the heart of the Just Transition to clean energy and sustainable development fit for a planet of 10 billion people in 2100.

Written by: Tony Wines, CEO, Turnkey Group

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