Africa is big on mining, but where are the benefits? [Picture: Gold Fields]
The refrain “Africa is a land of potential” is heard everywhere: from boardrooms to billboards, from NGOs to governments. It is the richest continent of all, with an abundance of minerals and natural resources. Yet it is also home to some of the poorest nations in the world.
Johannesburg was a city built on gold mining. Despite being distant from any viable water source, a prosperous urban jungle was constructed above the riches of the Witwatersrand. As the city declines, mining interest has shifted southwest of Gauteng: to the Northern Cape.
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Manganese and mining
Isolated in the vast, dry Northern Cape, the tiny town of Hotazel’s rich manganese deposits have caught the eyes of mining companies. An estimated 15 billion tonnes lie in the Kalahari Basin, making it the source of 80% of the world’s supply of this hard, brittle and silvery metal.
Yet more can be done to ensure communities benefit from such mining activities – beyond job creation and empowerment, as we’re often told.
“Africa always gets the short end of the stick. If we look at job creation resulting from mining … our mines create more jobs in the northern hemisphere than in the Global South. This is a huge problem,” says David van Wyk, a chief researcher at the Johannesburg-based Benchmarks Foundation.
There is no doubt about the invaluable contribution of the mining sector to the South African economy. A source of employment for nearly half a million people, the mining industry contributed R493.8 billion to the country’s gross domestic product (GDP) in 2022.
Van Wyk agrees mining is beneficial to the country. But, he cautions, “irresponsible mining is incredibly destructive … We are trapped in a global economy where we are the suppliers of cheap labour and minerals and raw materials, and we don’t seem to be able to dig ourselves out of that position”.
“Irresponsible mining”, as van Wyk refers to it, can have detrimental effects on the small towns that usually attract mining companies whose main aim is to make a profit.
“It destroys the river systems, it destroys the ecology, it destroys the broad environment. It also destroys nearby communities – with the influx of labour into an area where there is mining, increases in HIV/Aids, sexually transmitted diseases, you have increases in poverty, people lose their ancestral land, their ability to cultivate the land and they become dependent on mining,” he argues.
While it may be true that irresponsible mining can be disastrous, responsible mining promises to improve the lives of many. South32, a mining company headquartered in Perth, Australia, operates two manganese mines in the Kalahari basin.
On their website, the company says it is “working hard to make a meaningful contribution to the social and economic development of the country”. This, they claim, is being done by, among other initiatives, “creating opportunities for the growth of black enterprises, recruiting from within our local communities, improving housing and living conditions for our team members [and] increasing local engagement through sustainable community development”.
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Raw materials vs finished goods
Van Wyk argues that more can be done to ensure Africa reaps the full benefits of her abundant natural resources. “We are exporting 90% of our manganese instead of adding value to it,” he laments.
Instead, he suggests South Africa could take advantage of its abundant manganese, for example, by “manufacturing batteries in South Africa, manufacturing alternative energy technology inside South Africa”. Basically, he says, “using the competitive advantage we have of having all this manganese here.”
Such an approach would definitely boost the local economy, generating prosperity for a country and a continent so long deprived of dignity, of a chance to live – and live well. It reminds me of President Cyril Ramaphosa’s speech to delegates at the BRICS Business Forum in August.
“Africa is a continent of great opportunity in the industrialisation process in a variety of sectors. Africa is a continent rich in the critical minerals that will drive business success in the 21st Century. The continent has resources of lithium, vanadium, cobalt, platinum, palladium, nickel, copper, rare earth minerals, rhodium and many others. African countries have made it clear that the investors of choice are those who will process the resources here, close to source,” he said.
Some of the most prominent CEOs and executives of businesses from each of the BRICS (Brazil, Russia, India, China and South Africa) were present in the room that evening. They all clapped and then the next speaker took the podium. In such a moment, one must wonder: which investor here actually buys that?
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Hurdles to growth in Africa
Bureaucracy, corruption, mismanagement and inefficiency stand in the way. In South Africa, the governing African National Congress (ANC) through its national democratic revolution (NDR) policy has made it clear that capital is the enemy here. Nearly every effort has been made to frustrate business in this country, in line with NDR objectives. Corruption, mismanagement and inefficiency, a disastrous trio, have crippled the state to the extent that basic services such as water and electricity are anything but reliable.
Business is well aware of the hurdles inhibiting growth. It is a difficult environment to operate in. In the face of daily power cuts – crucial for any economic activity – what Ramaphosa said next could only be described as concerning to the degree it was out of touch, perhaps laughable: “South Africa possesses world-class infrastructure, skills, abundant natural resources, industrial clusters and a host of incentives to support investment”.
Van Wyk was correct in differentiating between “responsible” and “irresponsible” mining. The same can be applied more broadly to business in general. It is true that certain individuals, hungry for the high life, might exploit Africa’s resources to their own benefit and the detriment of starving communities.
Yet, this should not lead one to view business as inherently bad, as, in the words of the late economist Steven Horwitz, “Nothing has done more to lift humanity out of poverty than the market economy”.
“The number of people worldwide living on less than about two dollars per day today is less than half of what it was in 1990,” he wrote in an article for the Foundation for Economic Education (FEE). “The biggest gains in the fight against poverty have occurred in countries that have opened up their markets, such as China and India.”
Facts will forever remain facts. They can be tested. But they can’t be denied. The market economy has lifted people out of poverty. Perhaps, then, the ongoing exploitation of African resources is derived from long standing extractive institutions in resource-rich countries and an elite that chooses who does business where, when and how. A fairly regulated market environment can lift people out of poverty.
Cut the red tape first. Root out corruption (sincerely) and get rid of cadre deployment. Implement measures that actually foster an environment conducive to growth. Make doing business easy; balance this out with effective measures to prevent exploitation. Let Africa rise. Let her people live with dignity.
