The News
East Africa is likely to see increased interest from mining companies, many of which are smarting from disputes with military governments around the Sahel, the head of a major gold mining firm told Semafor.
West African countries have traditionally been hotspots for miners but a number of companies are locked in disputes with military administrations in the region. In recent weeks, several companies have launched arbitration cases against authorities in Burkina Faso, Mali, and Niger. In one high-profile dispute, Canadian miner Barrick last week suspended operations in Mali after the government seized control of its gold stocks, reportedly worth $245 million.
“Now you have what’s going on in West Africa, there should be a little more investment into East Africa,” Stephen Mullowney, CEO of Canadian miner TRX Gold, said in an interview. He cited Ethiopia, Kenya, and Tanzania — the latter of which TRX Gold is already operating in — as countries that are likely to see an uptick in interest, along with the southeastern nation of Mozambique, although investment there may be curtailed by political instability following disputed elections.
In this article:
Alexis’s view
East African countries have plenty to offer Western miners in the coming years, notably the relative absence of strongarm tactics seen in parts of West Africa. That, along with East Africa’s deposits of critical minerals needed for the global energy transition, will make it an increasingly attractive option.
But this doesn’t mean interest in West Africa will vanish. Ghana, Africa’s biggest gold producer, and Côte d’Ivoire are just two West African countries that offer well-governed, business-friendly options. And Western mining companies are unlikely to give up entirely on the junta-led countries in the Sahel because the opportunities are simply too lucrative to let go.
Ulf Laessing, the Bamako-based director of the Sahel Programme at Konrad Adenauer Foundation, a German think tank, told me that even though West Africa’s military governments were “very difficult to deal with as they are desperate,” he nevertheless expected “continued interest in exploiting their gold and other minerals given the profits foreign miners make, despite higher royalties and taxes.”
And even if Western companies look more to East Africa, businesses from elsewhere are likely to accept conditions imposed by military-led Sahelian countries and strike deals, unencumbered by colonial history or a legacy of deals perceived to be unfair to host nations. Last year, Mali signed an agreement with China’s Ganfeng to operate its Goulamina lithium mine. Meanwhile, Turkey and Niger have discussed mining and energy cooperation.
Know More
Burkina Faso, Ghana, and Mali are among the world’s top gold producers. West Africa is also home to large deposits of iron ore, bauxite, and uranium. But the region’s military governments now want a larger share of revenues from their mineral resources. Mali wants to renegotiate contracts in line with 2023 mining laws that require state and private interests in projects to rise from 20% to 35%. Burkina Faso said last year that it planned to strip some foreign firms of permits, and Niger has also revoked permits.
By contrast, governments across East Africa — rich in deposits of cobalt, copper, nickel, and titanium — have overhauled their approach to mining regulations in the last five years to attract burgeoning mining-sector investment driven by the growing prominence of the energy transition and its demand for minerals needed for electric-vehicle batteries and grid infrastructure.
Tanzania implemented regulatory changes to attract mining investment, including the introduction of a tender system for mineral rights applications to improve transparency, boosting the sector’s contribution to GDP from 3.5% in 2020 to 9% in 2024.
Kenya, which aims to increase mining’s contribution to GDP from less than 1% to 10% by 2030 through similar reforms, lifted a four-year moratorium on mining licenses in October 2023 after reorganizing its ministry.
And mining legislation that came into force in Uganda in 2022 provided tax breaks for mineral exporters and duty exemptions for the import of mining machinery.
Room for Disagreement
Mucahid Durmaz, senior analyst for West Africa at risk consultancy Verisk Maplecroft, said there would be risks in dealing with East African countries too because global shocks of recent years have pushed nations across the continent to seek ways to boost their cash-strapped economies.
Durmaz said East African governments were unlikely to resort to the measures taken by Sahelian military juntas, which have included the nationalization of mines in Burkina Faso and the direct expropriation reportedly seen in Mali, but he expects more to pursue interventionist policies. He cited Botswana’s negotiations with De Beers over a diamond sales agreement and Senegal’s audit of mining and energy contracts with foreign companies as examples of this trend.
“I expect that resource nationalism risks for foreign operators will remain persistent across much of the region,” he told Semafor.
Notable
- Resource nationalism ″can prove disastrous″ if pursued by leaders acting in self interest, political commentator Tafi Mhaka argued in Al Jazeera.