Sustainability factors in African mining amid geopolitical changes

A wide range of matters across the sustainability gamut have been under discussion at the Investing in African Mining Indaba in Cape Town this week. These include how the continent’s mining sector will be affected by the Trump administration’s recent announcement that the US will turn away from the Green New Deal and withdraw from the Paris Agreement on Climate Change.

From an African mining perspective, the move to reopen the debate on what a fair Green Deal is provides opportunities for developing countries to claim back the space and time needed to ensure their energy transition is just. There are some projects in developing countries, including in SA, where more time is needed to be able to invest in projects premised on fossil fuels, which should be undertaken within the broader sustainability context. This could also open the opportunity for new conversations around funding, with some banks already stating they will allow funding for a broader range of fossil fuel projects than has previously been allowed.

While there will be a change in how the US talks about sustainability, there will also be increasing opportunities in the mining space for possibly even greater investment by US companies in the green minerals sector, which supports green transition and is therefore essential for the African journey to net zero.

Global approach

Although the Trump administration may pull back on climate commitments at a federal level, the rest of the world, including the EU, Australia and Asia, is still moving ahead on sustainability commitments. Global markets continuously demand responsible sourcing of minerals and compliance with strict environmental, social and governance criteria. US companies operating in Africa cannot ignore these requirements if they wish to continue to partner with businesses that are subject to EU and other international regulations. 

Globally, laws have evolved to reflect a growing sense of ethical responsibility, preventing a return to the atrocities of the past. Once, slavery, child labour and colonising entire continents to strip them of resources were seen as normal business practices. Today, such actions are unequivocally condemned, and the treaties and laws governing resource extraction reflect this fundamental shift toward responsible, sustainable mining. Regardless of political changes in the US or elsewhere, these core ethical and sustainability standards are here to stay.

Challenges

While opportunities for sustainable investment in the sector abound, there are also challenges that could derail the sustainable exploitation of the continent’s critical minerals. Ongoing war is still prevalent in many parts of Africa. For example, a war in Democratic Republic of Congo could affect the mining and transport of its significant reserves of cobalt in the country. Political instability is rife in other areas as well, including Mozambique and Madagascar, both of which are host to graphite reserves.

Such instability could cause Africa to miss the opportunity to fully benefit from its mineral stores. Further challenges include public infrastructure decay and underdevelopment and persistent policy and regulatory uncertainties. The Fraser Institute continuously reports that these challenges could impair these jurisdictions, negatively affecting their investment attractiveness.

Local beneficiation

Notwithstanding the challenges, the continent continues to tackle its problems head-on. The critical minerals boom has furthered the opportunity for the continent to learn from past practices and improve its current mining strategies. African governments are committed to increasing domestic processing capacity and beneficiation in the continent’s supply chains. 

Outside of the economic or structural considerations, a key contributor to ensuring Africa benefits from the mining sector is regulatory and policy certainty, including improving the administration of current regulations and policies, avoiding regulatory duplications, and implementing balanced legal systems for fiscal regimes, environmental regulation, socio-economic development, and localisation requirements. These laws should be predictable and consistently enforced.

Permit regimes must also be streamlined. For example, SA has significant manganese reserves, but regulatory approvals for transactions relating to mining interests can take months. In that period pricing and economic conditions change. Requests to remove red tape are a cry for efficiency, not a call to lower permit standards.

Shared prosperity

Equitable sharing is also a key consideration for future-proofing the mining industry. Collaboration among mining companies, labour, governments and communities is a key enabler of shared prosperity, and failure to ensure the equitable sharing of mining benefits results in the loss of the social licence to operate.

A further consideration for achieving shared prosperity is to ensure that mines operate in ways that avoid environmental degradation or minimise such effects. While there is a tendency to rely on regulatory mechanisms, those alone are not sufficient. If operations pollute water sources or disrupt water supply, communities feel the brunt. Laws pertaining to mining rehabilitation are being amended to ensure these communities do not suffer the long-term effects of mining operations. 

Local law approach

Shared prosperity remains a priority across Africa, with some jurisdictions enacting robust community engagement and benefit-sharing requirements in mining and other sectors. For instance, Kenya mandates community development agreements (CDAs) between mining licence holders and local communities, ensuring tangible benefits such as education, healthcare, infrastructure, cultural preservation and environmental protection are clearly planned, funded and delivered.

However, while these provisions, adopted in various forms across the continent, aim to elevate community participation and prosperity, they can hit significant roadblocks in practice. Defining “community” can be tricky in multi-ethnic regions; overlapping jurisdictions (national, provincial/county, municipal, and traditional authorities) blur responsibility for oversight, and local powerbrokers may try to derail equitable development by misdirecting resources to line their own pockets.

Further, shifting commodity prices or political tides can rewrite “set-in-stone” agreements overnight, and without robust oversight, lofty promises in a CDA risk becoming empty words on paper. Ultimately, legislators must craft pragmatic frameworks that balance the long-term interests of communities with the realities of driving investment and revenue-generating operations, ensuring that well-intentioned regulations remain both achievable and beneficial in the real world.

Notwithstanding geopolitical changes, there will always be contestation around what is sustainable from a policy perspective, both economically and environmentally. Trump’s rejection of the Green New Deal provides an opportunity for all Africans to re-examine what lies at the heart of sustainable mining and how we can all contribute to ensuring project longevity that results in a sustainable and prosperous effect for all Africans.

• The authors are partners at Bowmans.