As reported by Reuters:
* High commodities may mean greedy African governments
* Growing public pressure for
mining windfalls
By Tiisetso Motsoeneng
CAPE TOWN, Feb 9 (Reuters) - Resource-rich African governments risk unrest if they hold back the benefits of soaring global commodity prices from their own people, delegates to a major
mining conference were told on Wednesday.
With
Africa facing as many as 17 elections this year against the backdrop of seismic political upheaval in
Tunisia and
Egypt, there is a high chance of voters taking to the streets or using the ballot box to demand a decent share of the pie.
"Unfortunately, as commodities prices rise, so does the desire of some governments to grab as much of the perceived increase as possible for themselves with little thought of sharing their wealth with their people," said
Mark Bristow,
chief executive of West
Africa-focused miner
Randgold Resources.
"Will they get away with it in the long term? I don't think so," he told a
mining conference in
Cape Town. "Many African countries are due to have elections within the next two years."
Strong growth in the resource-hungry economies of
Asia has caused a rally in commodity prices in the last year, with copper comfortably surpassing its 2008 highs to notch up a record well above $10,000 a tonne this week.
Platinum, gold and a host of other minerals have plotted similar trajectories.
However, as in
Egypt and
Tunisia, technology is playing its part in keeping Africans informed about world markets and giving them a sense of what they might be owed.
With more than 500 million
mobile phones in
Africa, compared with around 50 million a decade ago at the start of the last commodities boom, governments and companies no longer have a monopoly on information.
For instance, union officials in northern
Zambia's Copper Belt pride themselves on checking up-to-the-minute world prices on their phones during wage talks with company bosses.
MOVING GOALPOSTS
Delegates at the
Cape Town conference, the biggest African
mining jamboree of the year, said a flood of investment to cash in on the boom minerals was far from guaranteed, mainly because of the temptation for governments to tweak minerals policies or impose windfall taxes.
When returns on a venture are measured in decades, as they are in
mining, not mere months or years, firms are understandably sensitive about the chances of policy change.
"Countries like the
Democratic Republic of Congo are always moving their goalposts around so capital says it is very difficult to go there," said
Frank Holmes,
chief executive of
U.S. Global Investors, a resource-focused investment house.
"Same thing with southern
Sudan …- they have started changing the rules for exploration and development of resources," he said. "Countries with huge resources have particularly heightened risk."
Conference host South
Africa is another case in point. Home to 90 percent of the world's platinum reserves and a large chunk of its gold,
Africa's biggest economy should be attracting
mining companies in droves. Instead, the sector has contracted over the last decade, in part because of demands from disgruntled communities near mines and militant elements in the ruling
African National Congress for the state to take over mines for the benefit of the people.
Yet the fact remains that no matter how great the wealth sitting beneath
Africa's soil, it will continue to sit there, to the benefit of no-one, without large amounts of capital and stability -- things for which the continent is not noted.
"Experts who look at these things say
Africa has about 30 percent of the world's mineral resources yet
Africa only produces about 10 percent of the world's minerals," said Graham Birch, a
director of Russian
gold miner Petropavlovsk.
"That's a huge gap between the potential and what is actually happening." (Additional reporting by
Agnieszka Flak and
Wendell Roelf, Writing by Ed Cropley, editing by
William Hardy)
