Development bank seeks to grow North Africa presence

To bolster the presence of North Africa at this year’s Investing in African Mining Indaba, multilateral development finance institution the African Development Bank (AfDB) has collaborated with the organiser to invite as many mining Ministers as possible from the region.

Attendance of delegates from the North African Sahel and Mahgreb regions, where mining companies exploit resources, such as phosphate, iron-ore, marble and gold, has been scant in previous years, notes AfDB African Natural Resources Centre director Sheila Khama.

For the first time, the bank has secured the presence of North Africa at the Indaba by specifically targeting the attendance of Moroccan delegates.

The AfDB is the Patron of the Ministerial forum – one of several platforms at the Mining Indaba – at which the Morocco Minister of Mining and Environment Dr Abdelkader Amara will be a special guest of the AfDB.

Khama notes that the Moroccan government has a controlling stake in phosphate producer OCP, which has shown interest in expanding its presence and export capacity across Africa, particularly targeting Southern Africa’s fertiliser market.

Morocco is the third-largest producer of phosphate in the world, having produced 30-million tonnes of phosphate in 2014, she notes, adding that the country has phosphate rock reserves of about 50-billion tonnes, comprising over 75% of the world’s proven reserves.

As a result of Morocco’s presence at the Mining Indaba, the AfDB hopes that other countries from North Africa will be more inclined to attend the event in the years to come, further promoting trade between North and Southern Africa. Historically, trade between the regions has been curtailed somewhat unnecessarily by language and culture barriers, Khama adds.

Through the Ministerial forum, visitors to the Mining Indaba are able to engage with several mining ministers from Africa to promote their respective countries. In the past, over 16 mining ministers from Africa participated and similar participation is expected this year.

“It is an opportunity to speak directly to investors, articulate policy and highlight investment concerns. In addition, it provides a space where opportunities that may not be immediately evident to potential investors are emphasised.”

Khama will chair a discussion on local content and increasing benefit retention. A keynote address will be delivered by University of Oxford professor of economics and public policy Sir Paul Collier, who was one of the original authors of the Natural Resources Charter.

The discussion will aim to create a balanced perspective on promoting local content to heed the benefits of local content and export revenue in relation to mining, while giving fair value to mining companies.

Constraints in terms of energy, infrastructure and global market share mean that, realistically, Africa must not simply idealise localisation, but seek to strike a balance between localisation and export revenue to improve value creation, Khama argues.

Another discussion hosted by the AfDB is ‘Attracting Investment in Africa’, the key question being ‘What will it take’? Khama comments that Africa having mineral reserves alone is not enough to attract investment – “given that many other countries and continents have minerals too”.

She argues that one of the main activities of investors is managing risk and, therefore, attracting investment in Africa importantly involves diminishing the risk profile of the region.

Khama, however, acknowledges the significant opportunity in Africa in terms of its natural resources, stating that, despite remaining uncompetitive in some areas, such as education and technological advancements and expertise, Africa has a significant comparative advantage in terms of natural resources endowment and a young workforce.

The AfDB will also organise a panel discussion on a key theme ‘Managing Relations with Communities’ and host the Ministerial lounge, which is a VIP area reserved for Ministerial delegations to hold meetings.

She also acknowledges the importance of natural resources as a generator of employment and government revenue, but qualifies that a second pillar of investment in the private sector is vital to the success of the mining industry.

Therefore, owing to the significance of natural resources in Africa, it is in line with the AfDB’s mandate to rally behind the bid to attract investment and drive confidence in the continent, Khama notes. She tells Mining Weekly that the number of departments within the AfDB that will attend the Mining Indaba has increased from two in 2015 to five this year.

These divisions include the African Natural Resources Centre, which focuses on policy issues, the Private Sector Investment Department, the Development Research Department, the Regional Integration Department and the African Legal Support Facility.

Khama enthuses that 9 000 people, including financiers, ministers and mining executives, attended the Mining Indaba in 2015, deeming the event important enough to pay a significant amount to attend, which is testament to its importance with regard to mining and investment in Africa.