ERM Conference Insights. Mining on Top: Africa - London Summit

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1 Mining on Top: Africa - London Summit 2014

2 Mining on Top: Africa - London Summit Sharing the benefits of the commodity boom in Africa - improving social and economic outcomes from mining It is estimated that the African continent holds over 30% of the world's mineral reserves and includes some of the world's top mineral producing countries. The Mining on Top Africa Summit was held over 4 days in Westminster, London in June. Just under 500 delegates from 37 countries heard from 86 speakers, with a focus upon how to overcome some of the challenges in African Mining and how to gain a better understanding of the infrastructure investment needs of the region. The conference programme was packed with presentations, panel discussions, roundtable sessions and evening events. Mining on Top, along with the Commonwealth Business Council and UK Trade & Investment, brought together African government ministers and representatives from 13 countries, investors, service providers, civil society and the mining community. ERM attended, delivered presentations and led panel discussions on a range of topics, from infrastructure and water challenges, to environment, biodiversity and other mining risks. This document provides a summary of the key insights from the conference. The evolution of the African Mining Vision Hosted and chaired by Pauline Latham, OBE MP in partnership with the All Party Parliamentary Extractive Industry Group and sponsored by ERM, an invitation only session was held in the Members Dining Room at the House of Commons on Day 1 of the conference. The title of the session was 'The evolution of the African Mining Vision'. ERM Partner Andy Churr (pictured top right) was joined by Antonio Pedro, Director of UNECA's Sub-regional Office for Eastern Africa and Ian Satchwell, Director of the International Mining for Development Centre. The focus of the discussions was based around understanding the concerns of stakeholders and how to meet the expectations of local communities that arise throughout the lifecycle of the mine. 2

3 Day 1: Andy Churr, Partner in ERM s Sustainability Strategy Team, speaking about The evolution of the African Mining Vision at The House of Commons Day 2: ERM Partner, Simon Tillotson presenting at the panel session on Water management considerations 3

4 Conference Insights Collaboration between government, miners, investors and civil society is key. The summit identified a number of high-level guidelines for this: Africa has huge mineral wealth which has the potential to eradicate poverty in the region. Governments and mining companies need to act in partnership to encourage national development and create opportunities beyond mining activities that will endure long after production ceases. Infrastructure is key to mining and lack of infrastructure (roads, rail and power in particular) is preventing companies from investing in mining in remote parts of Africa. The higher risk profile of African projects compounded by fear of resource nationalism does not encourage enough investors. Human capital is a key, precious resource in the regions around infrastructure projects there is need to train and develop. Education is a 'soft' resource - utilisation of the potential in people creates more sustainable, lasting benefits. Local communities and stakeholders often feel they are not seeing enough of the benefits from mining. This includes the need to find ways of showing tangible benefits early on in the development phase of a project. African government institutions face challenges to evolve policy and governance in a short space of time to keep up with the rapid development of the mining sector. This includes ensuring that the right skills and resources are in place to manage these evolving challenges. Development agencies could play an increasing role as trusted arbitrators between companies and governments in the short term to establish trust and build a platform between the two to make this work. As speakers and panellists, ERM provided insights into the following areas of development at the conference: Infrastructure There is currently an 'infrastructure deficit' in most regions of Africa, which requires thinking beyond the mine and looking for a more integrated approach towards lasting infrastructure solutions that can also support community development. Economic links between critical infrastructure and local communities or nations need to be designed in from the start of the project. Good investments and lasting infrastructure partnerships will help communities to see that improved infrastructure will not only be beneficial to the mines, but can also create lasting local business options. The government has a role to promote growth for the communities - the post-mine infrastructure plan needs to be flexible enough to accommodate alternative futures which will, in turn, also strengthen social licence to operate in the regions. Power Creating power infrastructure is a key priority and also one of Africa's largest infrastructure challenges, with 30 countries facing regular power shortages and 69% of Africa without any reliable power supply. ERM's Ian McCubbin joined experts from the UK TI, MP Rt Hon Michael Fallon and other industry leaders on a panel discussion focused around power supply considerations in Africa. Current provisions will not meet the needs of proposed extractive project development, many of which are in remote areas. Sustainable power for African mining will be a casualty if cost reduction remains the only priority. Water Many regions of Africa are water stressed and as extractives projects consume water resources, the successful delivery of these projects is therefore linked to protection of water supply. The Day 2 panel discussion on 'Water management considerations' was chaired by ERM Partner, Simon Tillotson and was followed by a real life water management project case study, presented by ERM Technical Director Simon Gibbons. The session also discussed how the path out of poverty for many African communities is inextricably linked with access to clean water supplies. Recognition of water as a basic human right, access to which is guaranteed and protected for communities, contributes to a positive environment in which successful business can ultimately be conducted with less risk to the mining company concerned. 4

5 Network Roundtable Risk There are specific risks in operating in Africa and on Day 3 of the conference, ERM Partner, Jonathan Molyneux, was joined by Kevin Fox, Africa Europe Exploration Director at Rio Tinto, Nigeria's Minister of Mines and Steel Development and other legal and insurance experts on a panel that addressed how can they be mitigated. Evaluating environmental costs is a determining aspect of mining risk management. Internationally accepted tools such as Environmental Impact Assessments, has enabled mining companies to factor environmental considerations into their investment decisions. In many African countries these assessments, together with environmental management plans, have become a condition to the granting of relevant mining rights (as is the case in Mozambique for example). Some countries also impose a rehabilitation obligation on applicants; in South Africa, companies applying for mining rights have a duty to provide both an environmental management plan and the prescribed financial provision for the rehabilitation of the impacted environment. Environment and Biodiversity One of the fundamental challenges facing Africa is how to promote sustainable economic development whilst protecting the natural environment. On Day 4 of the conference, ERM Partner, Tom Woollard (session chair) was joined by sustainability experts from Cambridge University, the Department for International Development (DFID), WWF and the UK TI. Amongst the topics discussed were whether Africa will really benefit from responsible mining businesses in which the health and safety of workers is the highest priority. The use of new (and lower impact) technology that avoids damaging protected areas and protects the natural environment should be integrated into all major corporate and governmental development decisions. Africa's great natural legacy runs the risk of being compromised if responsible business practices are set to one side in order to facilitate rapid, unchecked and environmentally destructive expansion. 5

6 Day 2: ERM s Ian McCubbin, speaking at the panel session entitled Power supply considerations 6

7 Conclusions It is clearly in the mining industry's (and Africa's) best interest for mining to be achieved responsibly across the region. It will take leadership and close collaboration between government, investors and miners to create a sustainable outcome with lasting benefits for civil society. There are already some encouraging examples of good mining practice across Africa and growing understanding that environmental and social impacts need to be managed responsibly. With industry investment and commitment from country leaders, together with a greater focus on creating lasting, shared value, the potential of Africa's mineral wealth could soon be realised, creating lasting outcomes for the region. Day 3: Jonathan Molyneux, Partner in ERM s Global Strategic Advice Practice, speaking at the session entitled Africa mining risk assessment 7

8 ERM is a leading global provider of environmental, health, safety, risk, and social consulting services. With sustainability at the heart of both our services and how we operate our business, we are committed to providing a service that is consistently of the highest quality. We have over 150 offices in 40 countries and territories employing more than 5,000 people. We have had the privilege of working with many of the world's largest mining companies, helping them integrate their sustainability policies in practical, cost effective, reputationenhancing ways. And having worked closely with the international lending community in formulating and understanding the Equator Principles, we have a deep appreciation of the issues facing mining operations. All face critical sustainability challenges and our clients in these and many other areas rely on our ability to assist them in operating more sustainably which has a positive impact on our planet. Over the past five years we have worked for more than 50 per cent of the Global Fortune 500 delivering innovative solutions for business and selected government clients. For further information about ERM's mining services or issues raised in this Insights document contact: Adele White, Client Development Manager +44 (0) adele.white@erm.com Andy Churr, Partner +44 (0) andy.churr@erm.com Jonathan Molyneux, Partner +44 (0) jonathan.molyneux@erm.com