The African mining sector has long been at the epicentre of global criticism as a result of political tensions, artisanal mining, energy unreliability, among several other issues. Over the last decade, however, mining companies and government entities have been working to improve not only ESG and sustainability practices on the continent, but also opportunities for Africa to grow as a key clean energy player on the global stage. This has resulted in a remarkable shift driven by a combination of regulatory changes, societal expectations, and the industry’s role in fostering sustainable development.
Sustainable Development Goals
One aspect of the evolving African mining ESG landscape is Sustainable Development Goals (SDGs). Established by the United Nations, SDGs are attainable through mining company operations which generate profits, employment, and economic growth in low-income countries.
The goals ensure that mining benefits extend beyond the life of the mine itself. The heads of 193 UN member states agreed to 17 SDGs which will be the shared global development framework for the coming generation. Mining companies have the potential to become leading partners in achieving these.
Miners are increasingly called upon to extract responsibly, produce less waste, use safer processes, incorporate new sustainable technologies, improve local communities’ wellbeing, curb emissions, and enhance environmental stewardship.
Mining companies that commit to SDGs will also benefit from improved relationships with governments and communities, along with better access to financial resources. Those that fail to engage meaningfully with the goals will put their operations at risk in both the short and long term.
Several megacompanies operating in Africa have committed themselves to promoting these SDG’s, including AngloGold Ashanti (NYSE: AU), the company’s South African and Ghanian joint venture conglomerate is working in partnership with state-owned mining firm Gécamines in the Democratic Republic of Congo (DRC).
Mining companies operating in the DRC typically rely on NGOs to address community development, whereas AngloGold Ashanti understands that to help achieve enduring sustainable development, local communities need empowerment and accountability in decision making.
Hence, it has directly engaged in partnership with communities near the Kibali and Mongbwalu mines in the eastern part of the country. The programmes aim to empower local entrepreneurs by developing self-initiated entrepreneurial activities, especially among the youth and women.
In the study ‘Under African skies — mining TNCs in Africa and the Sustainable Development Goals’, the data found that other transnational corporations in the eastern DRC relied on NGOs and ended up having a limited sustainable development impact on communities.
Over more than a decade, AngloGold has helped to transform the livelihoods of those living near both Kibali and Mongbwalu through a mix of mutual learning about all parties’ positions and goals, co-creative engagement, and support and capacity empowerment by engaging directly with community stakeholders to promote sustainable development through local entrepreneurship.
Energy efficiency and the shift away from coal
Often, the quickest and most cost-effective way to improve sustainability is through increasing energy efficiency and reducing fossil fuel use. In 2016, the South African government embraced energy efficiency as a ‘first fuel’ and an unseen energy resource to be exploited before considering other energy sources.
A critical example of the influence of energy efficiency is the gradual elimination of coal, which will eventually be replaced with renewables and other lower carbon emitting sources of energy. The coal industry is expected to decline as demand and investment in the sector drops. Coal’s contribution to South Africa’s primary energy supply declined from 70.7% in 2012 (when local coal production peaked), to 63.1% in 2018. Coal production in South Africa has stagnated over the past 10 years. Nevertheless, reliance on the energy source is expected to continue for some time to come. The scenarios considered for the Integrated Resource Plan 2019 show that coal is still expected to generate between 17% and 42% of South Africa’s electricity in 2050. Despite this, several majors are taking steps to loosen ties from the non-renewable fuel source.
Coal giant, Glencore, agreed to a multibillion-dollar deal that will eventually rid itself of coal mines, four of which are in Mpumalanga province, South Africa — a move that represents the company’s biggest strategic shift in years.
It comes as global demand shifts to greener alternatives and leaves the company to focus on sustaining its position as a major supplier of the minerals and metals needed for electric vehicle (EV) batteries and other green technologies.
“We have some of the best future-facing metals in the world,” said Glencore CEO, Gary Nagle, this past month, referring to the company’s nickel, copper, cobalt, and zinc assets. “This will be the go-to metals transition company in the world.”
Increasing Africa’s share of the green value chain for lithium-ion batteries, EVs, and clean energy
By 2040, clean technologies will demand 40 times more lithium, 25 more times graphite, and 20 times more nickel and cobalt compared to this year, according to the International Energy Agency.
In 2021, the DRC’s government, the United Nations Economic Commission for Africa, the African Export-Import Bank (Afreximbank), the African Development Bank, and the Africa Finance Corporation (among others), collaborated to devise strategies to attract investments. The goal was to enhance Africa’s participation in the lithium-ion battery, EV, and clean energy value chain.
Owning 51% of the world’s cobalt reserves and significant hydroelectric power potential, the DRC is well positioned to be a cost-effective and low-emission producer of lithium-ion battery precursor materials and cells. This is according to a report by the African Development Bank titled ‘Strengthening Africa’s Role in the Battery and Electric Vehicle Value Chain’.
Moreover, a BloombergNEF study was commissioned to assess the feasibility of establishing Special Economic Zones in the DRC and Zambia to produce battery precursors, confirming the technical and financial viability of the project and estimating the total cost at US$2.7B.
Afreximbank’s director for export development, Oluranti Doherty, stated that according to the report, a precursor facility in the DRC would cost three times less than a similar plant in the US. This is due to cost competitiveness and proximity to raw materials.
Similarly, many other African countries possess substantial reserves of green minerals, including copper, aluminium, chromium, lithium, graphite, and rare earth elements that play a vital role in the development of renewable energy technologies like solar panels, wind turbines, green hydrogen production, EVs, and battery storage.
To explore potential synergies between continents, the Asia External Representation Office and the African Natural Resources Management and Investment Centre of the African Development Bank, organized an online policy dialogue event titled “Enhancing cooperation between Africa and Asia in developing Green Minerals value chains” back in November 2023.
The event brought together a wide range of experts in the green minerals sector, including representatives to explore cooperation opportunities and lessons Africa could learn from Asia’s experiences.
Dr. Vanessa Ushie, acting director of the African Natural Resources Management and Investment Centre, highlighted the importance of Africa’s transition from a raw material exporter to a key player in the entire green minerals value chain for the continent’s inclusive and sustainable growth. As part of this transition, she said, “Africa and Asia can cooperate in win-win partnerships.”
Prioritizing ESG in African mining operations
The adoption of ESG principles is paramount to investors for aligning with international sustainability goals and unlocking economic opportunities. Environmental and social impacts, governance issues, and a lack of coordination among policymakers all pose hurdles.
SRK Consulting director, Andrew Van Zyl, said that although most mining companies operating in Africa (especially the larger companies) have had ESG on their agendas for some time, there is now more progress regarding embedding ESG policies into their operations, largely due to demand from investors.
The adoption of ESG principles is paramount to investors for aligning with international sustainability goals and unlocking economic opportunities
“There is certainly more attention being paid at a departmental level within companies to understand and apply ESG policies, which tend to be developed at corporate level – and often in a different country from where the mine is located.” SRK Consulting partner and principal scientist Wouter Jordaan explained.
He commented that investors and lenders are more frequently requiring mines to assess their performance against global best practice in ESG because the legislative frameworks in many African countries are still considered insufficient.
Jordaan added, “Mines relying on the large, international financial institutions for capital have, therefore, already aligned their ESG policies with benchmarks, such as the International Finance Corporation’s performance standards.”
Given its mineral resources, Africa stands to benefit enormously from a low-carbon future. If mining is done responsibly and government bodies continue to support the changing landscape in an ever-decarbonizing world. Africa has fundamental advantages, being home to rich deposits – requiring less mining activity and energy use – and plenty of renewable energy potential.
