Amidst speculation this week that Australia’s resources boom is nearing an end, unlocking the vast wealth of Africa is high on the agenda for mining executives, investors, government officials and NGOs meeting in Perth this week.
The Africa Down Under Conference has become an increasingly important event, as Africa continues to attract an ever larger share of global exploration dollars.
There are reportedly more than 300 Australian mining companies active in Africa, where competition for resources – particularly land, water, energy and food – is fierce. Indeed investment in Africa by Australian miners and explorers is reportedly to the tune of more than $20 billion and currently more than 40 per cent of all overseas Australian mining projects are in Africa, with many companies leading that charge headquartered in Perth.
What do companies have to consider when working in such an environment? How do they ensure they are conducting business in such a way as to not only return profits to shareholders, but benefit the countries in which they are operating, thus avoiding conflict with communities and maintaining their social licence to operate?
Mining companies can stimulate economic growth and bring prosperity, but without a commitment to human rights and sustainability they can also cause people to lose their land and way of life, while irreparably damaging the environment.
Two-thirds of the world’s poorest people live in countries rich in natural resources, but too often these countries are characterised by poverty, corruption and conflict.
The rapid increase of Australian mining operations in countries with high levels of corruption and weak governance brings with it the risk that companies will be exposed to corrupt behaviour.
Opaque management of natural resource revenues by foreign governments can lead to corruption and mismanagement, which can create unstable and high-cost operating environments for companies. It also can fuel project-related violence, with women and children in the community often worst affected.
The UN Special Rapporteur on the Rights of Indigenous Peoples, James Anaya, in Australia last week, has recognised the adverse impacts mining can have and has made it a focus of his work for the next three years.
It’s estimated that as much as half of the gold produced between 1995 and 2015, and up to 70 per cent of copper production by 2020, will take place on the lands of Indigenous peoples around the world.
The exclusion of Indigenous peoples from political decision-making processes – locally, nationally, regionally and globally – places them in a position of extreme disadvantage as they face loss of land and livelihoods. So gaining informed consent is crucial if trouble is to be avoided and rights upheld.
Regrettably, in recent months, several large companies have actively lobbied the World Bank Group to weaken its standard on free, prior and informed consent.
When problems arise, communities frequently lack access to an effective complaints mechanism. Implementing such a mechanism at the local level is critical if a mining company is to maintain a social licence to operate, avoid having to deal with simmering community tensions and conflict, and negotiate a remedy when things go wrong..
Governments also have a major role to play to ensure mining drives sustainable development and poverty reduction.
The Australian Government’s Mining for Development Initiative, announced in Perth last October, could help, but only if mine-affected communities have an opportunity to participate in decisions that will impact on their day-to-day lives.
The community engagement strategy announced as part of this initiative must be put into action. Funds must be made available to communities and civil society organisations in African and other resource-rich countries, so that they can meaningfully engage with companies and governments and get their fair share of the resource wealth buried beneath their feet.
The Australian Government also can increase revenue transparency in the extractives sector, by following the lead of the US, which last week announced new rules to stamp out corruption by forcing oil, mining and gas companies listed on US stock exchanges to report all payments to governments in the countries in which they operate.
Lack of reliable, public information about the flow of revenue to governments from extractive companies makes it impossible for communities to monitor the money and prevent it being embezzled by corrupt officials.
It means that companies can be spending billions of dollars on a project in a country, but communities still may not have adequate hospitals or schools.
Australia should introduce similar legislation here, for companies listed on the Australian Securities Exchange.
As a mining giant, there is still much more our country can do to increase the chances of mining contributing to the alleviation of poverty around the world.
Andrew Hewett, Executive Director, Oxfam Australia
This opinion editorial was first published in The West Australian on 27 August, 2012.