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Unlocking Africa’s mining potential: The IFC’s three areas of development

The Investing in Africa Mining Indaba held in Cape Town last week saw mining companies and African policy makers and leaders congregate to discuss some of the leading issues surrounding mining in Africa.

Tom Butler, global head of mining at the World Bank/International Finance Corporation

Tom Butler, global head of mining at the International Finance Corporation

According to Tom Butler, global head of mining at the International Finance Corporation (IFC), “investment in extractive industries remains the most important driver of foreign direct investment in Africa”.  

However, he added that there are three areas that require development and investment in order to unlock the potential of the mining industry in Africa. These include mapping and consolidating geological data on where Africa’s mineral wealth lies, developing local procurement, and infrastructure development.

Mineral geodata coverage

At the Mining Indaba, Butler introduced the Billion Dollar Map, a World Bank initiative to consolidate the geological coverage of where minerals are found across Africa.

“Accessible information about geology is a public good, useful to investors and explorers, but also to policy makers and regulators and the public at large,” explained Butler. “Development also suffers when there is information disparity.”

He added that it is estimated that the current value of known subsoil assets per square metre in sub-Saharan Africa is around one quarter of that in high income countries.

“This is not because Africa has less extensive geological resources than Canada or Australia. It’s because there is yet an enormous amount of wealth left to discover. And we need US$1bn to put that on the map.

“It will promote standardisation and accessibility of information and it will level the playing field and make the job of private sector exploration teams easier. Coupled with in-country training and institutional support, and the work of exploration companies, this initiative will unlock the true worth of Africa’s mineral empowerment.”

He added that the World Bank is currently acquiring airborne geological data across Malawi.

Shared infrastructure investment

“New mining investment in Africa has to overcome an enormous infrastructure deficit,” said Butler, adding that in some African countries, such as Liberia, projected infrastructural spending by mining companies for their own use is actually greater than that of the public sector.

“We need to focus on removing the biggest bottlenecks. In Africa one of the biggest infrastructure bottlenecks is the power sector. On current trends less than 60% of Africans will have electricity in their homes by 2030, and unmet investment needs are estimated at upwards of $30bn,” he said.

“When it comes to mining, the demand for power can reach over 23,000 MW by 2020, which is three times the demand that it stood in 2000.”

According to global economist David Hale the entire sub-Saharan region produces less power than Spain, a country that has only 40m people, compared to the 900m people in sub-Saharan Africa.

Butler stated public-private partnership co-investment is the key to unlocking the funds needed for power-sharing structures in mining countries.

Developing local procurement

Butler said there is also a need to enhance the mining industry’s local procurement of goods, services and personnel, which will benefit local communities by creating jobs and business opportunities.

“Host communities see jobs and business opportunities as one of the key benefits of having a mine in their backyard.”

He added that the IFC is looking to support the diversification of income-generating activities surrounding the mine itself, such as agriculture and even tourism.

In July the World Bank is launching a global partnership for local content development for extractive industries in Africa. “It already has some of the biggest oil companies at the table,” Butler said.

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