In this continuing AFKInsider series, “Who exploits industrial metals in sub-Saharan Africa?” we are examining the influence of foreign mining companies across the continent.
While colonialism has been ousted from Africa, many argue that multi-national corporations based in far-off capitals practice economic colonialism with developed nations using economic power and technical capability to exploit the resources of sub-Saharan Africa while paying a pittance to local populations.
In part one of the series, we examined the two largest oil- and -gas-producing countries in sub-Saharan Africa — Nigeria and Angola — and who profits from the riches that lie beneath the soil. In this segment we will examine sub-Saharan Africa’s largest producers of industrial metals iron ore and copper: South Africa and Zambia, respectively.
In contrast to many mineral-producing states, South Africa is an exceptionally diverse economy with many successful industries other than mining. While the country ranks among the world’s largest producers of iron ore, it also has extremely prominent financial, legal, energy and transport sectors.
The country is the seventh-largest iron ore producer in the world, and the fourth-largest exporter. Yet all its mineral exports — including 72 percent of the world’s platinum, 59 percent of its kyanite and many other significant minerals — only contribute 8.8 percent to the South African economy.
Increased demand seems inevitable due to China’s predicted super cycle or a prolonged (decades-or-more) trend in the rise of real commodity prices driven by urbanization and industrialization of a major economy. The super cycle, combined with a mining ban in Goa, India — traditionally responsible for about half of India’s mining — present very good news for the South African mining industry.
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Ownership in companies that export iron ore is increasingly diverse due to South Africa’s indigenization or black economic empowerment policies, aimed at increasing black ownership of mining companies to 26 percent by 2014.
By far the largest iron ore-extracting company in South Africa is Kumba Iron Ore Ltd. In 2011, the most recent year for which complete data is available, Kumba was responsible for 41.4 megatons of the country’s 58.1-megaton total iron ore production. Of this production, 38.9 megatons came solely from the Sishen Mine, by far the largest in the country.
The majority shareholder in Kumba is Anglo-American Ltd., a London-based mining conglomerate, with 69.7 percent of ownership. Kumba is also owned by the South African Industrial Development Corp. and minority shareholders.
Assmang is the second-largest iron ore-extracting company in South Africa, mining a total of 11.5 megatons in 2011.
Assmang is owned by a diverse group including Oresteel Investments Ltd., the Bokamoso Mining Trust, the Fricker Road and Assore Employee Trusts and minority shareholders. The companies and trusts behind Assmang are based in South Africa.
|Company||Majority Ownership||Production (Mt)||% of Total Production|
South Africa is the continent’s largest economy and the level of ownership by local companies is far greater there than in most other sub-Saharan countries. The only countries that have a greater local stake in their mining industries are those with laws mandating that businesses are primarily owned by locals, such as Nigeria, discussed in part one of this series.
Since the country’s independence, Zambia has relied heavily on copper production to stay afloat. Estimates put production of the metal at 40 percent of the Zambian gross domestic product at independence. Production slowed down in the years following independence due to waning demand and rampant mismanagement. In recent years demand has picked up due to industrial growth and a seemingly unquenchable thirst for expansion in China. This is good news for Zambia, which already ranks as the sixth-largest producer of copper in the world.
Ownership of mining companies in Zambia dates back to privatization in 2000. Prior to privatization the majority holder in copper mines throughout the country was Zambia Consolidated Copper Mines Ltd. A large percentage of mining interests were sold to private corporations, but the government held onto a portion through an investment holdings company, the Zambia Consolidated Copper Mines Investments Holdings Plc (ZCCM-IH).
The centerpiece of Zambian mining is the Mufulira mine. Mufulira is owned by a joint venture, Carlisa investments, which in turn owns Mopani Copper Mines Plc., itself a Zambia-based joint venture between Glencore International AG, First Quantum Minerals Ltd and Zambia Consolidated Copper Mines Investments Holdings.
|Company||Nationality||% of Mopani LLC|
|First Quantum Minerals||Canada||16.9|
A number of other countries in Africa play prominently into the world’s supply of industrial metals. Privatization has solved much of the corruption and mismanagement that came along with government-owned industry but has also sent much of the profit across oceans.
In what has been termed “resource nationalism,” there is a move in some African states to reclaim natural resources. While it is vital that the riches beneath the soil benefit local populations, pulling individuals out of poverty, providing healthcare and education, a balance must be struck that also ensures the mismanagement and corruption of massive state-owned enterprises is not repeated.