Scrambling to the Bottom? Mining, Resources & Underdevelopment

The 21^st century race for resources and territory has simultaneously induced cries of optimism from donors and the international agencies, but there is despair from critics and many on the continent: that plunder and looting continues in a manner reminiscent of the colonial past (Bond, 2006; Bush, 2007). But is the current scramble similar to the previous looting of African resources? Are there no benefits from the demand for Africa's resources? Can the current dynamic be characterised as a scramble or, is it simply ‘business as usual’ for the good of civil society?

Africa holds 42% of the world's share of bauxite; 38% of its uranium; 42% of the world's reserves of gold; 73% of its platinum; 88% of diamonds. The continent also has enormous reserves of non‐ferrous metals like chromite (44%), manganese (82%), vanadium (95%) and cobalt (55%). Despite this abundance of resource wealth ‐ and these figures probably underestimate resource availability because of limited surveying ‐ there is little evidence that raw materials are translated into growth with justice and equality. And there is only limited evidence that strategies to convert local resources nationally, or to pool them regionally, will generate real value added for Africans. For while the continent's average economic growth rates have been high since 2000 compared with previous decades due almost entirely to the unprecedented price of crude oil and metals, African raw material producers do not benefit from the resource scramble.

Large scale resource income is limited to a few and largely oil producing countries like Nigeria, Angola and Sudan. And where mining for gold and other minerals continues apace, so too has displacement of communities/migration, increased environmental hazards and poor health and well being. Smaller countries too have hit the recent headlines, like Equatorial Guinea where oil has encouraged an attempted coup and imperialist intervention. Resource rich countries, moreover, consume only a tiny amount of what they produce. This indicates that the path to industrial‐based growth remains limited, almost entirely to South Africa and Nigeria. African states seem unable, under present contracts, to access improved value added from the processing of copper, gold and diamonds, bauxite, crude oil and cobalt. Value remains locked in the industrial centres of international capital.

Resource abundance accompanied by high levels of poverty and destitution in resource producing countries has led to an inverse relationship between resource availability and economic performance: the ‘curse of resources’. Between 1960 and 1990, for instance, the World Bank indicated that ‘developing countries with few natural resources grew 2–3 times faster than natural resource‐abundant countries’ (World Bank, 2003:149); the exception to the rule was diamond rich Botswana. The idea of the resource curse has captured the imagination of many and certainly driven contemporary donor prescriptions for Africa.; Here are five main reasons (Ross, 1999; Auty, 1995; Yates, 1996):

The ‘resource curse’ has been a dominant feature in explanations of ‘crisis in Africa’ ‐ used as shorthand to explain poor economic development especially when linked with war and conflict as in Sierra Leone and Liberia, Angola and the DRC. These explanations of crisis, that war and upheaval are driven by ‘greed’ or ‘grievance’, have downplayed shifts in terms of trade and commodity market instability. In the contemporary period, such negative market volatility is absent. Since 2000 sustained high commodity prices mark a new stable era but there are two problems with this idea of stability. First, it has been ideologically convenient for donors to underplay market volatility, shaped after all by demands of consuming countries, major international companies and the power of financial speculation driven by profit taking. Donors blame poor economic performance on poor governance and corruption: it is an inconvenient truth to see the cause of persistent underperformance located in the asymmetry of the world economy. The second problem with the current optimism that high commodity prices will deliver sustained economic growth, is the failure to have an historical context with which to view current raw material demand. Just how unusual and how sustainable is the current spectacular economic growth for Angola, DRC and Zambia?

Outside of any historical context, the growth figures for selected resource rich countries imply opportunity for development of infrastructure, employment growth and improved provision of public goods. But it remains unclear just why and how increased windfall income will be directed toward poverty reduction. And it is unclear for just how long current high minerals prices will continue. Periodic high raw material prices are not new but we need to note there has been a secular decline in the industrial commodity price index. In the context of the last 163 years ‐ from 1845 to 2008 ‐ the increased commodity prices around which there is so much optimism reflects more accurately a breakdown in the trading of commodities. This breakdown is characterised by immiseration and abjection for people living in resource rich economies, spoils politics as elites benefit from unproductive rentierism and unprecedented profits for mining companies. It must also be noted that increases in oil and metals prices is not always matched by world market prices for other African commodities like sugar and cotton. Thus, the impact of even the contemporary (short term) high for the commodities price index is not generalised across Africa. Non‐oil producers are in particular confronted by the enormous cost of energy.

This issue of ROAPE unravels several of the contemporary false dawns that are promised by donors and company rhetoric that imply Africa gains from the current resource boom. The articles here go beyond a ‘stocktaking’ of mining debates to examine issues of the control and regulation of mining capital, the role of transparency and corporate responsibility, implications for development, sovereignty, imperialist intervention and local resistance that influence the political economy of resource rich African states.

How to regulate or control mining companies has been a persistent feature of the relations between international capital and the state in Africa. Now is the time to revisit those important debates to ask if the state in Africa is better positioned to exact higher returns from foreign capital ‐ an issue about which the journal would welcome future contributions. The 1960s and the years of nationalisations in the 1970s were marked by an optimism in Africa that mining companies could be controlled: regulation was inappropriate when nationalist rhetoric demanded nothing less than complete control. Very often, however, nationalisation became a relief for foreign capital at a time of tumbling commodity prices. It was also a strategy of last resort or a pragmatic response by African politicians struggling for legitimacy and doing so by promoting spoils politics ‐ the use of the public purse for private gain. Nationalisation was seldom a tool for national development but reflected, instead, the promotion of sectional interests.

In 1984 Newsweek had a banner headline, ‘The Death of Mining’ ‐ the international economic downturn took the wind from the sails of African states. Structural adjustment disciplined any state with the temerity to take on the mining houses, or any other international company for that matter. The new optimism about the contemporary African scramble for resources requires us to ask, what exactly does the scramble mean? We need to also ask, what impact do actual investments in mining have in Africa and what impact does the repeated mantra about mineral‐led growth have on being able to strategise around issues of poverty reduction, the promotion of justice and struggles against imperialism?

In this issue John Lungu examines aspects of the historical and contemporary relationship between the government of Zambia and the privatised international mining companies. This is important not only because of increased Chinese involvement but also rumoured Russian interest to invest $2 billion in Zambia's mining sector. Lungu provides an explanation of Zambia's enduring dependency on copper revenue to fund national development, and the consequent importance of tax and royalty agreements to Zambia's political economy. He also notes the importance of struggles within civil society to pressure the state to exact higher returns from mining companies.

Ongoing struggles in Africa highlight the need for improved returns from foreign direct investment to state finances. There is now a new language of transparency in the extractive industries. Conversations with many mining company executives reveal that the years up to 2002 were lacking examples of corporate responsibility. Corporate irresponsibility was easier to cite with cyanide spillages, attacks on artisanal miners, pollution of waterways and so on. Companies now, however, flaunt their ‘green’ credentials of responsibility. Anglo American for example, whose net profit was $7.3 billion in 2007, stresses through its subsidiary Anglo Gold Ashanti (AGA) in Ghana, that more than $1.5 million is spent on livelihood strategies for communities impacted by their mining activity. Yet AGA continues to be accused of human rights abuses in Obuasi, where mine executives proudly boast ‘the mine is the community and the community is the mine’. There have also been similar accusations about the company's activities in South America regarding, amongst other things, the destruction of communities bordering their operations. Anglo agrees with voluntary codes of conduct but shrinks, like other companies, from those codes being compulsory or well policed. But even if they were compulsory, do African states and local officials have the capacity to confront mining company excesses and to check on compliance? There is an enormous gulf between the number of ‘experts’ that mining companies use in their African operations and the numbers and expertise available, and that can be afforded, by African states in their negotiations with mining companies.

There is a call for the greater regulation of international mining companies by Western advocacy and international protest movements. In this issue, Bonnie Campbell examines issues of regulation and legitimacy in Africa's mining industry with a detailed exposé of Canada's position regarding corporate social responsibility. She does this at a time of massive growth in Canadian corporate expansion in mining in Africa and at a time of tremendous public awareness of the negative impacts of the activities of Canadian mining enterprises. She looks at the issues raised by resource governance, the ‘securitisation’ of mining activities and the debate in Canada regarding the efficacy of legislation to limit corporate abuse of communities impacted by mining companies.

Corporate demand for new oil and mineral development has a dramatic impact on communities that live close to concessions or are displaced by them. That impact is harshly exposed in the ways in which artisanal or small scale (sometimes referred to as ‘illegal') mining is dealt with by African states, security forces and international companies. Artisanal small scale mining (ASM) provides employment in sub‐Saharan Africa for at least two million people. Conditions are harsh, child and female labour extensive but the sector provides work, income and opportunities to offset persistent rural impoverishment and de‐agrarianisation. ASM challenges concession agreements made between governments and companies; it also challenges the legality of corporate property and concessions ‐ especially when the area or parts of it once handed to companies is not mined.

Sabine Luning in this issue examines the impact of liberalisation of the gold mining sector in Burkina Faso for artisanal miners. She examines the power relations that emerge around the allocation of concessions to companies and the marginal positions of artisanal miners since the mid‐1990s. ASM can be viewed as one of many local strategies to contest the power of international capital and local state collusion with it. Resistance is evident throughout the continent to the consequences of mining expansion and the disruption and dislocation that it creates. Owusu‐Korantang details the success of a Ghanaian advocacy group that defends the rights of communities that are often displaced and then sandwiched between private mining concessions and government demarcated forest reserves. Such communities are ‘thrown out of development’, dumped with only cursory reference made by policy makers to the negative impact that mining has on lives and livelihoods in gold and other ore bearing areas. ‘Wasted lives’, to use Zygmunt Bauman's (2001) phrase, are common where mining companies operate. But so too is resistance! Owusu‐Korantang illustrates this from the perspective of advocacy and grassroots opposition to existing mining operations. Mining communities are not against mining per se, only the consequences of current political, economic and social impacts. These have disposed and jettisoned many people from sustainable, but not always wholly desirable, relations of production. But company strategies of ‘alternative livelihoods’, petty commodity production, fishponds and oil palm cultivation, fail to replace people's security following their loss of land. The role of corporations in the process of displacing people from existing livelihoods is often neglected among mining advocates who call for African ‘modernisation’. As the London Financial Times has noted, African mineral producers can no longer ‘sit on their natural mineral wealth, rather like inefficient dragons, confident that their riches will be there tomorrow’ (Financial Times, 19 March 2001).

Two articles in this issue look at the impact of international investment and at imperial designs in Africa and how these relate directly to issues of oil and uranium. Cyril Obi looks at the implications of the entry of Chinese oil companies for resistance in the Niger Delta ‐ long the exclusive preserve of Western oil firms. Obi looks at how local resistance has responded to the Chinese presence and whether the explosions in 2006 or the capture of Chinese oil workers in 2007 might be an indication of things to come for Chinese oil capital, or even whether this resistance is simply an extension of previous opposition to all foreign oil companies irrespective of their nationality.

Jeremy Keenan documents Tuareg struggles and resistance in Niger and Mali. He notes that while international capture of uranium is critical to grievances around land and marginalisation of Tuareg communities, the explanation for conflict must include an assessment of the ongoing impact on the region of the global ‘war on terror’; here he examines the complexity of these rebellions. Across the Sahel, as elsewhere in Africa, struggles over resources go beyond economic interests of companies and the local displacement of communities and haggling over royalties. They include key geostrategic issues of imperialist intervention and, as in the cases of Nigeria, Sudan, Zambia and DRC, they include the need to understand the implications of China's increased demand for resources.

China stresses a policy of non‐intervention in Africa. It says it does not attach conditionalities to its foreign investment and aid. This has implications that go beyond the still inadequately researched issues of swamping Africa with cheap Chinese goods and services, harsh labour practices linked to China's management of development projects and increased presence of what can only be described as a Chinese bourgeoisie in Africa's towns and countryside. The implication of China's policy of non‐intervention in Africa is that Beijing colludes with the continent's authoritarian and repressive regimes. We need to ask, in what way is that collusion different from western capitals’ support for regimes that ensure the flow of Africa's oil and metals to the US, Europe and Asia?

We need also to revisit the idea whether there are strategies that can be adopted that will police corporations and predatory states, and politicians, who are eager to reap the benefits for personal or corporate gain. These strategies, however, will need to be generated from within Africa by communities affected by mining and not just from outside by donors stressing the importance of non‐binding EITI initiatives and the like. The call for African states to improve the mechanisms of control over mining companies will intensify if projections for sustained raw material demand are accurate. The credit crisis and looming Western recession will jeopardise that sustained demand, notwithstanding growth of India's and China's economy. Several West African states will need to learn the lesson of assuming oil led growth will meet local development needs. Ghana's recent oil finds led to many church services of thanksgiving but for the religious, prayers of regret may have been more appropriate.

In this issue Gisa Weszkalnys examines the management of expectations of prospective oil growth in São Tomé e Príncipe. She explores the debate about contrasting expectations and realities as the island gets closer to its ‘take off’. The challenges that accompany windfall profits are notorious although there is no necessary reason why they should lead to a resource curse. The important issues clearly are, how resource income is generated and managed; how can political elites eager to line their pockets from the public purse be controlled; what role can be exacted by workers and peasants concerned that revenue be used to improve their conditions of existence; and how can a strategy of equitable growth and redistribution be fashioned without special ethnic or regional claims hijacking national development plans?

One umbrella concern that provides cover for these many linked issues is the idea of sovereignty: what can states do and how can they manage their autonomy of decision making? Alicia Campos examines the principle of sovereignty and the implication for development in Africa. She explores the implications for transnational social movements around the exploitation of natural resources and contrasts different social demands in relation to oil extraction in two different locations: Equatorial Guinea and Western Sahara. She argues convincingly that international norms of self‐determination and those developed for non‐autonomous people, in cases like Western Sahara, allow the positing of issues and demands over mineral resources in quite different ways from where ‘sovereignty’ is more established as in Equatorial Guinea ‐ notwithstanding the recent coup attempt.

The revised and updated articles that appear here were presented to a conference on Mining, the State and Development in Africa held in Leeds in September 2007, bringing together a uniquely large number of African scholars and activists. Thanks are recorded here to the financial support of the British Academy, Lipman Miliband Trust, Oxfam‐Novib, Third World Network ‐ Africa, the Review of African Political Economy and the University of Leeds who made this conference possible. This journal will revisit many of the concerns raised in this issue and we encourage submissions that will contribute to the debate. We question the idea of the resource curse and indicate the need to see the deleterious consequences of resource availability in Africa resulting from particular strategies of capital accumulation promoted by and a symptom of underdevelopment. It is important to explore further the debate that if mining companies are part of a particular type of uneven capitalist development in Africa where commodification of land and labour is partial and restrictive, what strategies can be developed to counter the poverty generating consequences of mining on a world scale?