This
writer comes from an anti development mindset and is quick to bite on
whatever flimsy grounds can be drummed up. Yet the core narrative is
correct. Canadian mining has become a global force in wealth
creation and job creation in the whole resource extraction industry.
In
fairness, it is essentially unbeatable and this will continue simply
because it is now completely global. Observe that 90% of all
exploration and development capital is raised in Canada. Without
that component, the rest is rubbish. Thus the trend continues.
Mining
expertise always needs to be imported to the new mine. That is what
drives it all. It is also quite true that conditions are always
awful. Thus it takes an expeditionary mindset and the capacity to
deal with local conditions.
One
other thing that is worth understanding. In south America and
Africa, the local 'miners' pay no taxes and use environmentally
damaging technology all at starvation wages. It may allow thousands
to starve but better ways truly exist to start with.
Thus
a foreign operator who arrives with a decent royalty plan, employee
development and a truly clean operation is profoundly welcome and it
is not long until it is the preferred scenario.
Beyond
that the idea that we in Canada should legislate mining employment
standards in a foreign jurisdiction will play about as well as if we
were to try it in Arizona. Someone is dreaming in technicolor.
How Canada
Dominates African Mining
BY TRAVIS LUPICK, 18
APRIL 2013
ANALYSIS
Foreign companies from
a range of countries compete in Africa's mining sector. But according
to a number of measures, those from one country dominate: Canada.
When asked to think
about foreign mining contracts in Africa, many people's minds
will jump to China, or perhaps one of the former colonial powers such
as the UK or France. China's construction and agricultural projects
in particular are at the core of the 'Africa Rising' narrative, as
are the Asian giant's more than 1.3 billion consumers.
Some readers might be
surprised therefore to learn that Canada - with a population less
than one-tenth that of China's and geographically about as far from
Africa as one can get - has quietly grown to become one of the
largest stakeholders in Africa's mining sector - possibly the
largest, depending on how you quantify it.
A grizzly competitor
"We certainly are
one of the biggest players [in Africa] in several respects",
Pierre Gratton, president and CEO of the Mining Association of
Canada, told Think Africa Press. "It's a largely undeveloped,
unexplored continent, which makes it interesting... .A new frontier.
Our industry is often one of the first to go where no-one has gone
before."
Countries competing
with Canada in African mining include the UK, France, Australia,
China, and South Africa, but ranking their relative dominance is all
but impossible; countries measure and declare assets and investments
using different methodologies and with varying levels of
transparency. However, documents provided by Natural Resources Canada
seem to portray a relatively accurate picture of the country's
activities in Africa.
According to these
documents, in 2011 - the most recent year for which statistics are
available - 155 Canadian companies were operating in 39 African
countries. Their combined assets* totalled more than $30.8 billion,
up from $26.5 billion in 2010.
Canadian firms were
most active in East Africa, with $12.7 billion on the ground in 2011.
West Africa came next with $9.9 billion invested, followed by
Southern Africa ($4.9 billion), Central Africa ($3.4 billion), and
North Africa ($36.7 million).
Ranked in descending
order by value of assets, Canada's most important mining partners in
2011 were: Zambia, Mauritania, South Africa, Madagascar, Democratic
Republic of the Congo, Ghana, Tanzania, Mali, Senegal, and Eritrea.
While Canada is a
major force in African mining, current projects on the continent
actually only comprise a minority of Canadian companies' operations
overseas. According to Natural Resources Canada, assets in Africa
accounted for just 21.5% of Canadian mining companies' cumulative
assets abroad. The majority are in Latin America.
Taking stock
However, those numbers
describe just the interests of companies headquartered in Canada.
Expand the picture to take into account other country's projects
financed on Canada's Toronto Stock Exchange (TSX) and the TSX
Venture, and Canada's role in mining around the world grows even more
substantial.
According to a
December 2012 report drafted by the TSX, during the first nine months
of 2012, 89% of all global mining equity financings were done on the
TSX and TSX Venture (up one point from 2011).
The document states
that only 7% of mining projects traded on the TSX are located in
Africa, but that does not diminish the fact that a lot of money for
mining sites in Africa is going through the exchange in Toronto.
"There are
approximately 315-20 listed [mining] companies that are not African
but are doing business in Africa", says Bruce Shapiro, president
of Mine Africa, a Canada-based business and marketing company. "Of
those, over 50% are Canadian. So in terms of the companies that we
would normally look at, we certainly dominate that market."
Shapiro explains that
what sets Canada apart is the level of access to finance available on
the TSX, where there's a tradition of an appetite for risk. "Capital,
at the moment, is impossible to raise", he remarks, in reference
to struggling developed economies. "But if it wasn't, it would
be relatively easy in Canada, compared to some other markets."
Shapiro notes that
Canada has vast deposits of mineral wealth within its own borders, a
long history mining those deposits, and is now taking this expertise
to Africa. Looking to the future, he continues, prospectors tend to
be moving either into less-explored low-risk areas with stable
governments or high-risk regions that tempt miners with the potential
of very high rewards.
Rocky relations?
But in addition to a
favourable private sector, mining companies are also attracted to
Canada for a less-flattering reason, suggests Jamie Kneen, a
coordinator for advocacy group MiningWatch Canada.
"There are hardly
any Canadian laws of international application", he says. "If
something goes wrong, people may be able to sue in Canada, but that's
not entirely clear - it hasn't worked yet."
Kneen explains that
while countries such as the US have passed domestic laws that govern
corporations' activities abroad, Canada has not done the same. The
current Conservative government has actually voted down several
attempts to increase accountability abroad.
One of those attempts
to regulate the mining sector overseas was initiated by Member of
Parliament John McKay. In April 2009, he proposed a bill that aimed
to increase corporate accountability in developing countries, but to
no avail.
"It died a
glorious death", McKay recalls on the phone from the Canadian
capital of Ottawa. "They [mining lobbyists] don't play to lose."
He notes that without
such legislation, international corporations based in Canada are left
to self-regulate their conduct and adhere to the domestic laws of the
countries in which they operate as they see fit.
"We have no
ability to tell any mining company what to do, when to do, where to
do, or how to do it", McKay emphasises. In much of Africa, that
creates potential for abuse. "Canadian companies are venturing
into areas they've never ventured before", he says. "There
doesn't seem to be any hesitation to go into conflict zones and areas
where you know darn well you're going to have some difficulties of
some kind."
Indeed, as Pierre
Gratton from The Mining Association of Canada notes, Africa's mining
sector is expected to continue to expand, and Canadian interests on
the continent to grow with it.
"There's a
recognition that this is something that we do well here, that we're
good at mining", he says. "It's one of the exceptions to
the Canadian economy - we tend not to necessarily dominate sectors,
but in mining, we do."
*Natural Resources
Canada defines mining companies' cumulative "assets" as
"calculated at acquisition, construction or fabricating costs,
and includes capitalized exploration and development costs,
non-controlling interest, and excludes liquid assets, cumulative
depreciation [sic], and write-off."
Travis Lupick is a
freelance journalist currently living in Monrovia, Liberia. His work
has appeared in al Jazeera English, the Africa Report magazine, and
Canada's Toronto Star. You can follow him on Twitter at@tlupick.
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