Country profiles on the regulatory framework and the artisanal mining sector [AfricaMaVal]

The AfricaMaVal project aims to encourage EU-Africa value chain partnerships, that will require substantial investment. A country’s regulatory framework (task 7.4) is of high importance to facilitate attracting investment. Similarly, it is essential to strengthen Africa’s artisanal and small-scale mining (ASM) (task 7.5) sector to enhance its position as a key supplier of Extended Critical Raw Materials (ECRM) to Europe. This report is a joint deliverable consisting of country profiles on the national regulatory framework and the artisanal mining sector in Africa.

The first part of this report presents the outcomes of task 7.4, the national regulatory framework and good governance evaluation which is led by the Southern African–German Chamber of Commerce and Industry (AHK). It aims to assess practices that govern responsible mining investment in Africa, especially focusing on ECRM value chains. The results are documented in the form of 54 country profiles, which provide an overview of the policy and legal framework for the mining sector, focusing on the judicial system, foreign ownership, migrant & local labour law, ASM sector, licencing and permitting regime, taxation and royalties, mineral beneficiation, macroeconomics, investment climate and risk ratings. These country profiles are based on publicly available information and cover regulatory frameworks and governance based on the criteria deemed relevant for an investor.

The legislative review was complemented by an analysis of national frameworks for good governance, transparency, and accountability while taking note of risk ratings from Global Insurer Allianz, Moody’s, Fitch, S&P Global Ratings, Extractive Industries Transparency Initiative (EITI), Organisation for Economic Co-operation and Development (OECD) and Transparency International. The assessment also notes findings of the Fraser Institute Annual (FIA) Survey of Mining Companies which provides key insights into policy perception and investment attractiveness in Africa's mining sector. Countries with stable and predictable policies, such as Botswana rank highly. Countries with high or unpredictable taxation rates, such as the Democratic Republic of Congo (DRC), tend to score lower. Despite policy and regulatory challenges, countries with significant mineral wealth, such as South Africa and Zambia, still attract considerable interest. Political instability and security concerns, prevalent in countries like Mali and Zimbabwe, weaken their appeal.

In many African countries, a considerable portion of mining activities particularly in the ASM sector are largely informal, leading to inconsistent law enforcement and opacity owing to corruption and bureaucratic hurdles. However, numerous countries have embarked on policy and regulatory reforms to foster private sector engagement, increase local value addition, improve geological and mineral information systems to underpin exploration and mine development (especially for ECRMs), attract new capital investments, and regulate the ASM sector. Regional efforts have also been initiated to amplify environmental aspects, benefits for mining communities, improve governance and transparency in licensing and management of mineral rights, and accountability in the management and use of mineral revenue, by joining initiatives like EITI. Furthermore, many countries have improved their investment climate by improving regulatory stability, ease of doing business, availability of financial incentives, and investor rights protection, consequently elevating their risk ratings, and making it attractive destinations for investment.

The second part of this report, the artisanal and small-scale (ASM) country profiles, presents the outcomes of task 7.5 which focused on identifying responsible investment opportunities to strengthen ASM value chain potential for ECRM, with particular emphasis on responsible investment opportunities that strengthen the ASM sector’s supply potential and address ESG impacts while also contributing to higher value addition and economic development. The scope has been defined based on the outcomes of the AfricaMaVal deliverable 1.4 which identified the African countries where the ASM sector is already involved in the production of ECRM, or where there are ECRM deposits suitable for ASM production. As a result, task 7.5 focused on analysing the ASM sector in Burundi, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo, Ethiopia, Madagascar, Morocco, Mozambique, Nigeria, Republic of Congo, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe. Each profile aimed at characterising the ASM sector nationally and identifying major challenges inhibiting development and major investment needs. The focus on national context rather than at individual project levels was agreed based on task 7.5 scope, but also by recognising that many of the challenges and related investment needs of the ASM sector are systemic and can represent greater opportunities for sustainable development if tackled at sector level, while also taking into account the context of specific mineral value chains and mining communities.

Task 7.5 was led by the Levin Sources team through mostly desk-based methods, such as reviewing existing literature and publicly available information, and mostly phone interviews with stakeholders in the countries in scope, except for Cameroon and the Republic of Congo. The authors recognise the limitations of the desk-based methods in relation to the ambitions of task 7.5. In particular because this affected a more collaborative stakeholder engagement, the possibility to triangulate information collected or to address some of the data gaps encountered.

The analysis done to compile the 15 ASM country profiles provides an overview of the African ASM sector, showing both differences and commonalities. In particular, the research outlined how ECRM production is not yet happening to the same extent across the ASM sector in the 15 countries analysed. Instead, many, e.g., Cameroon, Côte d’Ivoire, Mozambique, Republic of Congo and Tanzania, remain more focused on commodities such as gold, coloured gemstones, and diamonds. In other countries with sufficient geological endowment in ECRM deposits that are suitable for ASM exploitation, increasing global demand and higher prices in certain periods for some of the ECRM, as in the case of lithium, have resulted in an increased involvement of the ASM sector, for example in Madagascar and Zimbabwe. Other countries, like Burundi, the DRC, Rwanda and Zambia, have a well-known geological ECRM endowment and a long history of ASM, contributing to the production of ECRM like tantalum-niobium, tin and tungsten (3T), copper-cobalt and manganese. Although specific to national context, a series of common challenges were identified by analysing the 15 countries. These include the structure and implementation of regulatory frameworks, availability of geological information, access to formal financing mechanisms, rudimentary mining practices (skills and tools) and evidence of adverse social and environmental impacts. Building on the challenges presented in each profile and based on inputs from stakeholders when applicable, investment needs and opportunities have been outlined. These include support to governance and technical assistance, programmes to facilitate access to finance and commercial partnerships through involvement of private sector (traders, commercial banks, etc.) and continued efforts to support responsible mining to mitigate and reduce adverse environmental and social impacts.