Africa News blog

Australia worse than Africa for mining? Yikes!: Clyde

By Clyde Russell The idea that Australia is a more dangerous place for mining investment than Mali might seem strange to most observers, but that’s exactly the view of the boss of the world’s third-biggest gold producer. Mark Cutifani, the chief executive officer of AngloGold Ashanti, said last week he was more concerned about government policies toward mining in Australia than about nationalism in Africa. On the face of it, this is an extraordinary comment that has gone largely unreported by both the Australian and international media. How can it possibly be that Australia, a stable Western democracy with rule of law, independent courts and a culture of vigorous debate, is a more risky place than countries like Mali, which had a military coup last month and is battling an insurgency by Tuareg separatists? Of course, it may be that Cutifani, an Australian-born mining engineer who has headed the Johannesburg-based company since October 2007, was ramping up the rhetoric to make a point when he talked to reporters on March 27 in Perth, capital of the resource-rich state of Western Australia. But this would appear to be at odds with his previous record of speaking sensibly about the gold-mining industry while remaining an advocate of the interests of his global company. The point Cutifani was probably trying to drive home is that the debate in Australia over its vast mineral resources appears to have veered off-track and descended into political point-scoring. “The politicians and we as industry leaders are missing each other,” the Australian Associated Press quoted him as saying. “Somehow, we’ve got to land this discussion and stop the class warfare-type conversations and turn the conversations into constructive dialogue about the future of the country and the industry.” To be fair, Cutifani has also lobbied against proposals for a resource rent tax in South Africa and moves to raise taxes in other African countries where AngloGold operates, such as Ghana and Mali. But for Australia, the background to his comments is an intensifying war of words between Wayne Swan, the treasurer in the Labor Party-led minority government, and mining magnates over the new Mineral Resource Rent Tax (MRRT) and the carbon tax. Both these taxes are due to start on July 1 and have raised the ire of many industries and the opposition Liberal Party.

The MRRT will impose a 30 percent levy on so-called super profits of large coal and iron ore, and doesn’t yet include other producers such as gold miners. The carbon tax will impose a price of A$23 on the emissions of the top 500 polluters, to be phased in, while reducing income taxes for poorer households in order to offset the expected increase in energy costs. The Labor Party, which has slumped in opinion polls partly over public disquiet over the new taxes and a broken promise not to introduce a carbon tax by Prime Minister Julia Gillard, appears to be following the tactic of stoking the politics of envy as a distraction method. Since the financial crisis that sparked the global recession in 2008 it has been easy for politicians to attack the rich and blame untrammeled greed for the economic carnage. In Australia, the target is billionaire mining barons and Swan attacked iron ore magnates Gina Rinehart and Andrew Forrest as well as coal developer Clive Palmer in an essay published last month. Interestingly enough, Swan didn’t attack BHP Billiton and Rio Tinto, the two global miners that led initial opposition to a stiffer resource tax that was watered down after Gillard deposed former prime minister Kevin Rudd in a party-room coup. Swan accused the billionaires of trying to use their wealth to “distort public policy,” apparently without any sense of irony, given that he was using his position as the second-most powerful politician in Australia to do the same. It seems to me that Australia would benefit from a more sensible debate on how to ensure the mineral wealth is developed in a way that rewards the owners of capital that take the risks of developing projects as well the overall economy and citizens in general. Debate in Australia appears to be driven by short-term political cycles, with federal elections every three years leading politicians to focus more on spin than sound policies. Is the MRRT the best design that could have been implemented? Will it raise sufficient revenue without leading to less investment, and will it help ensure the long-term viability of mining? Should the revenue it raises be used to fund a one percentage point cut in the company tax rate, as Labor proposes, or would it be better put toward building a sovereign wealth fund? These are all valid points for debate, but aren’t getting a hearing in Australia currently. Instead, as AngloGold’s Cutifani pointed out, there is an unedifying mud-slinging match that does little to enhance the reputations of either Swan or his targets.

Niger following Mauritania’s blueprint for an African coup

“We didn’t launch a coup,” said Colonel Djibril Hamidou Hima, spokesman for the military group which had days earlier overthrown the president of Niger, “We just re-imposed legitimacy.”

The statement was almost a carbon copy of the one I heard in Mauritania in 2008, where the soldier who had hustled an elected head of state out of the presidential palace spent the first few days denying his actions amounted to a coup d’etat.

Far from it, General Abdel Aziz said. He had in fact restored democracy.

Niger is the second military takeover in West Africa since the Mauritania coup – Guinea followed less than six months later — and the strongest indication yet that Abdel Aziz’ putsch is becoming the blueprint for aspiring presidents who don’t want to waste time standing in an election.

The Aziz model: For a start, you don’t shoot the man whose power you’re taking. That looks bad. Get him out of the palace and under house arrest, but keep bloodshed to an absolute minimum. The first pictures you want broadcast are of crowds cheering the coming of the liberator of the people, not of soldiers in shades firing machine guns.

Mauritania got away without a shot being fired and Guinea there was nobody to shoot anyway as the president had died. In Niger, at least three soldiers were killed, but ousted president Mamadou Tandja was captured without taking a bullet.

From here, the Mauritanian model shows how to make it stick. Once you’re in power, don’t do anything silly. If there are opposition parties, let them be. If people march against you, let them march. Keep the country running, talk about elections, allow the international community to have its say and to get involved.

Can gold save Burkina Faso?

Is the soaring gold price a ticket to a better life for struggling freelance miners in Burkina Faso?The impoverished West African country is trying to revive its gold mining industry, spurred by the global financial crisis and the need to reduce the economy’s dependence on cotton.Near the village of Mogen in northeastern Burkina Faso, artisanal miners are engaged in a dangerous hunt for gold in hand-dug pits.Landslips kill miners almost every year, although mostly during the rainy season. When it’s dry, children help sift the soil in search of the nuggets that pay for food and school fees.On a good day, a miner will unearth around five milligrams of gold, which earns about $10. But often they come up empty.Jeremi Nacanabo, who helps run an association of informal gold miners, told Reuters Africa Journal: “We don’t have the technology to take out the gold. Right now we’re working in a traditional way, which creates enormous problems and causes many accidents.”But gold mining in Burkina Faso is experiencing a revival after a halt in the late 1990s caused by poor management and inadequate capital.Analysts say poor prices for cotton, the country’s main export, have rekindled interest in mining. The financial crisis is tempting investors to buy low-risk assets such as gold, which is now selling for about $1,000 per ounce.Burkina Faso revised its mining codes in 2003 to attract foreign investors with tax breaks.The goal is to join the ranks of Africa’s top producers — South Africa, Ghana and Mali — within the next three years.In the dusty northeast of the country, the Taparko-Somita mine, which is run by theCanadian-listed, Russian-controlled company High River Gold, is the first of four gold mines that have begun operating in the past two years.Together they produced 5.5 tonnes in 2008 and they are heading for more than that this year. The government takes a 10 percent free stake in each mine.Local miners, who once worked for themselves, are finding jobs with the mining companies. They earn a salary, work in safer conditions and are given training.But even with the recent gold rush, Burkina Faso is still struggling to revive its economy and provide basic services for its 13 million people.Of course everyone can’t be part of the gold mining revival, but global demand for Burkina Faso’s natural resources could at least provide some trickle-down benefit for the economy.

Mining and free trade in Eritrea

Eritrea’s President Isaias Afwerki has guarded his country jealousy since independence, pushing a self-reliant attitude that encourages Eritreans to rebuild Eritrea for themselves.

But in order to develop the potentially lucrative mining and trade sectors, he will have to open up the country more to foreign money and therefore possible foreign influence.

The government intends to launch free trade zones at its main ports in Massawa and Assab on its Red Sea coast, and dozens of firms, including from China, India and Dubai, have already registered to operate there to take advantage of the bustling cargo shipping lanes.

Reserves of gold, zinc and copper have been found in Eritrea and analysts are predicting a mining boom. Fourteen foreign firms are exploring in the country and the first project is expected to start producing gold by late 2010.

“We believe mining will play an important role in boosting the economy and the government is committed to develop it,” Alem Kibreab, director-general of mines, told Reuters Africa Journal.

The authorities want the sector to be developed slowly and carefully to prevent the so-called “resources curse”, where oil and minerals have spawned and corruption violence in Africa.

After the long struggle for independence from Ethiopia and subsequent border dispute, expectations for the development of the economy to support the population of 4 million are high – although Afwerki says the mining sector is no magic solution.

France and Africa. New relationship?

Before Nicolas Sarkozy was elected president in 2007, he made clear he wanted to break with France’s old way of doing business in Africa – a cosy blend of post-colonial corruption and patronage known as “Françafrique” that suited a fair few African dictators and the French establishment alike.

He has made the same point during his past visits to the continent.

“The old pattern of relations between France and Africa is no longer understood by new generations of Africans, or for that matter by public opinion in France. We need to change the pattern of relations between France and Africa if we want to look at the future together,” Sarkozy said in South Africa early last year.

This week he is back in Africa for a visit on which France’s business interests play a very prominent role.

In the Democratic Republic of Congo, Sarkozy called on the country to work with former foes Rwanda and Uganda in a partnership based on exploiting the region’s natural riches.

Another stop was in neighbouring Congo Republic to see President Denis Sassou Nguesso, an old friend of France who seized power in the oil-producing state in 1979, lost it in a 1992 election and then returned five years later via a civil war. In the past, Congo Republic symbolised as much as anywhere the old style of diplomacy.

After the Congos, the schedule takes Sarkozy to Niger, a particularly important country for nuclear power dependent France because of the uranium mining interests of French state-controlled nuclear energy group Areva. It is building a huge new mine in Niger, where the government is fighting Tuareg rebels who demand more of the region’s wealth.

Storm in Madagascar

In the relative political calm of the Indian Ocean, Madagascar has long been a centre of turbulence.

Now another political crisis is brewing as the opposition accuses President Marc Ravalomanana of abuse of power and threatening democracy. Tens of thousands of opposition protesters demonstrated in Antananarivo on Wednesday, two days after an earlier rally descended into violence that left nearly 40 people dead.

The bodies of most the victims were found in a burned out clothing store. The authorities said they were looters who got trapped.

Ravalomanana and opposition leader Andry Rajoelina are very different characters.

The president is a self made millionaire. In his early twenties, he started selling yoghurt off the back of a bicycle. Today, at 59, he is a dairy tycoon with extensive business interests.

Rajoelina is 34 years old and nicknamed TGV, after the French high speed train, for his rapid-fire manner.

He is incensed that the authorities closed down his private TV station after it broadcast an interview with the former president, Didier Ratsiraka. Since he was elected mayor of the capital – a position Ravalomanana once held – Rajoelina has been one of the most vocal critics of the presidency.