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41. Implications of COP26 for Africa's mining industry

Author:
Vincent Obisie-Orlu
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Good Governance Africa (GGA)
Abstract:
Due to the importance of critical minerals in the energy transition, the mining industry has a significant role to play in the pursuit of a net-zero future. At the same time, critical minerals mining is an environmentally damaging process, often occurring in jurisdictions with poor labour and environment standards, compounded by political instability risk. The recently concluded 26th Climate Change Conference of the Parties (COP26) shows that Environmental, Social and Governance (ESG) integration must play a larger role in the mining industry.
Topic:
Climate Change, Environment, Political stability, Mining, Industry, and Minerals
Political Geography:
Africa

42. A strategy to future-proof Zambia’s mining industry

Author:
Vincent Obisie-Orlu
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Good Governance Africa (GGA)
Abstract:
Zambia is in an opportune position to benefit from the growing demand for copper to support the global energy transition. Policymakers in President Hakainde Hichilema’s administration have an opportunity to build a resilient and high-performance Zambian economy to bring a true New Dawn. To realise this vision, Zambia must address key economic challenges such as the legacy effects of the previous instability of the mining regulatory system. Volatile changes have plagued the country until recently, with past governments changing mining taxes in response to the copper price. Resultantly, investment growth has diminished and the multiplier effect that would otherwise have been associated with mining has been foregone. Poor macroeconomic governance and mining growth retardation have also pushed Zambia’s national debt to unsustainable levels, as exports have been insufficient to fund debt repayment. The country is now seeking debt relief from its external creditors and has struck a deal with the International Monetary Fund. In this first of a two-part policy briefing series, we examine the key economic challenges associated with mining governance reform and provide recommendations that will help develop a resilient mining tax regime and a more streamlined regulatory environment. The second briefing will address the debt challenge. Considering the growing demand for copper to meet the global net-zero goal, and an impending global supply crunch, more copper will need to be produced and Zambia is in a prime position to do so. At the same time, Zambia has declining copper ore grades. Our primary recommendation, therefore, is that a profit-based Mineral Royalty Tax (MRT) framework be strongly considered. This will enable investment in the necessary capital and infrastructure needed to increase output and promote exploration. Though profit-based MRTs can be exploited by mining companies making claims of increased capital investment to increase outputs, when combined with the implementation of the Extractive Industries Transparency Initiative (EITI)’s reporting standards, the risk of exploitation is reduced.
Topic:
Natural Resources, Economy, Tax Systems, Mining, and Industry
Political Geography:
Africa and Zambia

43. The legal and political implications of a judicial review of the Zondo Commission’s findings

Author:
Helen Acton
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Good Governance Africa (GGA)
Abstract:
Gwede Mantashe, the Minister of Mineral Resources and Energy, has threatened to judicially review the Zondo Commission’s (‘the Commission’) findings against him. This decision highlights legal and political weaknesses in South Africa’s democratic system. The law is unclear on whether the findings of a Commission of Inquiry (COI) could constitute administrative action reviewable in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). This was not sufficiently dealt with by the High Court the only time it previously faced a judicial review of a COI’s findings. Even if COI findings could constitute administrative action, it seems that the Commission’s findings and recommendations concerning Mantashe in particular are unlikely to be reviewable in terms of PAJA. The principle of legality would be his most viable option for a legal challenge, but on analysis it is unlikely Mantashe would succeed on this basis either. Moreover, challenging the findings of this Commission on legally dubious grounds underscores political weaknesses in the ruling African National Congress (ANC) party, and consequently the electoral system more generally. Not only does the proposed challenge by a senior party member in Cabinet undermine the ANC’s steadfast commitment to end entrenched corruption, but it also demonstrates that the party’s step-aside rule is too narrow. The rule does not impose political accountability on members implicated by COI findings unless they are criminally charged by the National Prosecuting Authority (NPA). This sets the bar too low for political accountability, which should not be equated with criminal liability. The ANC’s lenient stepaside rule, and its members’ use of legal technicalities to avoid political accountability, is dangerous in a proportional representation system with a one-party-dominant legislature. Voters elect a party in a closed list system, and so depend entirely on the ruling party to hold its members individually accountable for wrongdoing. The ANC needs to prove to the electorate that it takes this job seriously.
Topic:
Natural Resources, Mining, Judiciary, and Energy
Political Geography:
Africa and South Africa