Eritrea Resource play (ERP)

[Tackler]

African states must play ball

By: Ken Gooding

Posted: 2004/02/15 Sun 13:30 / © Mineweb 1997-2004

LONDON (Mineweb.com) -- David Klingner, Head of Exploration for Rio Tinto, gave a warning today (February 11) that, although the world’s second biggest mining group was ready to make a substantial contribution to the further development of Africa’s mining industry, it would be only in those countries where governments gave their wholehearted support.

The search for mineral deposits was not just the responsibility of exploration and mining companies, he insisted, but also of the community at large. “Companies cannot conduct the search on their own initiative, but must have the wholehearted support of the civil society in which they operate. Society must provide an appropriate business environment backed up by suitable laws and regulations if the search for mineral deposits is to be successfully undertaken,” he added.

“The many countries that make up Africa make for a spectrum of exploration opportunities from among the very best to the very worst when all of the factors, from geology, exploration history, laws, rules and regulations and governance are taken into account,” he said.

In the past five years Rio had demonstrated its confidence in Africa by spending US$57m – about 13 percent of its global $450m spend in that time – on exploration in Botswana, Guinea, Mauritania, Mozambique, South Africa and Zimbabwe. This had lead to “promising opportunities” with mineral sands deposits in Madagascar and Mozambique, iron ore in Guinea and diamonds in Zimbabwe.

Rio had “looked at opportunities” in the Democratic Republic of Congo (DRC), Egypt, Gabon, Morocco, Namibia, Tanzania and Zambia. The group had many joint ventures with major companies and juniors in Africa as well as a network of offices, laboratories and field equipment.

But funds for exploration were limited and exploration would always be focused on those countries in which Rio had the most confidence. Asked by Mineweb which countries at present were “off limits” as far as Rio was concerned, Klingner mentioned Angola, DRC – even though it “is a treasure trove, a wonderful place to look for minerals” – the Central African Republic, Equatorial Guinea, Guinea Bissau, Sudan and Libya.

Klingner said a fundamental requirement of a government wanting to encourage a vigorous exploration industry was to provide clear rules about the granting of exploration title, including the size of the area that could be held, the period of time for which it could be held, the qualifications of those who could apply, the fees to be paid for the privilege of holding the title, the work programme or expenditure commitment that must be carried out, and the report that must be submitted on work done when complete.

“The rules should encourage ground to be actively explored or else relinquished and for all data gathered to be recorded and submitted to the government for the benefit of those who succeed them in holding the ground,” he added.

“Of vital importance is that the successful explorer will receive a reward for discovery commensurate with the value to society of what is found. Governments must recognise the level of investment risk taken on by explorers if they wish to promote exploration.”

This meant that exploration and mining title should be conjunctive, that a mining lease would be granted to the holder of the exploration title on which a discovery was made as a matter of priority – subject only to the proposed development meeting society standards and best industry practice.

“The rules under which a development can taken place, particularly the fiscal regime and the community and environmental standards to be met, need to be known beforehand. The ground rules must be clear and obvious to the explorer and he must be confident that they will not be changed half-way through the process or following the discovery of a valuable deposit.”

Klingner said Rio also needed to have confidence in the political framework of countries where it operated. “The explorer must know that the difference between those that govern and those that loyally oppose them are matters of degree and are not so fundamentally ideologically different that they would alter the fabric of society if the opposition came to power.”

There must also be “confidence that those that govern are people of integrity who place the development of their country and the advancement of their citizens above their desire for personal enrichment.”

Klingner summed up by saying: “As the explorer goes through the process of prioritising his programme, projects in countries about which there is a lack of confidence in the rules or governance will not survive. There are so many, many options, and always - and properly - a limitation on the available funds, such that exploration will be focused where confidence is highest.”