In the 19th century, foreign explorers came to Africa in search of ivory, rubber and slaves. Today, they come for Africa’s minerals — its copper, zinc and tungsten. The developed world needs them for its skyscrapers, cell phones and much in between.
The exchange is sometimes unfair. Often, African governments don’t know the value of the natural resources underground, but mining companies from the West — and, increasingly, China — do. That knowledge asymmetry has cost African countries and their citizens as much as $1.4 trillion over the past 30 years.
“Mining companies know the true potential of these minerals, and the government doesn’t have a clue.”
But a more level playing field may be in sight, thanks to a World Bank initiative that aims to compile Africa’s mineral maps into a single, public database: the so-called Billion Dollar Map. The goal is to give African nations as much information as possible about their natural resources so that they can earn a fair price for the minerals they sell, World Bank officials say.
While mineral maps of the African continent exist, most are private or piecemeal. The Billion Dollar Map is crucially different: Its contents will be available to the public. And that, experts hope, will minimize underpricing and corruption, and help governments get a fairer price for their countries’ resources.
“When a government licenses its acreage for mining companies, they really don’t know what’s underground,” says Paulo De Sa, the World Bank geologist in charge of the project. “The mining companies know what the true potential of these minerals is, and the government doesn’t have a clue.”
African government efforts to force mining companies to process minerals before export may backfire as they come up against weakening commodity prices and investor demands that mining firms reduce risky investments. In the last year alone, Zimbabwe, Zambia, the Democratic Republic of the Congo (DRC), Namibia, South Africa and others have hinted at, announced or put in place measures aimed at adding value to minerals exports, which would boost tax revenue, encourage the formation of new businesses and add jobs. Zimbabwe, which holds the world’s second-largest platinum reserves after South Africa, has taken a hard line. Late last year, President Robert Mugabe threatened to stop exports of raw platinum in a bid to force mining firms to process the metal domestically.
As many African leaders are keenly aware, ignorance is peril in the mining world. Over the past 30 years, African countries lost $600 billion to $1.4 trillion in “net resource transfers,” according to a Washington, D.C. think tank . Most losses occur when governments are persuaded to sell their natural resources — minerals, oil, timber — for less than they’re actually worth, or to purchase them back again at inflated prices.
Private mining companies have been mapping Africa’s minerals for decades, and nations with mining interests have entered the game, too.
The poorest countries tend to be hardest hit. In the DRC, one of the world’s most underdeveloped nations, underpricing mineral assets cost at least $1.36 billion between 2010 and 2012, according to a 2013 Africa Progress Panel report . Not coincidentally, Israeli billionaire Dan Gertler stands accused of purchasing private oil and mineral assets that once belonged to the Congolese state, only to resell them back to the government for as much as 300 times the purchase price.
The Gertler case “is an egregious example of what the World Bank is trying to prevent,” says Aly-Khan Satchu, a Kenyan financial markets and commodities trader who specializes in oil. “By making this information public, it makes it a little more difficult to sell assets at below-market rates, which is part of the African problem.”
This article has been extracted from http://www.ozy.com, please click on this link to read the article in full http://www.ozy.com/fast-forward/africas-billion-dollar-map/30547.article
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