Roger Dixon, Chairman and Corporate Consultant, SRK Consulting (SA)

SRK talks about challenges and best practive examples from its work throughout Africa.

Roger-Dixon-BLOGSRK is renowned for the consulting it does for mining, but it is also often involved in the development of infrastructure around its projects in sub-Saharan Africa. Can you tell us about SRK’s involvement in key projects in Africa?

RD: SRK is involved through its rail section on the Nacala rail line in Mozambique, which will link the coal deposits in Tete Province with the Nacala port on the country’s northern coast. SRK is project manager for the stretch of line that passes through Malawi.

We are also acting as technical advisor to the Government of Cameroon on two major projects in Cameroon :one in iron ore and the other in bauxite. Both projects involve rail links of more than 500 km to a new port still to be constructed at the town of Lolabe near Kiribi. These projects are part of the national development plan for a rail network in Cameroon; consideration is also being given to electric power plants to supply the projects and the rest of the country with electricity.

In addition to our geological, geotechnical and mining-related activity, SRK’s dozen offices around Africa – including Accra, Lubumbashi, Harare and various South African offices – are regularly involved in infrastructural work related to water, environment and social impact studies.

Instable power supply and inadequate transportation in Africa are two of the biggest challenges that mining companies face. Which country or countries have made the greatest strides in this regard and can and should it be used as a benchmark model for its neighbours?

RD: Unstable power supply is a problem throughout Africa; however, the issue should be considered in context. South Africa produces 40 GW (some 45% of the continent’s total) and, of the 45 countries in Africa, 21 countries produce less than 200 MW. Despite setbacks at Medupi and Kusile, South Africa must be the model to follow.

There is substantial interest in the development of the Inga scheme on the Congo River; if and when this is developed, it could produce 40 GW and transform the economic outlook of the continent. The South African government has been proactive in negotiating preliminary take-off agreements with the developers of the scheme.

There are promising developments in power supply in Mozambique, Kenya and Cameroon, and there are also interesting developments in liquefied natural gas (LNG) as an energy source.

Across Africa there is an increased drive for local participation in the mining sector. This has led to the development of localization policies in countries such as Zimbabwe, South Africa and Zambia. How has this affected mining operations in such territories?

RD: Localisation policies go under different names and vary in their application across Africa’s borders, but the principal of mutual benefits for all stakeholders in a mining project remains a key to success. It is important, for instance, to develop service providers in the areas around mines, and many mining companies have gone to great lengths to give affect to these policies.

In our work with clients’ operations, SRK stresses the importance of earning and maintaining the “social licence” to mine, which includes engaging from a project’s earliest stages with governments and communities to optimise local participation and benefit.

The question is: “what do governments do to increase localisation other than providing the legislation?” Do they encourage the start-up of small businesses by providing user-friendly labour laws? This is a factor that is often missed. Complying with localisation policies unfortunately adds to the cost of doing business, and this can undermine job creation, which is ultimately what the encouragement of mining investment should be all about.

What does the trend for resource nationalization mean for the development of African nations that rely heavily on GDP and foreign direct investment generated by the mining industry, especially where SRK has a presence or direct involvement?

RD: Resource nationalism takes many forms on the African continent and tends to discourage foreign direct investment, particularly among junior miners who do not have large budgets with which to accommodate national demands.

SRK is often involved in helping clients navigate the various country regulations and expectations, ensuring both the legal compliance and good corporate citizenship that is required to build long-term relationships and sustainable mining projects.

As with most issues, a collaborative approach is required in which all stakeholders – including government and the community – work together to reach a common objective that will benefit everybody. In Africa, this collaboration needs to take place on a regional (rather than just national) basis, so that countries can work together on large projects requiring resources and investment from more than one government.

Can you choose three to five African countries where the national government has employed best practices, what these practices are and what other African nations can learn from these?

RD: Best practice has been built up in South Africa over more than 100 years, and is founded upon a power and transport network unequalled on the African continent; this should be the continent’s benchmark. Several other countries such as Kenya, Mozambique and Cameroon have moved forward with development plans, but it remains to be seen whether these counties have the institutional capacity to bring development plans to fruition.

Do you have a final message for the over 8,000 delegates that will be attending the African Mining Indaba and be looking into the top 20 mining destinations in Africa?

RD: South Africa is by far the dominant economy in Africa, with an established transport and power network that is beyond comparison on the continent. The time has come for South Africa to stand up and take a leadership role, both in SADC and on the continent as a whole. The country cannot afford to let competing political philosophies impede job creation and economic growth: both locally and throughout Africa.

This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

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