Extract July 2020 - Extractives Hub

Extract & Update, July 2020

             Extract July 2020

   Focus on development minerals - full text, open access Extractive Industries and
   Society journal articles

The focus of this issue of the Extract newsletter is ‘Development Minerals’,
specifically a special section of the journal Extractive Industries and Society
(EIS), edited by Prof. Daniel M. Franks of the University of Queensland, that
interrogates the relationship between minerals, development, livelihoods and
poverty reduction.

The full text of each of the paper can be downloaded for free using the links
below until 4 August 2020. This collection of papers dates back to a

symposium, “Back to Base: Reframing the role of industrial minerals and
construction materials in Africa's resource development strategy” held at the
African Union Commission, Addis Ababa, 17–20 October, 2016.

Through exclusive interviews with invited authors, this issue of the Extract
showcases individual articles contained in that special 'Development
Materials' section.

A full list of all of these articles, with the relevant full text links, is provided
below.

   1. "Reclaiming the neglected minerals of development" - Professor
         Daniel M. Franks introduces the Development Minerals agenda and
         argues for a rethink in the role of minerals in global development,
         asking whether the development community has been overlooking
         key commodities, issues, actors and development pathways; Free
         Download
   2. "Geotechnical assessment of sand for civil engineering in
         western Cameroon" - Dr. Samuel Tetsopgang, B. Bertrand
         Bongsiysi, L. Shula Dinayen, and T.F. Divine Nkenglefac assess the
         suitability of sand used for civil engineering works in Western
         Cameroon; Free Download
   3. "Reframing matter: Towards a material-discursive framework for
         Africa’s minerals" - Charles Akong proposes a framework of
         minerals that is consistent with the Africa Mining Vision; Free
         Download
   4. "Uncovering the high value of neglected minerals: ‘Development
         Minerals’ as inputs for industrial development in North Africa" -
         Dr. Amir Lebdioui argues that the type of linkages that are likely to
         maximize the impact of Development Minerals are forward production
         linkages; Free Download

5. "Enabling food security through use of local rocks and minerals"
       - Professors David A.C. Manning and Suzi Huff Theodoro review the
       use of locally-obtained crushed rocks to supply a range of major and
       trace nutrients for agriculture; Free Download
   6. "Policy convergence on development minerals in Africa: A study
       of Ghana’s regulatory frameworks" - Charles Afeku and Dr. Akua
       Asamoah Debrah explore regional policies and interventions aimed at
       promoting the Development Minerals sector to determine whether
       there has been convergence in the approaches across Africa; Free
       Download
   7. "Voices of artisanal and small-scale mining, visions of the future:
       Report from the International Conference on Artisanal and Small-
       scale Mining and Quarrying" - Professor Daniel M. Franks, Caroline
       Ngonze, Lacina Pakoun, and Dr. Degol Hailu. This last journal article
       includes full text of the ‘Mosi-Oa-Tunya’ conference declaration,
       reviews the artisanal and small-scale mining, and looks forward
       aspirationally the future; Free Download

We are delighted to present author(s) interviews below for four of these
seven journal articles listed above.

Geotechnical assessment of sand for civil engineering in western
  Cameroon - Dr. Samuel Tetsopgang, B. Bertrand Bongsiysi, L. Shula
  Dinayen, and T.F. Divine Nkenglefa

Our first EIS interview is with Dr. Samuel Tetsopgang, Senior Lecturer,
Department of Geology, University of Bamenda, Cameroon, regarding:
"Geotechnical assessment of sand for civil engineering in western
Cameroon."

1. While it is true that development minerals have significant impacts
for domestic development, a major challenge some developing
countries encounter is with regards to setting up an appropriate legal
and governance regime to harness these minerals. How in your
consideration should governments address the issues of standards
and environmental challenges that characterise the mining of
development minerals?
Yes, you are right that some developing countries encounter difficulties in
setting up an appropriate legal and governance regime to harness benefits
that development minerals may generate in their national budget. I think
there is still a deficiency of knowledge for decision makers in these countries
in term of the income and domestic benefits that the expansion of the sector
of development minerals can bring to their society, domestic industries and
to the increase of their national budgets. First of all, these developing
countries need to recognize the importance of the development minerals in
job creations and also poverty alleviation in their respective country. Once
this is done, scientific data on development minerals is needed in setting up
an appropriate legal and governance regime to avoid legal code on
development minerals that may be difficult for implementation. These

scientific data on development minerals are going also to be useful in
establishing standard and environmental norms in each sector where
development minerals are to be used. The existing mining code will ease the
development of legal code for development minerals.

2. The informal mining activities which you identified in Cameroon
seems to be a common trend in most developing nations. Are there
benefits to formalizing development minerals mining?
Yes. There are huge benefits for formalising the mining of development
minerals in a country like Cameroon. For example, the mining of a
development mineral like sand create hundreds of informal jobs from
quarries to the building passing through transportation and
commercialization and other services. All these jobs need to be formalized to
create more revenues for the national budget and also increase the working
conditions of people involved in this sector. The formalization of these jobs
will also create enable conditions for the environment protection.

3. Can you highlight some policy frameworks or approaches which
these nations can adopt to bring such mining activities within a
recognised governance system?
I think that by bringing some basic social services cheaper or free of charge
to the mining community of development minerals, who are sometime within
the poorer in the society, governments can easily implement policy for the
formalisation of the mining in this sector. In fact, the good process of the
formalisation should have as the main aim to improve the living conditions of
the artisanal or small scale miners. The organization of the mining
communities into smaller groups of interest may also ease the process of
formalization.

Uncovering the high value of neglected minerals: ‘Development
  Minerals’ as inputs for industrial development in North Africa - Dr. Amir
  Lebdioui

Our second EIS interview is with Dr. Amir Lebdioui, Fellow in Development
Management, London School of Economics and Political Science, regarding
"Uncovering the high value of neglected minerals: ‘Development Minerals’ as
inputs for industrial development in North Africa":

1. Given that there are several linkages that can be created from
development minerals in local economies, what factors should be
considered in prioritising these linkages? For instance, what should
inform a policy choice to create more production linkages than fiscal
linkages for a developing nation?
This is a very important question. Several factors should come into
consideration when assessing the desirability (and feasibility) of developing
production linkages around any commodity (including development
minerals).

Production linkages generally offer better developmental prospects than
fiscal linkages, as they hold significant potential for jobs creation, foreign
exchange/export revenues, the acquisition of transversal productive
capabilities that can serve other sectors, as well as for a stabilisation of
commodity prices through the transformation of raw material into
intermediate and finished products that are less vulnerable to price
fluctuations.

Nevertheless, there are many other considerations that should come into
play when assessing the suitability of production linkages around a
commodity. Resource exhaustibility is one of them. If a country runs out of a
given resource, it might need to start importing it to keep operating
downstream industries that process and transform such a resource. Firms
that operate upstream industries would also face a lower domestic market
demand which would hurt their productivity, unless they are sufficiently
competitive to export in foreign markets. Relatedly, policy decisions to
promote production linkages need to anticipate possible technological
changes, which may disrupt the ways in which given minerals are
transformed.

It is also important to consider input costs and the degree of technological
complexity required for vertical diversification, which can affect the
commercial viability of downstream and upstream activities. Even though the
acquisition of capabilities can be aided through public policies, the fact that
an activity is related to a country’s commodity does not necessarily mean
that there are lower entry barriers in that activity.

Lastly, although there is evidence that commodity value addition can
contribute to mitigate the effects of commodity price volatility, it remains
important to consider for commodity-dependent countries whether
diversifying along the commodity value chain is the best way to diversify their
economy precisely because such diversification may perpetuate the
vulnerability of economic sectors to fluctuations of raw commodity prices.

2. Some literature suggest that more focus is placed on the creation of
linkages for high value minerals than low -value development minerals.
How does the pricing structure of these minerals affect the creation of
linkages?
The focus on the creation of linkages around “high value” minerals and the
lower academic and policy interest for linkages around development
minerals is partly based on the (wrong) assumption that a lower value to
weight ratio translates into a lower developmental value.

In that respect, the ACP-EU Development Minerals programme under Daniel
Franks’ leadership has really helped to push the development minerals
agenda forward by shedding light on the considerable developmental
opportunities that lie in the exploitation of these minerals.

As argued in my study, the pricing structure of these minerals does affect
and reframes the suitability of the different linkages that can arise from their
extraction. The low commercial value in international commodity markets of
Development Minerals means that they generate low rents and consequently
weak fiscal linkages. This stands in stark contrast with energy resources,
such as oil and gas, and most hard commodities. Because of their
particularities (in terms of scale, low-rent generation, technology and capital-
intensity), the type of linkages that are likely to maximize the impact of
Development minerals on manufacturing and agricultural development are
production linkages (both forward and backward).

3. The study of the Cevital case highlights the role the private sector
can play in the creation of production linkages in a developing country.
It also suggests that Small and Medium-sized Enterprises (SMEs) and
faced with some challenges that limit their participation in the mining
activities? What do you think a government should do to address these
challenges?

Firms that are not as large as the Cevital group (the largest private group in
Algeria) undoubtedly face even higher barriers to integrate high value added
segments of mining supply chains.

SMEs face particular challenges when attempting to integrate mining supply
chains. Generally speaking, the scale of operations in the mining sector often
means that there is very little time frame for learning by doing and for
suppliers to scale up their operations. Firstly, the high cost of disruption of
large scale and non-stop mining production constitutes an entry barrier to
test new solutions and suppliers, who need to convince mining firms to
disrupt their large-scale production processes to test new products.
Secondly, even once local products and solutions are adopted, firms need to
scale up their operations immediately to respond to the industry needs,
which may be challenging for SMEs.

The role of industrial policy is particularly relevant in that regard. Several
market barriers to the development of local suppliers in the mining sector can
be overcome by targeted policies and infant industry protection to provide
R&D support; to accumulate specific skills needed in value addition
processes through training programmes; to provide fiscal incentives for
localisation; and to provide opportunities for learning-by-doing and intra-
industry dialogue through supplier development programme.

Enabling food security through use of local rocks and minerals - Professors David.
  C. Manning and Suzi Huff Theodoro

Our third EIS interview is with David Manning, Professor of Soil Science at
Newcastle University regarding "Enabling food security through use of local
rocks and minerals", co-authored with Prof. Suzi Huff Theodoro, Brasilia
University:

1. What benefit can development minerals with potentials to serve as
remineralizers* add to the sustainable development goal of food
security? (*addition of minerals to the soil)
There are at least two ways in which this goal is achieved. First,
remineralizers have the potential to address supply of crop nutrients for the
poorest farmers, or farmers with the poorest land, on the basis of using
locally-sourced rocks to add to soils.This can have a low level of formality,
but the principle of ‘do no harm’ is vital, and so advice or education is
needed to ensure that unsuitable rocks are avoided. The ‘ideal’ rocks are
igneous or volcanic rocks, given the association between these and high
levels of fertility in natural soils. There is a history of use of sedimentary
rocks rich in phosphate, and some use of metamorphic rocks is reported.

The second route is associated with formal mining, on the basis that the
ideal situation for a business is that all that is mined is sold – from the point
of view of both financial and environmental sustainability. In these
circumstances, a mining company will perhaps have a primary product – eg
a metal – and develop markets for what would have been regarded as
waste, disposed of to tailings dams. An example of this approach is
Anaconda in Newfoundland, who recently have issued press releases
relating to the use of their tailings for food production.

It is also worth noting that remineralizers are usually silicate rocks. Many
crops (cereals, grasses, sugar cane) require silica for growth, and it confers
pest resistance. In deeply-leached tropical soils, especially oxisols,
availability of silica is problematic, and so remineralizers supply this as well
as other nutrients. In temperate soils, this is less of an issue as reactive
silicate minerals occur widely, naturally, within the soil.

Examples of rock to avoid would be those associated with the mining of
metallic sulfide minerals, as there may be metal contamination, and mobility
of potentially toxic metals could be enhanced by acidification caused by
sulfide oxidation. This issue relates to the occurrence of acid sulfate soils as
a recognised problem in rice production. On the other hand, crushed rock
from a quarry that is producing construction materials is likely to be suitable
(although this needs to be checked), as materials suitable for construction
tend to lack sulfides. It is also important in very magnesium-rich silicate rocks
to be sure there is no asbestos – in some parts of the world, this occurs in
mine tailings.

2. From your research, Brazil happens to be a leading nation in the
exploitation of these remineralizers as a substitute for imported or
expensive chemical fertilizers and has gone ahead to set out the
legislative framework required to actualise this. Specifically, what legal
or policy steps are required for the commercialization of these
remineralisers in developing nations?
Brazil does lead in this respect, and that lead is because of need. Although
commodity crops are produced from 76% of Brazil’s agricultural land,
providing work and creating wealth, that involves only 10% of farm units. The
remaining 90% of farm units produce the food that is seen in markets, shops,
supermarkets etc that is destined for domestic consumption – fruit,
vegetables, meat, dairy, eggs etc. Many of these farm units are poor, and so

there is demand for alternatives to imported chemical fertilizers. Additionally,
there is a growing market for organic production, within which chemical
fertilizers cannot be used.

From my point of view, and this is as a foreign observer, the pathway to
regulation involved a sequence of steps and actors. At an early stage, the
Rochagem movement and associated conferences brought together farmers
and geologists who shared the common interest in remineralizers. Mining
companies became involved, as did Empresa Brasileira de Pesquisa
Agropecuária (EMBRAPA), Brazil’s government agricultural advisory body.
So, the first step was to articulate the demand for remineralizers, then to
identify specific rock types, with supporting trials as part of a developing
evidence base of material efficiency as well as recording the experience and
views of farmers. EMBRAPA’s involvement was a vital step, as it was
through EMBRAPA’s work that the approach was defined in the context of
regulation that could eventually become regulated in federal law. It is clearly
essential that government bodies that advise farmers and that advise on
policy are ‘on board’. There is considerable evidence now available in Brazil,
and a body of trained and experienced people who understand
remineralizers, and so other countries could build on Brazil’s experience.

The commercialisation depends on there being a strong regulatory
framework, and the market needs to exist in which customers have the
confidence to buy the products, safe in the knowledge that they will perform
as expected and do no harm. It is costly to package materials of this type,
yet bulk loads might be too much for small farmers. Consequently there is a
need to use cooperatives to buy in bulk and then disperse as needed to
individual users; some countries are doing this.

3. Is the Brazilian model something you recommend to other nations or are
there still areas of improvement to incentivise further development of
remineralizers in Africa for instance?

The Brazilian model probably wouldn’t work so well in the northern
hemisphere, although it offers much to organic producers there and those on
land where chemical fertilizers cannot be used in the interests of protecting
groundwater supplies. Where it has the greatest potential is in countries with
deeply weathered tropical soils – so, much of Africa. Africa’s use of chemical
fertilizers is well below what would be expected to feed the continent’s
growing population, so there is a serious gap in crop nutrition; Africa’s soils
are being mined of nutrients in an unsustainable way. South-South
collaboration between Brazil and Lusophone Africa (especially Angola) is
already taking place to transfer experience, and there is abundant scope to
develop this approach more widely. For example, the East African Rift has a
range of rock types that are unique to that geological environment, and that
have considerable potential to be used as remineralisers, with a substantial
supporting research base from Europe’s experience between the two World
Wars, when potash fertilizers were in very short supply outside Germany.

4. As new research efforts are encouraged towards the
commercialization of development minerals, can you highlight some
challenges which you believe deserve critical evaluation and further
appraisal to guide policy makers?
The key challenge is in understanding soil as a holistic system. The
emphasis in crop production in recent years has been on the biology of
crops, and the role of soil mineralogy has been largely overlooked, especially
since Rothamsted Research closed its mineralogy department. There is a
lack of interdisciplinary thought, knowledge and collaboration, and the
essential sciences – biology and geology – have drifted apart somewhat.
Minerals are dynamic components of the soil system and demonstrably react
in response to biological stimuli – every crop demonstrates that. A second
challenge is that we need to know the mineralogical composition of our soils.
Surprisingly, that is rarely known in the UK, where soil mapping and
classification hardly ever records mineralogy. Brazil is again ahead of the UK
in that respect. Only with mineralogical knowledge can the use of

remineralizers be properly understood. Third, there is a tendency for policy to
be dominated by northern hemisphere approaches to agriculture, which is
understandable. But as Jeffrey Sachs recognised, soil nutrient management
in developing countries is vital to support growth and human health/nutrition.
Care needs to be taken to understand how soils function in their specific
locations, and to plan the use of remineralizers or chemical fertilizers in that
context, guided by local knowledge.

  Policy convergence on development minerals in Africa: A study of Ghana’s
  regulatory frameworks - Charles Akefu (below left) and Dr. Akua Asamoah Debrah
  (below right)

Our fourth and final EIS interview is with Charles Akefu, Senior Legal Officer,
Ghana Minerals Commission, and Dr. Akua Asamoah Debrah, Visiting
Lecturer, University of the Witwatersrand, regarding "Policy convergence on
development minerals in Africa: A study of Ghana’s regulatory frameworks":

1. Ghana has undergone a country mining vision (CMV) process and
has also aligned its policies with the African mining vision (AMV).
Thus, to some extent, it can be said that Ghana has a coherent
regulatory framework with respect to development minerals. Can this
be said to be the case with other countries in the region?
Ghana has progressively enhanced its policies in relation to development
minerals. For instance, per its 1986 Mining Law, exceptions were made to
the licensing regime to permit the local use of building and industrial minerals
for specific works, agricultural use, and road construction. From the 1990s,
exploration campaigns and reports were undertaken to determine the
availability and extent of industrial minerals occurrences and deposits. In

2006, a new Mining Act set a minimum investment threshold for foreign
investments in industrial minerals. And in 2014, a new mining policy was
adopted including the objective to promote industrial minerals “with the view
to mining, processing, value addition and use in local industry”. However,
before that, mining regulations, including local content regulations passed in
2012, included provisions to promote local value creation.

Country Mining Vision (CMV) processes or processes for alignment of
mining policies with the 2009 Africa Mining Vision (AMV) are not all the
same. Whereas countries such as Lesotho and Rwanda have undergone
more comprehensive CMV process, countries like Ghana, Tanzania, and
Zambia that already have extensive mining regulatory frameworks can adopt
specific AMV policies or align specific policies with the AMV. Thus, in
Ghana’s case the CMV process sought to enhance the benefits of mining to
the country beyond fiscal revenues, especially through local content and
value creation.

One of the factors that made the alignment of Ghana’s 2014 Mining Policy
with the 2009 Africa Mining Vision (AMV) meaningful is the country’s past
experiences with commodity price super-cycles. In order to mitigate the risks
of dependence on the traditional minerals, i.e. gold, diamonds, manganese,
and bauxite, it was imperative that other minerals such as base metals and
industrial minerals would be developed to shore up mineral revenues and
provide additional benefits. So, the continental vision found a real need. In
contrast, many of the countries in the region are at a more recent stage of
discovery or large scale exploitation of the traditional or High Value Minerals
(HVMs) and are focused on defining optimal regulatory frameworks to
support the HVM sector. They are yet to fully appreciate some of the
challenges that mineral commodities face and their price elasticity.
Unfortunately, they are neglecting development minerals in the process.

This is why we recommend aligning the AMV and the 2009 ECOWAS Mining
Directives or a process that devolves the AMV at the regional level before

the CMV process, especially in the case of development minerals. This is
because a regional process will require the countries to consider a regional
approach to development of development minerals that could enhance the
potential and viability of development minerals and their benefits to the
region, in terms of mining and linkages such as local production of inputs,
infrastructure, local value addition, and consumption or utilisation in other
industries. Through such an approach, the benefits for all countries in the
region, including those that only have development minerals or no minerals
at all, could be immense.

2. The AMV compared to ECOWAS mining directives has a more robust
framework for development minerals. Ghana for instance has aligned
its policies with the AMV. To what extent have the policies articulated
under the AMV been implemented in Ghana and other countries who
adopted the AMV.
In respect of development minerals, the AMV envisions “a mining sector that
optimises and husbands Africa’s finite mineral resource endowments and
that is diversified, incorporating both high value metals” and requires specific
actions to promote “especially industrial minerals” for the local production of
consumer and industrial goods. Other requirements directed towards
minerals generally are also relevant, including local beneficiation and value
addition of minerals to provide manufacturing feedstock, backward and
forward linkages, promoting small and medium-scale enterprises to enter the
supply chain, infrastructure, innovation and technology, and regional
integration and harmonisation to facilitate factor flows. Thus, the AMV
requires African countries to look beyond HVMs to develop linkages around
development minerals within national and regional economies, such as
limestone, clays, gypsum, kaolin, salt, etc. for aggregate, fertilizer, ceramics,
cement, paints, pharmaceutical, chlor-alkali and other manufacturing
industries.

Many African countries that revised or adopted new mining policies and laws
after 2009 have sought to align their policies or regulatory frameworks with
the AMV. Since 2014, about 26 countries have undergone CMV processes,
whether comprehensively or partially. These include Angola, the Democratic
Republic of the Congo (DRC), Ethiopia, Ghana, Kenya, Lesotho, Sierra
Leone, and Rwanda. Despite adopting the AMV, many countries focus on
attracting investment into the HVM sector and provide incentives and
strategies for promoting exploration and exploitation of HVMs while
neglecting development minerals. For instance, Sierra Leone’s 2019 Mining
Policy proclaims that “serious consideration is being given to improving
understanding of the benefits that can accrue from the regulation of the
development minerals sector involving sand, clay, granite etc.” but does not
articulate any further policies or strategies. In contrast, Rwanda is seeking to
develop a specific policy and regulatory regime for development minerals,
and this could be instructive for other countries.

Curiously, the progress Ghana is making in implementation of the AMV
objectives for development minerals is partly attributable to policies and
strategies that predated the AMV, such as state funded exploration
campaigns and studies, promoting local ownership of industrial mineral
rights, and stipulating a minimum investment threshold for non-citizens. For
instance, the US$10 million non-citizen investment threshold necessitates
foreign investors to include processing and other value addition linkages in
order to qualify for an industrial mineral right. This has led to expansion of
the cement manufacturing industry using limestone from local quarries;
laundry bar soap and paint manufacturing from kaolin mining; brick making
and manufacturing of crucibles and cupels from mining clays; and concrete
products from sand and aggregates quarrying, etc. Post AMV, local content
regulations passed in 2012 provided that certain supplies and services
required by the mining industry should be procured locally, such as
explosives, cement and cement products, electrical cables, HDPE and PVC
products, rebars, fuel, general lubricants, bolts and nuts, conveyor rollers,

core trays, overalls and working clothes, chain link fencing/wire
netting/barbed wire, cables, haulage services, catering services, security
services, legal services, insurance services, and financial services, etc. Such
policies are relevant for optimising the benefits of HVMs as well as
development minerals.

It is important to emphasise that the success of the development minerals
sector in Africa hinges on the strong linkages within the local and regional
economy. As such, every mineral economy aiming to enhance the sector in
Africa, would require an optimal local/regional content and beneficiation
strategy/policy to build these linkages. Thus, we recommend among other
things to be integrated with a country’s mining policy - technology transfer,
investment in research and development, infrastructure (power, transport,
and ICT), and regional cooperation to scale up investments in development
minerals.

3. To what extent have the local contented policies with respect to
development minerals in Ghana have impacted the country’s GDP?
Can the policies be used as a template by other countries in Africa?
Mining in general accounts for 8% of Ghana’s GDP. Gold mining alone
represents about 90% of Ghana’s mineral production. Of this, about 5% of
the total mining contribution to GDP is attributable to gold. The remaining 3%
is distributed between the other minerals, i.e. diamonds, manganese,
bauxite, and industrial minerals. However, production of diamonds,
manganese and bauxite have been declining. Conversely, the quarry sector
which produces several important development minerals such as stone
chippings, crushed stone, gravel, and sand for the construction industry has
been growing steadily since 2009. Average percentage change in quarry
production between 2010 and 2015 was 27.93%, with a corresponding
221.56% increase in value from GH₵16,999,133.44 to GH₵54,662,553.24. If
the modest domestic linkages are considered, the multiplier effect of usually

by a factor of 7 means that the sector would be critical for the development
of the Ghanaian economy.

The AMV policies adopted by Ghana for development minerals are pertinent
for advancing the resource-based Africa industrialisation and development
strategy envisioned under the AMV. The policies articulate the goals and
provide the signposts for attaining the goals. So, while the policy intent and
outcomes are common to the countries, the approaches to attaining the
outcomes are dependent on each country’s resources and capacities.
However, the experiences of Ghana can be instructive for other countries,
such as the importance of exploration and acquiring a comprehensive
development minerals database to facilitate investment, and clearly
articulating and implementing strategies to ensure economic linkages with
the exploitation of development minerals. But even Ghana’s development
minerals sector could benefit immensely from further strategies, such as
enhancing the non-citizen investment threshold by allowing a lesser
threshold for joint ventures between citizens and non-citizens, to avoid
“fronting” and to promote technology transfer, and enhancing fiscal linkages
through leveraging government’s exploration costs for equity in the mining
companies. Additionally, developing a regional classification regime for
strategic development minerals and harmonised policies would facilitate
cost-effective regional exploration, scale development of development
minerals and opportunities for value creation.

Countries looking for guidance in developing a regulatory framework for
development minerals should consider the CMV process and also the
African Legal Support Facility’s Guiding Template available here. In this
guidance which we assisted in developing, entire sections are dedicated to
development minerals (Parts B-5 and B-6) and provide model statutory
provisions which address definitional issues, governance, eligibility
requirements, licensing, rights and obligations, artisanal and small scale
mining of development minerals, environment, health and safety, fiscal
linkages, certification, beneficiation, dealing, incentives, offences and

penalties, etc. These model provisions are based on the AMV goals and
therefore go further than the typical provisions on quarrying and building and
construction materials in many laws, by addressing the local/regional
economic and utilisation linkages potential of development minerals, the
opportunities for joint developments or cross-border utilisation, optimisation,
and cooperation.

  Extractives Good Governance: in conversation with Audrey Gaughran, Natural
  Resource Governance Institute, and previously of Amnesty International

1. Please could you introduce yourself, including about your work now
at the NRGI and previously at Amnesty International?
I am currently Senior Director for Regional Programs at the Natural
Resource Governance Institute (NRGI). In this role I oversee NRGI’s work on
transparency, good governance and anti-corruption efforts across more than
15 resource-rich countries. NRGI’s focus is on helping countries, particularly
those that are dependent on extractives, to manage their resources in the
best interest of the people of the country. The work we do is varied and
includes examining the structure of government deals with multinational
investors, tracking payments made to governments by oil, gas and mining
companies, and supporting countries to prepare for the transition to
renewable energy.

Before joining NRGI in 2018 I worked for 14 years at the headquarters of
Amnesty International (AI). I led the Global Issues program and specialized
in corporate accountability, particularly related to the extractive industries
(EIs). My work at AIinvolved investigating cases of human rights abuses and
working or legal strategies and campaigns to secure justice for victims. I was
involved in more than 12 investigations into EI-linked human rights abuses.

In addition to investigating individual cases, I also worked with industry and
government stakeholders on identifying systemic solutions to the human
rights issues in the sector. For example, I led Amnesty’s engagement with
the UN Guiding Principles on Business and Human Rights and other multi-
stakeholder initiatives aimed at protecting human rights of people affected by
extractive industries.

2. To what degree are miners’ human rights respected and protected in
different parts of the world?
The mining sector has placed a significant emphasis on health and safety,
and the standards here are well developed. The human rights issues for
miners often arise elsewhere. Based on my experience, which is largely
working on mining issues in Africa, there are some factors that can put the
rights of mineworkers at greater risk. Migrant mine workers, who travel and
live at the mine site away from their home for extended periods, can face
particular challenges. This was one of the issues at the Lonmin mine at
Marikana in South Africa, where housing for the migrant workforce was a
huge problem. The frustrations of mine workers about their living conditions
was a key factor in strikes and protests in 2012, events that culminated in the
shooting dead of 34 miners on 16 August 2012.

Artisanal miners also face serious human rights risks in many countries.
Their labour rights are often not considered, despite the fact that they
frequently work in very dangerous conditions, with little to no protection. The
situation for artisanal miners in DRC, for example, is well documented. While
working with Amnesty in the DRC I investigated how artisanal miners were
exposed to multiple risks – from the treacherous conditions underground to
being exploited by the trading system. In some context, artisanal miners are
branded as ‘illegal’, exposing them to a range of risks at the hands of law
enforcement or private security guards hired by mine companies. Amnesty
has continued to expose the serious human rights issues facing artisanal

miners in DRC, including child labour and forced evictions.

In Myanmar, where NRGI has a program, we are looking into how the
failures in implementing much-needed reforms in the jade mining sector
contributed to the recent landslide at Hpakant, where more than 100 people
working to find jade were killed in early July. As with DRC, this is sadly not a
one-off incident, but part of a patter where the underlying human rights and
environmental issues are not being addressed.

Government action is needed to protect the rights of artisanal miners, but
unless it is well considered it can create more problems. Making people’s
livelihoods illegal without looking at alternatives is a major problem. Moving
artisanal miners off land to make way for industrial mining can lead to
violence. The protection of the rights of artisanal miners has to go hand-in-
hand with protection of the wider community around mine sites, who can
face challenges due to both artisanal and industrial mining. It’s a complex
issue with context-specific elements, but one which is poorly addressed,
exposing tens of thousands of often vulnerable men, women and children to
exploitation and abuse.

3. How has this situation changed over the past ten years or so - is it
possible to say that things are moving in a particular direction, for the
better or the worse?
It is hard to say things are getting better across the board. In some cases,
things improve, in others not. Many companies are committed to labour
rights and health and safety and institutions like the International Council on
Mining and Metals work to drive standards upwards.

The rights of miners – whether formally employed miners, or artisanal and
small-scale miners – can depend significantly on how strong the
government’s legal protections and systems are. If laws are not in place or

not enforced (or if the solutions are not the right ones, as is sometimes the
case with artisanal mining), then the rights of workers and communities
around extraction sites are at risk.

The COVID crisis has raised some issues for miners in countries we work.
For example, in Peru we recorded mines workers’ protesting, concerned
about their health and the increased incidence of COVID-19 cases in mining
camps.

Following media reports on the issue the mining company, Antamina,
confirmed that over 200 workers tested positive for coronavirus, and by late
May, 718 mine workers had tested positive for the disease and public
concern was growing about the potential for mining camps to spread the
disease in rural areas. The way mines have handled the coronavirus
pandemic and the rights of workers has also been raised in DRC and other
countries.

4. Coming up next month we have the eighth anniversary of the terrible
Marikana platinum miners’ massacre in South Africa’s North West
province. What are your reflections now on that terrible event?
What happened at Marikana was profoundly shocking. On 16 August 2012,
the South Africa Police Service fatally shot 34 men and more than 70 others
were seriously injured. The men had been engaged in strike and protest
action over their pay and conditions at the mine.

A commission later set up by the South African government called for a
criminal investigation, and this led to criminal prosecutions. Amnesty
International worked on the use of force issues and campaigned for justice
for the miners and their families. In 2016 I worked with the Johannesburg
office of Amnesty to look at the events that led to the protests, particularly
the housing conditions.

Even four years after the shootings, the conditions were atrocious. There is
no other way to describe the ‘housing’ – the lack of sanitation, the
dirt. Thousands of mine workers were living in squalid conditions in informal
settlements around the mine. The mining company Lonmin was well aware
of the situation and had, under its 2006 Social and Labour Plan (SLP),
committed to construct 5,500 houses for workers by 2011. By 2016 when we
were investigating, it had built just three. SLPs are legally binding documents
based on South Africa’s Mineral and Petroleum Resources Development
Act. Our investigation focused on how Lonmin could get away with not
fulfilling its SLP.

Part of the problem was the government’s insufficient commitment to
ensuring the housing for migrant mine workers – a long-standing issue in
South Africa - was properly addressed. Another element was that the
regulators were so understaffed. Amnesty International interviewed two of
the three staff who work at the regulatory agency that monitors SLP
compliance for the North West province. They were fantastic, really
committed and professional. But they were three individuals covering almost
250 SLPs. This is something I have found repeatedly in working on the
extractive sector – regulators who should in theory be able to ensure good
practice, including protection of the rights of workers and of affected
communities and the environment are under-resourced, over-matched by the
companies in power and resources.

   Interview with Fernanda Delgado de Jesus, Professor and Researcher:
   Brazil's petroleum sector amidst and beyond Covid-19

1. What are the factors that Petrobras actively considers in shaping its
upstream petroleum licensing rounds?
In fact, the license rounds for Brazilian oil and gas exploration are
determined by the Conselho Nacional de Política Energética (CNPE),
whereas the national regulator – the Agência Nacional do Petróleo, Gás
Natural e Biocombustíveis (ANP) – is responsible for the executing those
licensing rounds.

Adopted in 2010, this Production Sharing Contract (PSC)s regime applies to
Brazil’s pre-salt, polygon-shaped, offshore area. The federal government is
represented in Brazilian PSCs via the State-owned marketing company Pré-
Sal Petróleo SA Sociedade Anônima (PPSA). The PPSA audits costs, a
central issue in PSC accounting, and has the power to veto upstream
petroleum development plans, but has no equity stake.

The current complexity and regulatory costs pushed companies away from
participating in two pre-salt auctions in November 2019, ending a successful
two-year run that revived the sector after the 2014 oil price collapse.

Looking forwards, Brazil has suspended a round of concession models and a
pre-salt offer planned for this year, but it is still planning an auction in June
2021 of two areas not awarded in the Transfer of Rights auction last year.

A prevalent company viewpoint in Brazil is that, in order to improve
regulation and attract investment, Brazil should abandon its current
production sharing terms (see below) in its key offshore pre-salt area in
favour of the default concession model that exists across Brazil outside of
that area. Even the National Oil Company (NOC), Petrobras, accepts the
need for such a change.

Accordingly, the federal government did prioritise a legislative Bill that would
allow some areas of the pre-salt offshore area to be offered under the model

concession contract. However, this Bill has now stalled.

Moreover, the Minister of Mines and Energy, Bento Albuquerque, recently
spoke in favor of a simplified contract model, but the Congress (the national
legislature) showed little interest in accelerating the change, partly due to
both political and fiscal revenue calculations.

2. How important is the oil & gas sector to Brazil’s economy?
The oil and gas sector accounts for about 5% of Brazilian GDP today. It also
represents a very large number amount of direct and indirect employment
that is vital for the country given the current economic conditions we face
during this Covid-19 pandemic.

Good governance is vital for the sector. The Brazilian Ministry of Mines and
Energy states that the supporting pillars for the petroleum sector in Brazil
are: good governance; legal certainty; predictability; and respect for
contracts - which I note have been further strengthened during the Covid-19
crisis in a bid to attract more investment.

Attracting investment is vital. Inward investment will translate into the
generation of jobs and wealth for the country and is rightly a government
priority.

The world is experiencing an unprecedented crisis, with a strong demand
retraction for oil and a consequent price imbalance, a situation that requires
“new geopolitical arrangements” to cut supply and seek a market recovery.

The Covid-19 crisis led to an instantaneous collapse in the demand for oil in
the world, with the need to cut at least 10 million barrels of oil per day of
production. Indeed, an even bigger cut in supply may be required in view of
the fact that consumption is still weak. Brazil’s petroleum sector must be

highly competitive internationally to thrive in such circumstance.

3. Open question – what would you like to share with our readers,
about Brazilian energy and/or oil & gas?
What we have today in Brazil is a market anxious about Petrobras
divestments. These divestments represent both market opportunities for the
private sector and a big step towards an open and more competitive
Brazilian market.

At the same time, the economic recession will dampen some investment
here in Brazil; for instance, less investment in exploration, reduced working
hours offered to staff working in the sector, and the hibernation of production
units.

Even so, we must remember that we have much to offer the world. Our
offshore pre-salt zone oil reservoirs are both highly prospective and
productive. Onshore, the Brazilian Government has provided an economic
and regulatory stimulus for upstream activities, and it has also started the
discussions about onshore unconventional exploration too.

At the same time companies have been seeking cost reductions and even
greater operational efficiency through an enhanced focus on technology. We
can and must be a leader in technological innovation.

In the context of Covid-19, investors are also looking to spread their
geographical risk. European investors, for instance, can be attracted to first
consider, and then commit to, investing here in Brazil. Let’s make sure we
can offer them highly prospective brownfield opportunities that allow for a
quick turnaround on capital investment, given a supportive enabling
environment.

4. What are the impacts of the COVID-19 economic crisis on the
Brazilian oil & gas sector?
The recent global oil prices crash combined with other effects of the
pandemic - reduced workforces as a result of lockdowns - has resulted in the
highest level of capital flight in Brazil’s history.

Foreign investors are not as confident about Brazil as they were before the
pandemic. The forecast is concerning and poses problems for domestic
producers.

The activities most affected by the pandemic and the resulting oil surplus
have been in the upstream sector: exploration and production; oil field
services; and relevant supply chains.

Petrobras has reportedly had to postpone several offshore oilfield sales
within the last month alone, due to low pricing and demand. The company
has cut investment by around 20% this year, a reduction in line with the
sector as a whole.

Over the mid-term, and globally, I expect to see an cuts in upstream
investment continue, a hibernation of production units (resulting in lower
output), and an overall reduction in fuel and gas consumption.

Even given the considerable resilience of oil companies, well-accustomed to
the economic volatility of the oil industry, the truth is that the sector had
barely recovered from the 2014 crisis.

The oil majors' investment cuts have hit Brazil and will reverberate
throughout the supply chain and affected sectors. This is inevitable. But we
can and must mitigate this damage. The answer is surely to enhance our

competitiveness. Doing so must be our focus. We should do so by cutting
the (in)famous bureaucratic burden of doing business here, ending PSCs in
favour of a concessionary regime, and perhaps even allowing greater
flexibility with respect to our Local Content requirements.

5. Do you think the COVID-19 crisis can have an impact on innovation
in the oil & gas sector? Could you mention initiatives in Brazil?
The fourth industrial revolution (“Industry 4.0”) has arrived, but the crisis
brought about by the Covid-19 pandemic is now an unwelcome reality
alongside it, accompanied by the melting of oil prices, the collapse of
demand, and the fraying of social fabrics, especially in the urban centers.
The pandemic marks the end of the 20th century, the century of the greatest
technological development ended with a virus that can be dissolved with
water and soap.

The social isolation we experience today does not represent a rupture from
the past, but rather an acceleration of pre-existing trends. Because
everything was already set, everything was already here. There was no
transformation. The home office is not a transformation, deliveries are not a
transformation. In fact, it is an acceleration brought about by an
epidemiological phenomenon, associated with a tendency to thin those
economic and political institutions, especially here in Brazil.

It is not possible to simply create demand for oil from nowhere, nor is it
possible to resume the market as it was and just go back to the old price
standards for oil.

We simply do not know how long this crisis will last and when oil demand will
return, it is not known how long it will take. Guesses and predictions, of
which there are many, are not conclusions for our industry, of which there
are few.

Science will bring a vaccine. Digital clouds and storage clouds saved the
home office and jobs. Delivery apps have saved restaurants, pharmacies
and markets, but what will save the oil and gas industry?

Yet, the pandemic will bring us new ingredients and ideas. That is our
collective challenge. We must put all our imagination into this economic
recovery. Digitization has everything to do with it, how to make operations
safer and more efficient – that will be fundamental. We will continue to
innovate; can we innovate our way out of this sectoral crisis as, indeed, we
have in the past? Judging by that past, we can expect cost reductions to be
a key metric of such innovation.

Beyond questions of cost control, we may well identify new business
opportunities through innovation and research, and we must be ready to fully
exploit these when and if they come. In such a context, issues related to
energy transition and emissions reduction are salient. Brazil has great
potential to develop alternative energy sources, complementary development
that does not hinder the oil sector but instead offers us an overall energy mix
that is both cheaper and more sustainable.

6. Given that future disruption such as caused by the COVID-19 can be
part of the society of the future, what could be the solution to
increasing resilience in the oil industry?
Petrobras President Roberto Castello Branco acknowledged in mid-May
2020 that Covid-19 could impact the company's asset divestment plans, but
he gave assurance that Petrobras would not be deflected in pursuing that
objective.

The prospect is for a very large reduction in petroleum sector exploration
activities in Brazil, followed by delay/postponement in the making of final

investment decisions. In particular, capital expenditure is being pushed back
  to future years. The normalisation of the sector is not expected before 2023.

  Prior to the start of Covid-19 isolation measures in Brazil, Petrobras has
  announced a deal involving onshore fields in the Rio Grande do Norte. That
  deal was announced in August 2019, but it has not made similarly significant
  progress elsewhere and since Covid-19 reached Brazil this Spring.

  With Covid-19, the chances of Petrobras reaching their divestments targets
  are lower now. Also, due to new oil price levels, perhaps the NOC may be
  required to revalue downwards the assets it has for sale. Indeed, if we
  navigate to a “lower for longer” scenario, Brazilian petroleum assets will need
  to be priced lower.

  But it is still early to have a definitive view. Whilst it is true that oil prices have
  recently shown a modest sign of recovery, everything remains very uncertain
  and volatile in international markets, affecting the Brazilian petroleum sector
  from top to bottom.

Happy to help.
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