Unleashing the Hidden Riches: Unlocking the Mining Sector’s Full Potential

Investing in transformation, implementing attractive mining codes, a healthy and stable policy are some of the possible solutions that have been formulated to benefit from the mining resources of COMESA member countries.

Julien Paluku, Minister of Foreign Trade in the Democratic Republic of the Congo: “COMESA member countries occupy a significant and significant position in the production of minerals. »

On the margins of the 17th COMESA Economic Forum, possible solutions were found to be able to take advantage of the vast resources in the COMESA member countries. According to Julien Paluku, the Minister for Foreign Trade in the Democratic Republic of the Congo, it is a reality that COMESA member countries occupy a significant position in mineral production.

Take inspiration from the model of the OPEC countries

In order to benefit from this, he asks them to implement the model of oil producing countries. As soon as they saw that they were not benefiting from it, they decided to come together within the Organization of the Petroleum Exporting Countries “OPEC” to reverse the trend.

If the member countries of COMESA are thinking in this direction, it is hoped that it will produce an effect that will allow them to intervene in setting the prices of their minerals.

In addition, COMESA member countries should create stock exchanges. He wonders why Africa still relies on the London, New York, Toronto or Shanghai stock exchanges. The latter always set the prices of minerals coming from Africa.

According to him, the commitment of African countries to set the price of their natural resources will allow them to escape poverty.

Three challenges found among Africans

According to him, Africans have three important problems. These include fear of starting up, investing and taking out loans.

He explains that when he was Minister of Industry in 2022, he chaired a council of industry ministers at African level held in Niamey, Niger. At the end of this meeting, it was recommended that every country in Africa should dedicate 10% of its budget to industrial development, especially to promote transformation.

Still, he wonders how many countries have implemented this recommendation. According to him, Africa should not rely on support from developed countries. On the other hand, it should itself promote its immeasurable potential by developing the value chain.

It will have to become aware of the beginning of the transformation to give value to its natural resources and succeed in imposing itself on global dynamics, he insists.

He gives the example of Zambia with the production of electric batteries. According to him, they include cobalt, lithium, manganese and nickel which are widely present in COMESA member countries in general and in Burundi in particular.

How to finance the mining sector ?

In order to finance the mining sector, he states that African policy makers should force the banking sector to finance the transformation of natural resources. He is concerned that this sector to a large extent directs money to finance real estate. However, according to him, supporting the real estate sector contributes to making the economy immobile because, in this case, money does not circulate.

Financing mineral processing will even provide access to international markets. He argues that the European Parliament has passed a resolution banning the manufacture of thermal engine vehicles by 2035. And the United States has also increased the tax on electric cars from China. Therefore, Africans should seize this opportunity, because China will no longer have stores in Europe and the USA, he explained.

A healthy and stable policy in the mining sector is a necessity

Dr.Second Ntiharirizwa, a geologist at the University of Burundi, says that there must be a healthy and stable policy in Africa in general and in the COMESA zone in particular that gives certainty to investors in the mining sector.

He states that they fear unexpected risks in relation to the contracts they have already signed. That is, the change in the level of regulatory texts and unilateral adjustments to the previously agreed tax regime by increasing tax rates.

Access to foreign currency is also a major barrier for investors. They need it to pay debts, return capital and pay dividends to foreign investors. They also feel high risk in countries where commercial activity is almost non-existent. They prefer to go where others have already started working. If they find that there aren’t at least a few mining companies, they are afraid to commit to taking that risk.

It then calls for the establishment of attractive mining codes and investment codes that clearly state the rules and guarantees that apply to exploitation and export rights. And add the fact of reassuring investors that they can take advantage of the deposits they discover in their research.

In addition, adapting tax regimes to some other mining countries to allow greater profitability is a necessity. He explains that there can be no investors if the taxation regime and exchange rates are not satisfactory. Making data on the mining sector available is also crucial.

Note that COMESA consists of 21 countries.