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3. Trends in mineral specialization
Africa's specialization and world demand
Although mineral specialization in Africa is closely linked with colonial history, political independence was not accompanied by a desire to break with it. During the 1960s and 1970s world capitalism's economic system has been subject to decisive changes as a result both of objective processes and of deliberate strategies of social actors, in the West as well as in parts of the Third World. But the African continent has been largely excluded from such structural changes so that its position within the world capitalist economy remains almost unchanged.
The contemporary growth of industry and modern services in Asia and South America has no equivalent in Africa, even north of the Sahara, and domestic economies remain mainly based on primary activities, agriculture and mining. With the change in the characteristics of international investment Africa has become less important as an outlet for capital exports of European metropoles. Actually the African continent now receives only a very minor share of the direct foreign investments of Western enterprises. For example, around the mid-1970s, foreign investments in Africa represented barely 5% of total foreign investments in the world, and most of these followed the traditional pattern of plantation or mining investment. Yet, if in relative terms direct investment in Africa has decreased, other financial flows, such as commercial and bank credits or government loans have increased, so that the proportion of direct investments in total financial flows became very small, compared to other areas of the Third World. In 1974, this proportion was, for example, 28% in Liberia, 11 % in Zaire and the Congo, and 0% in Zambia, while according to OECD data it was 38% in the Philippines; 50% in South Korea; 83% in Malaysia; 60% in Indonesia; 54% in Brazil; and 70% in Mexico. These figures are all the more interesting as the volume of total financial flows that Africa received was relatively very high. For instance, in 1974, Zaire attracted as much capital as South Korea, and the Congo as much as the Philippines. The amount and structure of financial flows must be linked with the consolidation of the mining specialization of some African countries on the one hand, and the new financing strategies of Western and Japanese groups on the other.
The study of mining investment projects in Africa confirms what has been said earlier about the trends of mineral specialization.
Copper development seems to be definitely not on the agenda since the only big project considered is that of Tenke-Fungurume in Zaire, where there are estimated reserves of 50 million tons of very high grade ore (5.7%). Initially, this project was to give an output of 150,000 tons of metallic copper per year, but the figure was later reduced by one-third. The Société Minière of Tenke-Fungurume, which was created ten years ago to implement this project, has already spent $280 million of an estimated total cost of one billion dollars, but construction has been stopped because of the recession in the world copper market. If the project had been achieved, the additional output would not, in any case, have decisively affected the world position of Africa for copper. By contrast, the number of big investment projects for the extraction of iron ore, bauxite and uranium is really impressive.
Six big projects were adopted during the 1970s which if implemented would have increased the present production capacity of iron ore in Africa (excluding South Africa) two and a half times. These projects followed the old colonial pattern of mineral exploitation, based on the combination of a mining field, a railway corridor and a harbour, which characterizes the iron ore activity in Liberia and Mauritania. But the depletion of the coastal deposits leads in some cases to the exploitation of fields farther inland, which of course increases the cost of infrastructures. The six projects are located in Mauritania (the Guelbs), Senegal (Faleme), Guinea (Mifergui-Nimba), Liberia (Bie Mountain and Wologisi), Ivory Coast (Mount Klahoyo) and Gabon (Belinga).
The Guelbs project in Mauritania, actually replaces the present mines which are likely to be depleted by the end of the 1980s. Reserves on the new site are estimated at 500 million tons and the projected output as 12 million tons around 1989. But in contrast to the ore extracted from the Kedia d'Idjil mine, that of the Guelbs is of low metallic content (35% to 42%) and will have to be processed on site to obtain concentrates of higher grade. The project, however, does not require big infrastructural investments as it is located near the old deposit and its railway line.
The exploitation of the Faleme project in Senegal, however, requires the construction of a railway track, a hydroelectric dam and a harbour. The cost of these infrastructures represents between 75% and 80% of total investment, which in 1980 was estimated at 250 billion CFA francs. Ore reserves, of a very high grade (63%) amount to some 350 million tons, and the planned output is 12 million tons per annum.
The Mifergui-Nimba project in Guinea is bigger still. Ore reserves on the field are estimated at 600 million tons of rich ore (65%) and the site is near the Liberian facilities which, with some small investments, could be utilized. But this project, with a planned production of 15 million tons, is actually the least expensive. Long-term prospects are also more promising in a country such as Guinea, which is endowed with huge resources of rich iron ore (around nine billion tons!) and which possesses the best fluvial network in Western Africa.
Two other big projects for iron ore extraction are planned in Liberia. The first, with a production target of five million tons, will replace the Bomi Hill mine exploited by the US group Republic Steel. The second is that of Wologisi, with a planned output of ten million tons; this requires new infrastructures.
The Mount Klahoyo project, in Ivory Coast, is also very important, with a planned production of 12.5 million tons, as is the Belinga project in Gabon, with 15 million tons of rich ore.
All these projects are run by joint ventures in which the participants are local governments, Western and Japanese steel companies and, less frequently UK and US mining groups and European state agencies such as the French Bureau of Geological and Mineral Research. While most old mines supply only the plant of the overseas owner, new mines must supply the steel plants of all foreign investors in proportion to their capital share and only the output corresponding to the local government's share is for the open market. These joint venture projects were planned by the Western and Japanese steel groups in the framework of a global strategy of iron ore supply during the 1960s and early 1970s when there was rapid growth in the world iron demand and a search for higher grade ore. But the crisis of the Western steel industry from the mid-1970s has delayed the implementation of most of these projects. According to the Ivorian Ministry of Mines, 'the delay in the implementation of the Mount Klahoyo project is due to the fact that Japanese and European steel companies, which have a participation of 85%, face huge difficulties, although the ore is of very high quality'. This holds true of all other projects, except those replacing mines that are becoming exhausted, such as those in Mauritania and Liberia.
Hence, the world capitalist crisis that has affected the Western and Japanese steel industries since the 1970s has delayed Africa's specialization in iron ore production which was projected in the context of an expanding world economy. While the growth prospects of copper extraction in Africa were quite negligible by comparison with Asia and South America, the investment projects in iron ore would have given Africa, along with Brazil and Australia, a greater role in supplying Western and Japanese steel industries.
By contrast, the extraction of bauxite and uranium has been developed despite or maybe because of the crisis. The investment projects should entail a very big increase of bauxite production into the late 1990s. Most of these projects are located in Guinea, but some also involve other countries such as Ghana and Sierra Leone. Besides the extension of the Boke field from five to ten million tons per year, three big projects will enable Guinea to maintain its position for a long period. The Tougue project, with two billion tons of reserves and eight million tons of output, is run by a joint venture between the Guinean government and the Swiss group Alusuisse. The Ayekoye deposit, with 500 million tons of reserves and nine million tons of planned output, is run by an association between the government and Arab investors from Saudi Arabia, Kuwait and Egypt. Lastly the Dabola deposit, with comparable reserves, is managed by an association between the state, the US group Reynolds, and investors from Yugoslavia, Algeria and Nigeria. The first two projects are semi-integrated, as the ore extracted will be processed on site to produce alumina. Other bauxite investment projects are less ambitious. These are located in Kibi in Ghana, with three million tons of planned output; in Marondo Mountain in Mozambique (two million tons); in Manatenina, Madagascar (two million tons); and in Minim Martap, in Cameroun (one million tons). Other projects could be elaborated in the future for Mali, Burkina Faso and Guinea-Bissau. Of all these, however, only the Guinean projects have so far gone beyond the stage of feasibility studies. Here, too, the decrease in world demand for metals has an impact, even if less pronounced than for iron and copper. But the additional production capacity that will result from the Guinean projects is about 20 million tons of bauxite ore, while the current capacity is only 14 million tons. Such an expansion in the context of the world crisis is quite remarkable, as is the fact that in the Third World only the Guinean projects are being implemented. The relative importance of Guinea's resources, their quality (the alumina content of the ore is around 45-55%) and its low ratio of production to resources, compared to other producing areas, can easily explain this expansion. Yet the strategies of the world aluminium industry's leading firms, which try to diversify their sources of supply, are also a decisive factor. These firms are very much interested in reducing the relative significance of the producing countries in the Caribbean in the world bauxite deliveries, as these countries were very active in the International Bauxite Association during the 1970s. The major participants in the world aluminium industry are involved in the three Guinean investment projects.
As is the case of bauxite, the investment projects for uranium confirm the specialization of some African countries in its production and export. Apart from South Africa, these projects are concentrated in three countries: Namibia, Niger and Gabon. In Niger, two important mines, in Imouraren (70,000 tons of reserves) and Azelik (12,000 tons) will soon be opened; and exploration continues actively on a territory of nearly 300,000 square kilometres. Here too, the investment projects are managed by joint venture finance, which associates the Nigerian government, the French Commissariat for Atomic Energy, North American oil groups or European and Japanese power agencies.
In Namibia, intensive search is carried out in the Namib desert and in other places, but little information is available on the importance of the fields discovered there. Development prospects seem to be very favourable, especially for the deposits of the Namib desert and Trekkopje, which very soon are to be exploited. Concessions have been granted by the South African government to big British and US mining groups (Rio Tinto Zinc, Newmont, Consolidated Gold Fields) to French oil companies and, of course, to South African groups such as De Beers and Anglo-American.
Of all projects, those of Niger are the most advanced. When completed, the mines of Imouraren and Afasto will give an additional output of 5,000 tons a year, which will considerably reinforce Africa's position on the international uranium market.
For bauxite and uranium, then, the world crisis seems to increase the mineral specialization of Africa. This process is the outcome of the strategies of the mining and industrial groups in advanced countries rather than local state policies response to the world crisis. These strategies try to concentrate the growth of mining production in those countries where the possibilities of challenging the world imperialist system are the weakest, either because these countries are subject to neo-colonial links or because their political and economic influence is too weak to allow any possibility of action, at least individually. Also, most of the investment projects are located in countries which (except for iron ore) are already producing minerals; the biggest projects for bauxite are in Guinea, uranium mines are being opened in Namibia and Niger, while iron ore projects are located, on the one hand, in Liberia and Mauritania, which are old producers, and, on the other, in countries such as Gabon, Ivory Coast and Senegal that are heavily dependent on France and the EEC.
The direct intervention of Western and Japanese groups in the investment projects confirms the existence of an oligopolistic strategy which aims at maintaining Africa's specialization for some minerals (copper) and reinforcing others (iron ore, bauxite and uranium). This occurs when elsewhere in the Third World the traditional forms of specialization in primary products are increasingly challenged. It appears, then, that these strategies separate the African mineral producing countries from other Third World producers. This is all the more obvious for bauxite extraction, since its strong growth in Guinea under the control of Western aluminium companies has been clearly related to their aim at reducing the relative significance of the Caribbean producers.
Foreign states' intervention, either with direct participation in financing, with a long-term purchase guarantee, or through their mining or energy agencies, reflects their growing interest in Africa's mineral resources. Such interest is not new: we have recalled the influential role played by the European states in the mining colonization of Central Africa at the turn of the century, in close co-operation with private capitalists. Yet the involvement of Western states (and also now Japan) in the exploitation of African mineral riches in the recent period is more clearly founded on strategic considerations, especially for uranium, because of its military and energy uses, but also for the other minerals needed by the West's advanced capitalist countries' industries.
Africa's specialization and world demand
Africa's mineral specialization is not necessarily matched by world mineral demand, in particular the metal consumption of advanced capitalist countries. The demand for copper, iron ore and aluminium, owing to the world crisis tended to stabilize during the 1970s, as is shown in Table 3.1.
Table 3.1 World Metal consumption (tons)
|Iron ore (millions)
Source: Metal Bulletin, various issues 1974 and 1984.
Traditional growth sources of iron, copper and aluminium consumption dried up with the exhaustion of the accumulation model based on the production of 'metal intensive' durable consumer goods and on the use of highly mechanized technology in the advanced capitalist world. Investment in mechanical and electrical industries, as well as in building and construction works, declined in Europe, the USA and Japan. The relative stagnation of world demand for the first three metals conceals the fact that decreased consumption by the Western economies was compensated by an increase in Third World and socialist countries.
The crisis in the advanced capitalist countries only accentuates earlier trends. The progressive saturation of the consumer durables market and the technical progress which increased the efficiency of raw material use prefigured a declining trend in metal consumption well before the world economic crisis. Thus, the increase in per capita consumption of copper and steel between 1963 and 1974 was due only to requirements in Japan where the initial equipment level, compared to other advanced countries, was low. In addition, the quantity of copper used by unit of investment diminished in most industrial countries during the decade preceding the crisis. As for iron ore, whereas in 1960 an average of two tons was needed to produce one ton of pig iron, in 1974 only one and a half tons were required.
Aluminium was introduced in the middle of the last century but its large-scale use began only after the Second World War. During the 1950s and 1960s the general increase in mineral costs and prices was less for aluminium than for copper and steel, therefore, both because of a high global economic growth and because of its substitution for other metals the consumption of aluminium increased. This trend in the 1960s could be observed in advanced and in Third World countries, see Table 3.2.
After 1975, however, world demand for aluminium dropped, for the first time since 1957, as for other metals. The declining trend in metal consumption therefore represents a structural phenomenon that was first aggravated by the general crisis during the 1970s, then by the big capitalist countries' deflationary policies applied in the 1980s. True, industrial growth has continued in socialist economies, although at a reduced rate, and in some parts of the Third World, but this has not been enough to compensate for the reduction of Western and Japanese consumption.
Table 3.2 Per capita consumption of aluminium (lb)
|Federal Republic of Germany
Source: Industrie Minérale, 1974.
The forecasts made in the 1970s about the future growth of metal demand, when the structural character of the crisis was not yet fully understood, were too optimistic and had to be systematically revised. Because of the oil price rise, only the demand for uranium has increased during the recent period. Today, uranium is mainly used as an energy source, even if its military use is far from insignificant in the developed countries. Between 1942 and 1975, military requirements for uranium represented about 200,000 tons, that is, almost half of the world's cumulated output in that period. After 1975, however, demand for uranium accelerated in the advanced countries, as OPEC's decision to increase oil prices made the production of electricity more profitable by utilizing nuclear power. Calculations made in 1977 by the French Ministry of Industry show not only that nuclear powered electricity had become profitable, but also that its cost is less, dependent on the price of other raw materials used in its production. At a price of $35 per pound of uranium, the unit cost of electricity (in cents/kilowatt/hour) and its breakdown according to the raw material used is illustrated in Table 3.3.
The growth of civil demand for uranium may be estimated on the basis of the growing share of nuclear fuelled electricity in the global energy supply. At the beginning of the 1980s this share was more than 10% in the USA and Britain, around 20% in Germany and Japan, and almost 40% in France. The development of nuclear energy in France has been so important that the proportion of nuclear fuelled electricity in total electricity production reached the level of 65% in 1985.
Table 3.3 Comparative cost per unit to produce electricity according to fuel used
Source: French Ministry of Industry, 1977.
Nuclear energy has been developed mainly as a substitute for traditional energy sources rather than as a response to growing global energy needs. Between 1960 and 1981, the number of nuclear power stations in operation grew tenfold and their total capacity increased from one to 170 gigawatts (one gigawatt = one thousand million watts). In 1984, there was a world total of 323 nuclear power stations in 26 countries, with a combined capacity of 208 gigawatts. The present forecasts give an estimated additional capacity of 150 to 200 gigawatts for the year 2000.
In interpreting the recent evolution of Africa's mineral specialization, it is apparent that the stagnation of copper extraction corresponds to the declining trend in copper use in those advanced countries that have always been the main outlets for African exports. Likewise, the growth of uranium production in Africa seems to reflect the growing nuclear energy needs of the advanced countries. By contrast, the development of bauxite production in Africa has occurred in spite of the fall in demand for aluminium which the crisis induced in the major capitalist economies. Mining growth in Africa is clearly here a substitute for actual production elsewhere, especially in those producing countries of the Caribbean which tried to challenge the multinationals' power on the world market during the 1970s. Iron ore specialization follows quite a similar pattern. True, the severe steel crisis in the Western countries and Japan has delayed the opening of new African mines. The declining trend in steel consumption observed in developed countries before the crisis, however, did not discourage the big steel companies of the West and Japan from planning ambitious development programmes for iron ore extraction in Africa. The growth of iron ore production on the African continent is, therefore, also a substitute for production elsewhere, at least potentially, as long as the Western steel crisis continues. The divergence between the pattern of world metal consumption, and particularly that of the advanced capitalist countries, and the profile of the mineral specialization of Africa is an indication of the play of Western and Japanese operators' strategies aimed at reshaping the role of Africa in the world metal market.
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