Pickaxes and pitfalls – some hints at the legal challenges of undertaking mineral and infrastructure developments in Africa

The riches of Africa are vast, the opportunities in this underdeveloped continent are endless and there are many people lining up to exploit them. However, there are a few pitfalls in waiting for the unwary, some of their own making and others inherent in the African jurisdictions.

It is an obvious statement that, in order to engage in mining activities or the development, operation and maintenance of infrastructure needed for the successful exploitation of the opportunities presented by Africa, one has to have the rights corresponding to the activities that are to be undertaken. Accordingly, it stands to reason that there will be legislation detailing a formal process for the application for, and the granting of, mineral rights and titles. Despite the important differences between mining legislation on the African continent, the presence of a set framework is common to all of the countries in which we work (such as Namibia, Botswana, Eritrea, Zimbabwe, Mozambique, Lesotho, DRC, Ghana, Zambia, Burundi, Uganda, Liberia, Madagascar and Guinea to name but a few). The same cannot, however, be said in respect of the laws governing the provision of infrastructure such as roads, rail, water and electricity, where they range across the various countries from particularly underdeveloped to extremely sophisticated. Even within one country, the laws range from sophisticated in a sector of specific interest to the country (such as gas, for instance) to underdeveloped or nonexistent in another sector. This dichotomy can exist between neighbouring countries.

There is a popular misconception that legal processes and requirements can be by-passed and that short cuts are available. While such short-cuts are attractive, the danger is that, if mineral rights and titles are not granted in accordance with the legislative process, then such rights can be validly withdrawn, without compensation by the authorities. The risk of such withdrawal is significantly increased in countries where political changes are often followed by a review of contracts and rights granted by a previous regime (such as the review of certain contracts in the DRC and the recent statements by the Guinean president announcing the intended review of existing mining contracts). This will be an obvious cause for concern for any financiers and developers. A strict compliance with the legal processes and requirements will therefore be essential for the sustainability of a mining project and for the infrastructure needed to support it and other economic activities.