Kazakhstan
Eurasian Natural Resources Company, ENRC, the miner that entered the FTSE 100 , was in talks to buy its domestic rival Kazakhmys in a deal that would bring together Kazakhstan's two largest companies and create a central Asia mining giant. ENRC was forced by the Takeover Panel to issue a statement yesterday saying that it has held "informal dialogue" with Kazakhmys, one of the world's largest copper producers. It added that "no formal proposal has been made by ENRC and there can be no certainty that a formal proposal would be made". The announcement sent Kazakhmys shares to an all-time high, ending the day up 16 per cent at 1,780p, valuing it at £8.1bn.
The news brought out into the open a combination that has been a favourite topic of traders and is likely to be determined by hard-nosed negotiations between the handful of men that control the two companies. Nearly half of ENRC is owned by three billionaire oligarchs,Alexander Mashkevich, Alizhan Ibrahimov and Patokh Chodiyev, who each own a 14.6 per cent stake. Vladimir Kim, the billionaire chairman of Kazakhmys, owns just under 50 per cent of that company.
Adding a further wrinkle is the role that the Kazakh government would play in the talks. It owns 20 per cent of ENRC and it is thought to be keen amid the global mining consolidation frenzy to see the creation of a national champion that could roll up other companies throughout central Asia. "The idea that there would be two listed Kazakh miners in London in five years always looked like it would be one company too many," said an analyst. "It looks like it's going to happen much quicker than that, but there is certainly going to be an element of politics involved."
Speculation has simmered since Mr Kim took a 14.6 per cent stake in ENRC in 2006. But since its December stock market float, ENRC shares have skyrocketed. When Mr Kim bought his ENRC stake, which he later transferred to Kazakhmys, it was worth $800m (£395m). Today, it is worth $4.4bn, more than five times as much. This is due in large part to major expected price rises for the price of chromium, which ENRC mines and is used to produce stainless steel.
Power shortages in South Africa, home to the world's largest reserves of the metal, mean that prices, set quarterly, are expected to jump by as much as 50 per cent.
Analysts think a deal could still be long way off. "There are good reasons for them to get together, but we think this is less likely in the short term," said Charles Cooper, an analyst at Evolution Securities. Kazakhmys is cheap relative to sector rivals, he added, which would make price a sticky issue, and the outcome is likely to be heavily dependent on the personalities involved.
Mr Kim, who has built Kazakhmys through a series of acquisitions over the last decade, is likely to want to continue in a lead role at any combined entity.
Armenia
Environmentalists campaigned fervently against plans to open a large tract of relatively untouched forest land to strip mining, only to watch the Armenian National Assembly approve the deal anyway. This spring, as the snows in the mountainous north began to melt and work started at the Teghut mine, a coalition of conservation groups renewed their push to have the government reconsider the approval of what they contend will cause irreversible damage to the nation's dwindling forestland.
More accustomed to setbacks than progress in dealing with political leaders in Yerevan, environmentalists got a shock when the country's new prime minister, Tigran Sargsyan, not only agreed to discuss their concerns, but seemed to cozy up to their arguments.
"We can't damage nature, because it'll cost our state and the people much more to repay," Sargsyan told a group of conservationists on 20 June. "And clearly, we need to take that into account from the very beginning and make balanced decisions. We need not be seduced by industry's statistics alone, but realize the importance of providing a proper living environment for people."
Environmentalists hailed as unprecedented the prime minister's decision to meet face-to-face and to openly discuss the government's controversial approval — even if the mining operations in northern Armenia's Teghut forest continue.
"This was the first serious meeting with a high-ranking official like the prime minister within the last 15 to 20 years," said Hakob Sanasaryan, chairman of the Greens' Union. "But the outcome of the meeting showed the discussion in fact was a formality. Maybe he will carry out serious reforms in other spheres, but not Teghut, I think."
Tatul Manaseryan, an economics professor at Yerevan State University and a former independent member of the National Assembly, believes the prime minister is trying to shake up the system and rattles off a long list of changes.
"The PM has started important reforms from his office: the work day starts at 9 a.m., the government sessions are as transparent as possible, he demands computer and other kinds of literacy from the ministers, organizes regularly scheduled meetings with citizens and actively responds to the questions raised, made a call for cooperation to the opposition and participated and spoke at the opposition congress, set a compulsory requirement for the ministries to work with non-governmental organizations, and so on," Manaseryan said.
Indeed, Sargsyan has been unafraid to criticize corruption, bribery, smuggling, and other problems — charges often made by monitoring organizations and citizens, but rarely from the mouths of senior politicians.
"The number one problem in the Republic of Armenia is not the problem of democracy, nor the lack of freedom of expression," Sargsyan recently told the National Assembly. "The number one problem is the corruption that hinders all our reforms. If we don't manage to create equal conditions of competition for economic entities, there won't be any democracy in Armenia. That is the basis and corruption is our number one enemy."
Thursday, October 30, 2008
Diamonds and Independence : Botswana ( South Africa! Where!)
Diamonds and Independence
Some of the most intriguing stories told by conference participants came from Botswana, believed to
have achieved the fastest growth in per capita income in the world, averaging 9% annually from
independence in 1966 until 1999. A panel on Botswana described an intriguing mix of good fortune and
shrewd decision-making that went into what has sometimes been termed "The African Miracle."
According to Scott Beaulier, an economics professor at Mercer University in Macon, Ga., who is an
expert on the country, the luckiest break was the fact that the country's wealth in diamonds was not
discovered until a year after it had been granted independence from Britain. The country's leaders
"thought they would have to make wealth out of sand," said Beaulier. John Moreti, deputy chief of
mission at the Botswanan embassy in Washington, agreed. Before the discovery of diamonds, "no one
was interested in us."
The landlocked, Texas-sized country is still heavily dependent on subsistence farming, noted Moreti,
pointing out that its cattle population of two million remains higher than its census figure of 1.8 million.
But he said it is also among the most progressive of African countries, aided by a history of peaceful
relations among its component tribes. "Like the Greek city-states, they found a need to deal with each
other." He and Beaulier also cited a tolerance and openness toward foreigners -- a policy Moreti
described as "Let's keep the experts around" -- and a relative lack of corruption as positive economic
forces.
Both men also emphasized, however, that the country faces serious hurdles in continuing its rapid
growth. "We don't have an entrepreneurial culture," said Moreti. He cited, in particular, the failure to
invest in agriculture as an export crop, comparing the country unfavorably with Israel, which also has a
hot climate and sparse rainfall. In addition, the country has been less successful developing its copper
and coal reserves than it has diamonds. And although per capita income has risen from $80 at
independence to some $2,600 now, Moreti said, the poverty rate is about 40% and unemployment almost
21%.
Mountains to Scale, and For Sale
The panel on which Hesse and Oyebode appeared, entitled "Entrepreneurship and Leadership," also
discussed the multiple facets of business life on the continent. Moderator Robert J. Chalfin, a Wharton
lecturer who heads a New Jersey-based planning and consulting firm, expressed concern about areas
subject to rapid currency fluctuations. Yet in Nigeria, according to Oyebode, problems have actually
become less severe with a less heavily regulated economy. "We bill in dollars, not in local currency,"
added Hesse, noting that he also invests heavily in land: "I bought two mountains. Problems look like
opportunities to me."
Hesse's story about developing a software program that could be used by less skilled -- and lower paid
workers -- reflected the varying effects of the "brain drain." Referring to Africans who have left for
other areas, he provoked laughter from the audience by saying, "You wouldn't believe the opportunities
you have created." As Oyebode put it, "It may be better to be one of 30,000 lawyers (in Nigeria) than to
be one of several million in the U.S." Those who have remained or who never left, Hesse said, can enjoy
a lifestyle that is more upscale than the lifestyles of executives holding similar positions in the developed
world. He and other panelists predicted that the brain drain would reverse as more firms begin
outsourcing to Africa.
As for addressing the pervasive problem of poverty in Africa, Nduom said that the government in Ghana
had based its strategy for reducing poverty on five "pillars":
· Development of infrastructure, including roads, water, electricity and communication technology
· Modernization of agriculture
· Enhanced health and education
· Good governance
· Private sector development
The country has, in recent years, introduced a fully flexible exchange rate, lowered tariffs, fully or
partially privatized some 225 state-owned enterprises and introduced a value added tax, he noted. Private
banks have been authorized to operate since 1988, and deregulation of the petroleum sector of the
economy began in 2004.
Behind Closed Doors
One theme that ran through the conference was the idea that economic growth in Africa would tend to
occur more rapidly in an atmosphere of reduced government regulation and greater political reform.
Oyebode, for example, predicted that there would be greater opportunities for business in Liberia
following recently held elections to replace the authoritarian government of former president Charles
Taylor.
The changing political climate was a major topic of Nduom's keynote address. "When Africa's heads of
state get together these days," he said, "the agenda includes ... adhering to provisions of constitutions, the
rule of law and fiscal responsibility. It is true that not every African head of state or country believes and
practices all of this. But what is happening is a good beginning.
"Peace-making is in, military coup-making is out; lifetime presidencies are out, term limits for heads of
state are in. We should encourage our leaders to broaden these [efforts]. That is the best way to guarantee
the prosperity of the African people. That is the exciting challenge on the continent of Africa."
Nduom conceded that there have been clear exceptions. He criticized Uganda's refusal to allow
independent political parties and described as "unfortunate" the authoritarian rule of President Robert
Mugabe in Zimbabwe. He said that one solution in these and similar cases was for heads of more
democratic states to make their case privately, rather than in international forums. "It may be better done
behind closed doors," he said, adding that leaders in these states are becoming more willing to do this.
"Some countries are ready for change and are indeed implementing reform. Others need to be
encouraged," he noted. "We have a small group of countries that need to be dragged along. And that
must happen. We have come to understand that we cannot achieve accelerated national development,
create wealth and eradicate poverty without reforming the public sector." In his own country, a new
constitution was introduced in 1992 followed shortly by the country's first multi-party elections.
Elections for local assemblies were held in 2002. "Our leaders have understood that it is only through
good governance and the rule of law" that conditions for reducing poverty will occur.
The move toward more open societies has also been spurred by the growth of information technology. In
Ghana, Nduom said, "The influence of the media, particularly the private radio stations" and increased
accessibility of cell phones "cannot be overemphasized. The combination of radio and mobile phones has
given Ghanians tremendous voice and space [in] matters of political, economic and social interest. The
role of radio stations in enhancing debates during election campaigns has helped promote lively and
constructive political competition, and enhanced transparency during vote counting and declaration of
results. Society is a lot more informed."
On a personal note, Nduom said it was this commitment to political reform that led him to return to
Africa and, once there, to leave the private sector for government. He came to the United States in 1970
as an exchange student, completing high school in a small town in Minnesota, then returned in 1973 to
get his bachelor's, master's and doctoral degrees from the University of Wisconsin in Milwaukee. He
joined Touche Ross in 1981 and became a partner in 1985, one of five blacks out of some 1,000 partners.
He later returned to the continent with the firm, which had become Deloitte and Touche, and started a
new management consulting practice for them.
He said it was his country's "commitment to good governance that attracted
professionals like me to move back to Africa in the first place. But it is the
need to accelerate the pace of reforms and strengthen democracy and the rule
of law that has attracted me to go into politics. I enjoyed working and living in
the United States. But my father always said that however big I became in the U.S., I would be better off in my own country. For sure, it was easier for me to live and make a decent living in America. But it is more satisfying when I am able to make something work in Africa."
Some of the most intriguing stories told by conference participants came from Botswana, believed to
have achieved the fastest growth in per capita income in the world, averaging 9% annually from
independence in 1966 until 1999. A panel on Botswana described an intriguing mix of good fortune and
shrewd decision-making that went into what has sometimes been termed "The African Miracle."
According to Scott Beaulier, an economics professor at Mercer University in Macon, Ga., who is an
expert on the country, the luckiest break was the fact that the country's wealth in diamonds was not
discovered until a year after it had been granted independence from Britain. The country's leaders
"thought they would have to make wealth out of sand," said Beaulier. John Moreti, deputy chief of
mission at the Botswanan embassy in Washington, agreed. Before the discovery of diamonds, "no one
was interested in us."
The landlocked, Texas-sized country is still heavily dependent on subsistence farming, noted Moreti,
pointing out that its cattle population of two million remains higher than its census figure of 1.8 million.
But he said it is also among the most progressive of African countries, aided by a history of peaceful
relations among its component tribes. "Like the Greek city-states, they found a need to deal with each
other." He and Beaulier also cited a tolerance and openness toward foreigners -- a policy Moreti
described as "Let's keep the experts around" -- and a relative lack of corruption as positive economic
forces.
Both men also emphasized, however, that the country faces serious hurdles in continuing its rapid
growth. "We don't have an entrepreneurial culture," said Moreti. He cited, in particular, the failure to
invest in agriculture as an export crop, comparing the country unfavorably with Israel, which also has a
hot climate and sparse rainfall. In addition, the country has been less successful developing its copper
and coal reserves than it has diamonds. And although per capita income has risen from $80 at
independence to some $2,600 now, Moreti said, the poverty rate is about 40% and unemployment almost
21%.
Mountains to Scale, and For Sale
The panel on which Hesse and Oyebode appeared, entitled "Entrepreneurship and Leadership," also
discussed the multiple facets of business life on the continent. Moderator Robert J. Chalfin, a Wharton
lecturer who heads a New Jersey-based planning and consulting firm, expressed concern about areas
subject to rapid currency fluctuations. Yet in Nigeria, according to Oyebode, problems have actually
become less severe with a less heavily regulated economy. "We bill in dollars, not in local currency,"
added Hesse, noting that he also invests heavily in land: "I bought two mountains. Problems look like
opportunities to me."
Hesse's story about developing a software program that could be used by less skilled -- and lower paid
workers -- reflected the varying effects of the "brain drain." Referring to Africans who have left for
other areas, he provoked laughter from the audience by saying, "You wouldn't believe the opportunities
you have created." As Oyebode put it, "It may be better to be one of 30,000 lawyers (in Nigeria) than to
be one of several million in the U.S." Those who have remained or who never left, Hesse said, can enjoy
a lifestyle that is more upscale than the lifestyles of executives holding similar positions in the developed
world. He and other panelists predicted that the brain drain would reverse as more firms begin
outsourcing to Africa.
As for addressing the pervasive problem of poverty in Africa, Nduom said that the government in Ghana
had based its strategy for reducing poverty on five "pillars":
· Development of infrastructure, including roads, water, electricity and communication technology
· Modernization of agriculture
· Enhanced health and education
· Good governance
· Private sector development
The country has, in recent years, introduced a fully flexible exchange rate, lowered tariffs, fully or
partially privatized some 225 state-owned enterprises and introduced a value added tax, he noted. Private
banks have been authorized to operate since 1988, and deregulation of the petroleum sector of the
economy began in 2004.
Behind Closed Doors
One theme that ran through the conference was the idea that economic growth in Africa would tend to
occur more rapidly in an atmosphere of reduced government regulation and greater political reform.
Oyebode, for example, predicted that there would be greater opportunities for business in Liberia
following recently held elections to replace the authoritarian government of former president Charles
Taylor.
The changing political climate was a major topic of Nduom's keynote address. "When Africa's heads of
state get together these days," he said, "the agenda includes ... adhering to provisions of constitutions, the
rule of law and fiscal responsibility. It is true that not every African head of state or country believes and
practices all of this. But what is happening is a good beginning.
"Peace-making is in, military coup-making is out; lifetime presidencies are out, term limits for heads of
state are in. We should encourage our leaders to broaden these [efforts]. That is the best way to guarantee
the prosperity of the African people. That is the exciting challenge on the continent of Africa."
Nduom conceded that there have been clear exceptions. He criticized Uganda's refusal to allow
independent political parties and described as "unfortunate" the authoritarian rule of President Robert
Mugabe in Zimbabwe. He said that one solution in these and similar cases was for heads of more
democratic states to make their case privately, rather than in international forums. "It may be better done
behind closed doors," he said, adding that leaders in these states are becoming more willing to do this.
"Some countries are ready for change and are indeed implementing reform. Others need to be
encouraged," he noted. "We have a small group of countries that need to be dragged along. And that
must happen. We have come to understand that we cannot achieve accelerated national development,
create wealth and eradicate poverty without reforming the public sector." In his own country, a new
constitution was introduced in 1992 followed shortly by the country's first multi-party elections.
Elections for local assemblies were held in 2002. "Our leaders have understood that it is only through
good governance and the rule of law" that conditions for reducing poverty will occur.
The move toward more open societies has also been spurred by the growth of information technology. In
Ghana, Nduom said, "The influence of the media, particularly the private radio stations" and increased
accessibility of cell phones "cannot be overemphasized. The combination of radio and mobile phones has
given Ghanians tremendous voice and space [in] matters of political, economic and social interest. The
role of radio stations in enhancing debates during election campaigns has helped promote lively and
constructive political competition, and enhanced transparency during vote counting and declaration of
results. Society is a lot more informed."
On a personal note, Nduom said it was this commitment to political reform that led him to return to
Africa and, once there, to leave the private sector for government. He came to the United States in 1970
as an exchange student, completing high school in a small town in Minnesota, then returned in 1973 to
get his bachelor's, master's and doctoral degrees from the University of Wisconsin in Milwaukee. He
joined Touche Ross in 1981 and became a partner in 1985, one of five blacks out of some 1,000 partners.
He later returned to the continent with the firm, which had become Deloitte and Touche, and started a
new management consulting practice for them.
He said it was his country's "commitment to good governance that attracted
professionals like me to move back to Africa in the first place. But it is the
need to accelerate the pace of reforms and strengthen democracy and the rule
of law that has attracted me to go into politics. I enjoyed working and living in
the United States. But my father always said that however big I became in the U.S., I would be better off in my own country. For sure, it was easier for me to live and make a decent living in America. But it is more satisfying when I am able to make something work in Africa."
'The Resource Curse': Why Africa's Oil Riches Don't Reach Poor.How long we will be conveniently silent !
Africa is cursed -- with riches. In an era of rising petroleum
prices, African oil is drawing new interest from major
companies around the globe, says John Ghazvinian, author of Untapped: The Scramble for Africa's Oil
Untapped: The Scramble for Africa's Oil. They see the continent
as the most promising place in the world for new production. It
doesn't have the huge deposits that the Middle East and Russia
do, but what it does have is accessible and largely unexploited.
And the oil's high quality makes it relatively inexpensive to
refine.
"Since 1990 alone, the petroleum industry has invested more
than $20 billion in exploration and production activity in
Africa," writes Ghazvinian, a visiting fellow at the University of
Pennsylvania, who spoke at a recent event sponsored by the
Wharton African Students Association. "A further $50 billion
will be spent between now and the end of the decade, the largest investment in the continent's history."
But most Africans are seeing little benefit from this influx of oil drillers and investment. In fact, because
of an economic paradox known as the "Resource Curse," they are often hurt by exports of their
countries' oil. "Between 1970 and 1993, countries without oil saw their economies grow four times faster
than those of countries with oil," Ghazvinian notes, adding that oil exports inflate the value of a country's
currency, making its other exports uncompetitive. At the same time, workers flock to booming
petroleum businesses, which saps other sectors of the economy. "Your country becomes
import-dependent," he says. "That decimates a country's agriculture and traditional industries."
Consider Gabon, which produces about 300,000 barrels of oil a day. "It's covered with tropical rainforest,
but it's hard to find bananas that are grown there. They are mostly imported from Cameroon. At one
point, Gabon was the world's largest per-capita importer of champagne." The oil -- and the champagne --
will eventually run dry. Gabon, with relatively small reserves, is already coming to terms with that
possibility. By then, much of the rest of the country's economy may have atrophied, Ghazvinian says.
Economists also call this phenomenon "the Dutch Disease" because it was observed in the Netherlands
after natural gas was discovered in the 1960s in that country's portion of the North Sea. The Dutch
manufacturing sector withered as the gas industry grew.
In addition, oil money tends to corrupt politicians. They end up vying to pocket a share of the finite
petroleum riches, rather than looking for ways to invest in their country's long-term prosperity. "The
governments aren't dependent on income taxes and therefore don't have to do what the citizens want," he
says. "The state isn't an engineer of economic growth, but a gravy train. None of the money gets down to
the people."
Some Westerners chalk up all of Africa's problems to corruption, thus absolving themselves of any
responsibility, he suggests, adding that the truth is often far more complicated. Some local leaders do
abscond with ill-gotten funds, but they then stash that money in Western banks where the bankers look
the other way. Western governments, too, overlook bad behavior, as long as the oil flows reliably
through the pipelines. "There are incentives on both ends. At the moment," Ghazvinian says, "there are
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no incentives for the resource-rich governments to do the right thing."
Living in the Stone Age
An historian by training and a journalist by trade, Ghazvinian isn't an anti-corporate crusader or an
oil-industry apologist. Rather, he set out to portray a region that, thanks to its oil riches and its
debilitating poverty, is increasingly occupying a place in economic and political debates in developed
nations.
Africa's oil belt lies mainly along its Western coast in the countries abutting the Gulf of Guinea. "One
third of the world's new discoveries of oil since 2000 have taken place in Africa," Ghazvinian notes.
The world's two most energy-hungry economies, the United States and China, are vying to stake out
spheres of influence in the oil-producing areas. Chinese oil firms, which typically don't face the same
quarterly earnings pressure that Western ones do, are pouring billions into all sorts of infrastructure
projects across the continent, Ghazvinian says. At the same time, politicians like Tony Blair, Britain's
former prime minister, and activists like Bono, singer for the rock band U2, and Jeffrey Sachs, an
economist at Columbia University, are calling for multinational efforts to relieve African poverty and
kick-start the continent's oft-sputtering economies.
Some commentators have pointed to Norway as a possible example of the way in which Africa's oil-rich
countries might conduct themselves. Norway, the world's third largest oil exporter behind Saudi Arabia
and Russia, salts away a large share of its wealth in a national pension fund, now worth more than $300
billion. The fund is expected to grow to about $900 billion in the next decade and invests only passively,
in non-Norwegian stocks and bonds. That limits the temptation of politicians to use the money for
pork-barrel projects. It has been nicknamed "the future-generations fund."
Ghazvinian doubts whether a comparable vehicle would work in Africa. Norway is a small,
homogeneous country of about five million people that was relatively advanced when its oil began to
gush, he points out. It already had the sorts of public institutions that enabled it to prudently manage its
newly found wealth. "I'm not sure that a future-generations fund can be airlifted to Chad. You would
need a lot of healthy, functioning civil institutions before you could do that. Chad is one of the world's
poorest countries," with 80% of its citizens living below the poverty line.
Even Nigeria, where the oil industry has operated for decades, probably wouldn't be able to adapt the
Norwegian model, he says. While its oil wealth is vast -- it has the world's 10th largest reserves -- so are
its problems. It's both an enormous country, with about 135 million people, and an ethnically diverse one,
with hundreds of distinct ethnic groups. And its reserves lie in the poor, rural Niger Delta. "People in the
Niger Delta live almost as if it's the Stone Age," Ghazvinian says. "They live in stick huts on little
islands in the mangrove swamps. Many of the villages are accessible only by boat. Nearby, you will
have these multibillion oil facilities, with executives being dropped in by helicopter."
Little of the oil wealth gets invested back into the delta and few of the companies employ local people,
he points out. That has contributed to civil unrest and lawlessness. "A thousand people a year are killed in
small-scale guerilla warfare in the delta," he says. "Boys will drill holes in the pipelines at night and suck
out the oil: 100,000 to 200,000 barrels a day were disappearing like this at one point. The money is
siphoned off to arm the guerilla groups."
The situation in other African oil-producing countries is just as difficult. Equatorial Guinea is "a family
business masquerading as a country," Ghazvinian quips. "It's one of the most closed societies on earth."
$15,000-a-Month Rentals
As he researched his book, Ghazvinian visited all of the major sub-Saharan oil producers and typically
found the same situation in each. The sizzling oil sector was enriching a clique of politically connected
people and creating boomtowns catering to the industry but seldom providing much wider economic
benefit or even employing many local people. "It's a capital-intensive industry, not a labor-intensive one,"
he points out. "So they don't need to hire a lot of people, and the ones they do hire are petroleum
engineers. You have local people hired to be security guards, but that's about it."
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On top of that, the flow of oil riches can create bizarre contrasts. Luanda, the capital of Angola and also
the center of its oil industry, is just one example. Luxury high-rises are being built there despite the
country's extreme poverty, and oil companies are paying $15,000 a month to rent apartments for their
employees. For expatriates, "it's one of the most expensive cities in the world," he says. "The disparity
between rich and poor there is like nowhere else in the world." Oil companies are flocking to the country
because its reserves lie offshore, allowing for safer drilling than in, say, the Niger Delta.
These same firms often argue that their role in Africa is simply getting oil out of the ground, maximizing
profits and paying taxes. Politicians, they contend, are responsible for investing the tax revenues in
education and infrastructure.
"The oil companies will often say that they would like to invest in infrastructure or schools, but they
don't have the expertise," Ghazvinian notes. "That's glib. Exxon Mobil is making billions and can hire
consultants. They could do more. They don't have to usurp the role of government to do something
useful in the countries where they are operating." At the very least, he adds, the oil companies might
come together and fund some sort of petroleum engineering university so more Africans could work in
the industry.
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Readers' comments
#1 Why Africa's Oil Riches Don't Trickle Down to Africans
I lived and worked in Angola for over a year providing private network telecom services to oil exploration and oil services firms. I formed a company, having to give up 49% equity to a shell company owned by the country's president and his cronies. I saw underwater siphening pipelines connected to private oil company pipelines. These lines siphened off crude and took it directly to the state owned oil company's storage. This, in addition to the fact that 80% of the private company's reported production became property of the state as part of the concession agreement. I saw container ships with cargo marked as belonging to UNICEF (presumably, corn meal and rice shipments to feed the hungry and impoverished) being cleared at the port of Luanda by Angolan military personnel and then transported to feed military troops. Public school teachers had not been paid salaries in five years.
Do not lay this level of corruption and abuse of power on the oil companies. If you are poor in this part of the world, you have found the ninth circle of Dante's Inferno.
By: Henry Pedroso,
Sent: 07:40 AM Thu Nov.01.2007 - -
#2 Africa's OIl - atrophying industries in lopsided econcomies
Oil is doing to these economies the same thing heroin production did in Columbia and Afghanistan for many years.
By: Claire Felong,
Sent: 03:08 PM Thu Nov.01.2007 - US
#3 Solution to Nigeria's Resources Curse
I'm a 28-year-old Nigerian male living in the country's federal capital, Abuja. This is probably the first place you will hear this; but you're going to be hearing a lot of it in the future. Sooner or later, oil production will be stopped onshore in the Niger delta region, and exploration and production will be limited to offshore areas. The costs at the moment far outweigh whatever income the government gets; there are serious environmental problems, and the violence is spiralling out of hand. So-called militants have used the cover of "freedom fighters" to perpetuate economic and human rights crimes that make Sierra Leonean blood diamonds seem like child’s play. Kidnapping of expatriate oil workers is now a booming industry, probably larger than Mexico’s or Columbia’s. In time, it would seem the only wise thing to do is to shutdown the oil rigs on land and declare the area a protected watershed or wetland. Then nobody will justify the actions of those fighting for "their share" of the oil wealth.
By: ik okechukwu, Abuja Property Development Co.
Sent: 04:17 PM Thu Nov.01.2007 - -
#4 Where do we stand in this matter of the stolen wealth of Africa.
I am an Accountant and a Stock broker in Lagos Nigeria.
My take on the stolen wealth is that:
1. Crude is a unique commodity that we can trace from the production to the last buyer. The buyers know when they buy the stole crude and can identify their suppliers; the thief.
2. Like the Angolan case of the state stealing from the private explorers', the explorers are aware of the robbery by the state, but because they are "taking more than was allotted and paid for," they are not bothered: or who would incur such heavy cost on exploration and encourage a mere greedy idiot to steal from his labour.
3. In the case of Nigeria, all those involved are under the illusion of money. Otherwise, what is the use for stealing when you can not enjoy any peace or freedom with it. You spend and live all under cover.
Now, leadership is not understood, riches are misconceived, the people are living without a vision for their individual lives, and this means the whole nation where wealth is continually stolen by the state and a few people in power have no vision. they live by the day.
Let the leaders of the people stop conniving with the cheats of the West, who lure them with money, and see life as that to be enjoyed with others and not in isolation. Let us all realize that it is only when we share that we can multiply successfully and not by the evil design of stealing from each other.
Thank you for this opportunity.
By: Remi Akinwale, First Call Investment Options Limited
Sent: 02:38 PM Fri Nov.02.2007 - -
#5 africa's oil
I live in Uganda (East Africa) where new oil discoveries have been found. I don't think Ugandans will benefit in this oil due to our corrupt leaders. Even the systems in place do not favour us. And I also don't think that "a future generation fund can be airlifted to Uganda!"
In order for Ugandans to benefit from Africa's oil, we need committed leaders who love their country and want to see it move an extra mile.
By: ALEX NANYONGA, Administrator
Sent: 12:42 AM Mon Nov.05.2007 - US
#6 Transparency is part of the solution
I recently traveled to Nigeria and spoke with Niger Delta Development Commission and government officials. One step to help maintain accountability for government and stakeholders alike is to enable shared visibility of funds provided against respective infrastructure programs. This is one way of enhancing accountability to support needs of the oil bearing communities in the Niger delta. See more at the SAP Public Security Blog. https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/u/251723409
By: Anthony McKinney, SAP/ Director Public Security
Sent: 04:10 PM Sat Nov.10.2007 - US
#7 The Resource curse - Africa's oil
It is fashionable for some economists to lament the fate of Africans and the 'resource curse' inflicted on them by the abundance of natural resources. It is not only about oil but others like diamonds, minerals and ores. Paul Collier of Oxford University, formerly with the World Bank, has produced some papers. So has Arvind Subramanian.
They portray a situation where rebels seize control over resources and fund their internecine warfare. Indeed, this is so. But they fail to go into the historical background which led to it and the current global context which sustains it.
Exploitation of natural resources is not new to Africa. The occupation of Africa and the scramble for Africa among the European powers in the 19th century were the consequence of resource abundance. Until African countries were liberated around the 1960s, European powers controlled them by force and their companies exploited the resources to feed their mills back home. The African people had no share in them except the low wages as sweated labour. There was apparent political stability ensured by the colonial powers. Except for a handful of countries, no country in Africa had acquired the administrative capability to govern itself. Most of them had very low levels of literacy. Congo, for example, had twelve graduates when the Belgians left.
When the colonial powers departed, internal fissures developed among the tribes, clans and other groups. A good deal of this was also the consequence of the artificial borders which the colonial powers had drawn to divide the Continent among themselves. These began to take a toll on the political stability of the newly independent countries.
The Cold War created another aberration. Dictators who were friendly to the West, especially the U.S., had their total support through military and other forms of aid. Congo's Mobutu was the classic creation of the Cold War. American policy strongly favoured authoritarian regimes in Africa to fend off communism and Soviet influence. Western companies could continue to operate under the umbrella of these dictators and the paternal protection of governments like the U.S., U.K. or Belgium.
With the collapse of the Soviet regime and end of the Cold War, the African dictators were abandoned and had to fend for themselves. Political rivalry turned violent and rival groups had to get arms in pursuit of their goals.
In countries rich in natural resources, oil or other resources, the rival groups had to seize control over them to finance their operations. Western companies began to operate under the 'protection' of regional despots. Sierra Leone was the worst example which stirred the global conscience. Natural resources, instead of being a boon to promote economic growth, turned into a 'curse.' Corruption, siphoning of funds, etc. are the seamy side of this scenario and flow out of control over resources and their sharing with MNCs from the west. African countries and leaders are critcised for all the sins - not a word is uttered about the Western companies which bribe them and gain ultimately from the sale or utlisation of natural resources in other parts of the globe.
Those who propagate and lament the curse of natural resources in Africa send out a wrong message - some of them are well meaning economists who are sympathetic to African countries and people. They should rather try to provide alternative arrangements for the extraction and utilisation of these resources and how to turn them into a boon. This is a very complex issue and calls for regional and global cooperation. If there is a genuine will to promote African development, it is not difficult to arrive at solutions.
By: Kandaswami Subramanian, Not employed
Sent: 12:56 AM Mon Nov.12.2007 - AU
#8 The Resource curse - Africa's oil
In my earlier comments, I failed to draw attention to the scourge of private military corporations (PMCs). These modern equivalents of buccaneers loom large in the African continent -- as the novelist Frederick Forsythe ably described in his popular nove, "The Dogs of War." They are engaged by rebel groups who seize power and also by MNCs to safeguard their interests. PMCs are paid out of the sales proceeds of natural resources. There is an unholy alliance between rebel groups, MNCs and PMCs.
There has been no progress in global negotiations in the U.N. to ban PMOs. Western countries find them to be of great help in their strategic objectives whether in Iraq or elsewhere. African resources will continue to remain a 'curse' as long this nexus is not broken up. How many of the economists who bemoan the natural resource 'curse' have taken note of this factor?
By: Kandaswami Subramanian, Not employed
Sent: 11:17 PM Wed Nov.14.2007 - AU
#9 More than meets the eye?
Reading the article 'The Resource Curse...' and the comments, especially Kandaswami's, it seems to me that there is more than meets the eye to resource exploitation in Africa. Apparently, mining/oil giants and foreign governments have found it advantageous to engage in a 'divide and rule by proxy' policy that, through its control over African governments, warlords, militias and mercenary group, suppresses the development and exploitation of mineral resources. This policy impoverishes African nations and forecloses their future while serving interests of capitalists and the foreign policy goals of the western world. This confluence of capitalistic exploitation and neo-colonial political strategy will result in the economic enslavement of an entire continent. Is anyone taking heed?
By: Prasad Rao, http://myprofile.cos.com/gangar
Sent: 02:33 AM Thu Mar.06.2008 - AU
prices, African oil is drawing new interest from major
companies around the globe, says John Ghazvinian, author of Untapped: The Scramble for Africa's Oil
Untapped: The Scramble for Africa's Oil. They see the continent
as the most promising place in the world for new production. It
doesn't have the huge deposits that the Middle East and Russia
do, but what it does have is accessible and largely unexploited.
And the oil's high quality makes it relatively inexpensive to
refine.
"Since 1990 alone, the petroleum industry has invested more
than $20 billion in exploration and production activity in
Africa," writes Ghazvinian, a visiting fellow at the University of
Pennsylvania, who spoke at a recent event sponsored by the
Wharton African Students Association. "A further $50 billion
will be spent between now and the end of the decade, the largest investment in the continent's history."
But most Africans are seeing little benefit from this influx of oil drillers and investment. In fact, because
of an economic paradox known as the "Resource Curse," they are often hurt by exports of their
countries' oil. "Between 1970 and 1993, countries without oil saw their economies grow four times faster
than those of countries with oil," Ghazvinian notes, adding that oil exports inflate the value of a country's
currency, making its other exports uncompetitive. At the same time, workers flock to booming
petroleum businesses, which saps other sectors of the economy. "Your country becomes
import-dependent," he says. "That decimates a country's agriculture and traditional industries."
Consider Gabon, which produces about 300,000 barrels of oil a day. "It's covered with tropical rainforest,
but it's hard to find bananas that are grown there. They are mostly imported from Cameroon. At one
point, Gabon was the world's largest per-capita importer of champagne." The oil -- and the champagne --
will eventually run dry. Gabon, with relatively small reserves, is already coming to terms with that
possibility. By then, much of the rest of the country's economy may have atrophied, Ghazvinian says.
Economists also call this phenomenon "the Dutch Disease" because it was observed in the Netherlands
after natural gas was discovered in the 1960s in that country's portion of the North Sea. The Dutch
manufacturing sector withered as the gas industry grew.
In addition, oil money tends to corrupt politicians. They end up vying to pocket a share of the finite
petroleum riches, rather than looking for ways to invest in their country's long-term prosperity. "The
governments aren't dependent on income taxes and therefore don't have to do what the citizens want," he
says. "The state isn't an engineer of economic growth, but a gravy train. None of the money gets down to
the people."
Some Westerners chalk up all of Africa's problems to corruption, thus absolving themselves of any
responsibility, he suggests, adding that the truth is often far more complicated. Some local leaders do
abscond with ill-gotten funds, but they then stash that money in Western banks where the bankers look
the other way. Western governments, too, overlook bad behavior, as long as the oil flows reliably
through the pipelines. "There are incentives on both ends. At the moment," Ghazvinian says, "there are
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no incentives for the resource-rich governments to do the right thing."
Living in the Stone Age
An historian by training and a journalist by trade, Ghazvinian isn't an anti-corporate crusader or an
oil-industry apologist. Rather, he set out to portray a region that, thanks to its oil riches and its
debilitating poverty, is increasingly occupying a place in economic and political debates in developed
nations.
Africa's oil belt lies mainly along its Western coast in the countries abutting the Gulf of Guinea. "One
third of the world's new discoveries of oil since 2000 have taken place in Africa," Ghazvinian notes.
The world's two most energy-hungry economies, the United States and China, are vying to stake out
spheres of influence in the oil-producing areas. Chinese oil firms, which typically don't face the same
quarterly earnings pressure that Western ones do, are pouring billions into all sorts of infrastructure
projects across the continent, Ghazvinian says. At the same time, politicians like Tony Blair, Britain's
former prime minister, and activists like Bono, singer for the rock band U2, and Jeffrey Sachs, an
economist at Columbia University, are calling for multinational efforts to relieve African poverty and
kick-start the continent's oft-sputtering economies.
Some commentators have pointed to Norway as a possible example of the way in which Africa's oil-rich
countries might conduct themselves. Norway, the world's third largest oil exporter behind Saudi Arabia
and Russia, salts away a large share of its wealth in a national pension fund, now worth more than $300
billion. The fund is expected to grow to about $900 billion in the next decade and invests only passively,
in non-Norwegian stocks and bonds. That limits the temptation of politicians to use the money for
pork-barrel projects. It has been nicknamed "the future-generations fund."
Ghazvinian doubts whether a comparable vehicle would work in Africa. Norway is a small,
homogeneous country of about five million people that was relatively advanced when its oil began to
gush, he points out. It already had the sorts of public institutions that enabled it to prudently manage its
newly found wealth. "I'm not sure that a future-generations fund can be airlifted to Chad. You would
need a lot of healthy, functioning civil institutions before you could do that. Chad is one of the world's
poorest countries," with 80% of its citizens living below the poverty line.
Even Nigeria, where the oil industry has operated for decades, probably wouldn't be able to adapt the
Norwegian model, he says. While its oil wealth is vast -- it has the world's 10th largest reserves -- so are
its problems. It's both an enormous country, with about 135 million people, and an ethnically diverse one,
with hundreds of distinct ethnic groups. And its reserves lie in the poor, rural Niger Delta. "People in the
Niger Delta live almost as if it's the Stone Age," Ghazvinian says. "They live in stick huts on little
islands in the mangrove swamps. Many of the villages are accessible only by boat. Nearby, you will
have these multibillion oil facilities, with executives being dropped in by helicopter."
Little of the oil wealth gets invested back into the delta and few of the companies employ local people,
he points out. That has contributed to civil unrest and lawlessness. "A thousand people a year are killed in
small-scale guerilla warfare in the delta," he says. "Boys will drill holes in the pipelines at night and suck
out the oil: 100,000 to 200,000 barrels a day were disappearing like this at one point. The money is
siphoned off to arm the guerilla groups."
The situation in other African oil-producing countries is just as difficult. Equatorial Guinea is "a family
business masquerading as a country," Ghazvinian quips. "It's one of the most closed societies on earth."
$15,000-a-Month Rentals
As he researched his book, Ghazvinian visited all of the major sub-Saharan oil producers and typically
found the same situation in each. The sizzling oil sector was enriching a clique of politically connected
people and creating boomtowns catering to the industry but seldom providing much wider economic
benefit or even employing many local people. "It's a capital-intensive industry, not a labor-intensive one,"
he points out. "So they don't need to hire a lot of people, and the ones they do hire are petroleum
engineers. You have local people hired to be security guards, but that's about it."
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On top of that, the flow of oil riches can create bizarre contrasts. Luanda, the capital of Angola and also
the center of its oil industry, is just one example. Luxury high-rises are being built there despite the
country's extreme poverty, and oil companies are paying $15,000 a month to rent apartments for their
employees. For expatriates, "it's one of the most expensive cities in the world," he says. "The disparity
between rich and poor there is like nowhere else in the world." Oil companies are flocking to the country
because its reserves lie offshore, allowing for safer drilling than in, say, the Niger Delta.
These same firms often argue that their role in Africa is simply getting oil out of the ground, maximizing
profits and paying taxes. Politicians, they contend, are responsible for investing the tax revenues in
education and infrastructure.
"The oil companies will often say that they would like to invest in infrastructure or schools, but they
don't have the expertise," Ghazvinian notes. "That's glib. Exxon Mobil is making billions and can hire
consultants. They could do more. They don't have to usurp the role of government to do something
useful in the countries where they are operating." At the very least, he adds, the oil companies might
come together and fund some sort of petroleum engineering university so more Africans could work in
the industry.
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Readers' comments
#1 Why Africa's Oil Riches Don't Trickle Down to Africans
I lived and worked in Angola for over a year providing private network telecom services to oil exploration and oil services firms. I formed a company, having to give up 49% equity to a shell company owned by the country's president and his cronies. I saw underwater siphening pipelines connected to private oil company pipelines. These lines siphened off crude and took it directly to the state owned oil company's storage. This, in addition to the fact that 80% of the private company's reported production became property of the state as part of the concession agreement. I saw container ships with cargo marked as belonging to UNICEF (presumably, corn meal and rice shipments to feed the hungry and impoverished) being cleared at the port of Luanda by Angolan military personnel and then transported to feed military troops. Public school teachers had not been paid salaries in five years.
Do not lay this level of corruption and abuse of power on the oil companies. If you are poor in this part of the world, you have found the ninth circle of Dante's Inferno.
By: Henry Pedroso,
Sent: 07:40 AM Thu Nov.01.2007 - -
#2 Africa's OIl - atrophying industries in lopsided econcomies
Oil is doing to these economies the same thing heroin production did in Columbia and Afghanistan for many years.
By: Claire Felong,
Sent: 03:08 PM Thu Nov.01.2007 - US
#3 Solution to Nigeria's Resources Curse
I'm a 28-year-old Nigerian male living in the country's federal capital, Abuja. This is probably the first place you will hear this; but you're going to be hearing a lot of it in the future. Sooner or later, oil production will be stopped onshore in the Niger delta region, and exploration and production will be limited to offshore areas. The costs at the moment far outweigh whatever income the government gets; there are serious environmental problems, and the violence is spiralling out of hand. So-called militants have used the cover of "freedom fighters" to perpetuate economic and human rights crimes that make Sierra Leonean blood diamonds seem like child’s play. Kidnapping of expatriate oil workers is now a booming industry, probably larger than Mexico’s or Columbia’s. In time, it would seem the only wise thing to do is to shutdown the oil rigs on land and declare the area a protected watershed or wetland. Then nobody will justify the actions of those fighting for "their share" of the oil wealth.
By: ik okechukwu, Abuja Property Development Co.
Sent: 04:17 PM Thu Nov.01.2007 - -
#4 Where do we stand in this matter of the stolen wealth of Africa.
I am an Accountant and a Stock broker in Lagos Nigeria.
My take on the stolen wealth is that:
1. Crude is a unique commodity that we can trace from the production to the last buyer. The buyers know when they buy the stole crude and can identify their suppliers; the thief.
2. Like the Angolan case of the state stealing from the private explorers', the explorers are aware of the robbery by the state, but because they are "taking more than was allotted and paid for," they are not bothered: or who would incur such heavy cost on exploration and encourage a mere greedy idiot to steal from his labour.
3. In the case of Nigeria, all those involved are under the illusion of money. Otherwise, what is the use for stealing when you can not enjoy any peace or freedom with it. You spend and live all under cover.
Now, leadership is not understood, riches are misconceived, the people are living without a vision for their individual lives, and this means the whole nation where wealth is continually stolen by the state and a few people in power have no vision. they live by the day.
Let the leaders of the people stop conniving with the cheats of the West, who lure them with money, and see life as that to be enjoyed with others and not in isolation. Let us all realize that it is only when we share that we can multiply successfully and not by the evil design of stealing from each other.
Thank you for this opportunity.
By: Remi Akinwale, First Call Investment Options Limited
Sent: 02:38 PM Fri Nov.02.2007 - -
#5 africa's oil
I live in Uganda (East Africa) where new oil discoveries have been found. I don't think Ugandans will benefit in this oil due to our corrupt leaders. Even the systems in place do not favour us. And I also don't think that "a future generation fund can be airlifted to Uganda!"
In order for Ugandans to benefit from Africa's oil, we need committed leaders who love their country and want to see it move an extra mile.
By: ALEX NANYONGA, Administrator
Sent: 12:42 AM Mon Nov.05.2007 - US
#6 Transparency is part of the solution
I recently traveled to Nigeria and spoke with Niger Delta Development Commission and government officials. One step to help maintain accountability for government and stakeholders alike is to enable shared visibility of funds provided against respective infrastructure programs. This is one way of enhancing accountability to support needs of the oil bearing communities in the Niger delta. See more at the SAP Public Security Blog. https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/u/251723409
By: Anthony McKinney, SAP/ Director Public Security
Sent: 04:10 PM Sat Nov.10.2007 - US
#7 The Resource curse - Africa's oil
It is fashionable for some economists to lament the fate of Africans and the 'resource curse' inflicted on them by the abundance of natural resources. It is not only about oil but others like diamonds, minerals and ores. Paul Collier of Oxford University, formerly with the World Bank, has produced some papers. So has Arvind Subramanian.
They portray a situation where rebels seize control over resources and fund their internecine warfare. Indeed, this is so. But they fail to go into the historical background which led to it and the current global context which sustains it.
Exploitation of natural resources is not new to Africa. The occupation of Africa and the scramble for Africa among the European powers in the 19th century were the consequence of resource abundance. Until African countries were liberated around the 1960s, European powers controlled them by force and their companies exploited the resources to feed their mills back home. The African people had no share in them except the low wages as sweated labour. There was apparent political stability ensured by the colonial powers. Except for a handful of countries, no country in Africa had acquired the administrative capability to govern itself. Most of them had very low levels of literacy. Congo, for example, had twelve graduates when the Belgians left.
When the colonial powers departed, internal fissures developed among the tribes, clans and other groups. A good deal of this was also the consequence of the artificial borders which the colonial powers had drawn to divide the Continent among themselves. These began to take a toll on the political stability of the newly independent countries.
The Cold War created another aberration. Dictators who were friendly to the West, especially the U.S., had their total support through military and other forms of aid. Congo's Mobutu was the classic creation of the Cold War. American policy strongly favoured authoritarian regimes in Africa to fend off communism and Soviet influence. Western companies could continue to operate under the umbrella of these dictators and the paternal protection of governments like the U.S., U.K. or Belgium.
With the collapse of the Soviet regime and end of the Cold War, the African dictators were abandoned and had to fend for themselves. Political rivalry turned violent and rival groups had to get arms in pursuit of their goals.
In countries rich in natural resources, oil or other resources, the rival groups had to seize control over them to finance their operations. Western companies began to operate under the 'protection' of regional despots. Sierra Leone was the worst example which stirred the global conscience. Natural resources, instead of being a boon to promote economic growth, turned into a 'curse.' Corruption, siphoning of funds, etc. are the seamy side of this scenario and flow out of control over resources and their sharing with MNCs from the west. African countries and leaders are critcised for all the sins - not a word is uttered about the Western companies which bribe them and gain ultimately from the sale or utlisation of natural resources in other parts of the globe.
Those who propagate and lament the curse of natural resources in Africa send out a wrong message - some of them are well meaning economists who are sympathetic to African countries and people. They should rather try to provide alternative arrangements for the extraction and utilisation of these resources and how to turn them into a boon. This is a very complex issue and calls for regional and global cooperation. If there is a genuine will to promote African development, it is not difficult to arrive at solutions.
By: Kandaswami Subramanian, Not employed
Sent: 12:56 AM Mon Nov.12.2007 - AU
#8 The Resource curse - Africa's oil
In my earlier comments, I failed to draw attention to the scourge of private military corporations (PMCs). These modern equivalents of buccaneers loom large in the African continent -- as the novelist Frederick Forsythe ably described in his popular nove, "The Dogs of War." They are engaged by rebel groups who seize power and also by MNCs to safeguard their interests. PMCs are paid out of the sales proceeds of natural resources. There is an unholy alliance between rebel groups, MNCs and PMCs.
There has been no progress in global negotiations in the U.N. to ban PMOs. Western countries find them to be of great help in their strategic objectives whether in Iraq or elsewhere. African resources will continue to remain a 'curse' as long this nexus is not broken up. How many of the economists who bemoan the natural resource 'curse' have taken note of this factor?
By: Kandaswami Subramanian, Not employed
Sent: 11:17 PM Wed Nov.14.2007 - AU
#9 More than meets the eye?
Reading the article 'The Resource Curse...' and the comments, especially Kandaswami's, it seems to me that there is more than meets the eye to resource exploitation in Africa. Apparently, mining/oil giants and foreign governments have found it advantageous to engage in a 'divide and rule by proxy' policy that, through its control over African governments, warlords, militias and mercenary group, suppresses the development and exploitation of mineral resources. This policy impoverishes African nations and forecloses their future while serving interests of capitalists and the foreign policy goals of the western world. This confluence of capitalistic exploitation and neo-colonial political strategy will result in the economic enslavement of an entire continent. Is anyone taking heed?
By: Prasad Rao, http://myprofile.cos.com/gangar
Sent: 02:33 AM Thu Mar.06.2008 - AU
"If there is no geology ,you cannot have a mine. ( article courtesy : Wharton Knowledge)
Diamonds aren't forever. Just ask John J. Teeling, executive
chairman of Dublin-based exploration company African
Diamonds. During a panel discussion on mining and natural
resources at the recent Wharton Global Alumni Forum in Cape
Town, South Africa, Teeling told the audience that despite its
storied past as a leader in gold and diamond production, South
Africa "is mined out."
Teeling, whose company is currently co-developing a large
discovery in Botswana with South African diamond giant De
Beers, said that of the 12 mining operations he has started since
1983, seven are in Africa -- including in Mozambique,
Zimbabwe and Sierra Leone -- but none are in South Africa.
"We go where the opportunities are, geologically," he said. "If
there's no geology, you cannot have a mine." South Africa,
which began mining diamonds in 1867 and gold in 1887, has
seen its resources depleted over time, while rising stars like
neighboring Botswana have moved into the mining spotlight. Globally, the competition is rising as well:
After being the leader in gold production for more than a century, South Africa lost its seat to China in
2007. "The future large discoveries in Africa are not going to be found in South Africa," Teeling said.
Other panelists disagreed with Teeling's assessment of South Africa's future mining prospects, citing new
technology that can extend the life of older mines. Indeed, the consensus was strong that mining will
continue to play a major economic role throughout Africa, as emerging markets like China and India fuel
a long-term commodity "super cycle" and African nations learn to contend with the so-called "resource
curse," or the inability to extract value from their abundant natural resources.
Like any industry that has endured for more than a century, mining in South Africa has had its share of
problems. Teeling alluded to the historic difficulty of obtaining permits -- "it took years to get them" --
and recent changes regarding the terms of mining titles, which are now under government control. (In the
previous regime, titles were under mixed public and private ownership.) And earlier this year, the
industry was forced to a standstill by rolling blackouts caused by a national electrical system
overburdened by the massive demand from post-Apartheid urban development. (Eskom, the state-owned
power supplier, has said it will take at least five to seven years to correct the problem by building new
coal and nuclear power plants.)
Despite these hurdles, mining remains the top industry in South Africa. Wharton marketing professor David Reibstein
David Reibstein, who moderated the panel, noted that mining is the country's biggest employer: a
half-million people are employed directly by mines and another 400,000 indirectly through associated
services like shipping. South African mines produce nearly 90% of the world's platinum, 80% of
manganese, 73% of chrome and -- despite its recent slip in position -- 43% of the world's gold. Mining
overall contributed 7% to South Africa's GDP in 2006. When adjusted for associated services and
additional industry output, such as electricity production, the total rises to 18.4%.
chairman of Dublin-based exploration company African
Diamonds. During a panel discussion on mining and natural
resources at the recent Wharton Global Alumni Forum in Cape
Town, South Africa, Teeling told the audience that despite its
storied past as a leader in gold and diamond production, South
Africa "is mined out."
Teeling, whose company is currently co-developing a large
discovery in Botswana with South African diamond giant De
Beers, said that of the 12 mining operations he has started since
1983, seven are in Africa -- including in Mozambique,
Zimbabwe and Sierra Leone -- but none are in South Africa.
"We go where the opportunities are, geologically," he said. "If
there's no geology, you cannot have a mine." South Africa,
which began mining diamonds in 1867 and gold in 1887, has
seen its resources depleted over time, while rising stars like
neighboring Botswana have moved into the mining spotlight. Globally, the competition is rising as well:
After being the leader in gold production for more than a century, South Africa lost its seat to China in
2007. "The future large discoveries in Africa are not going to be found in South Africa," Teeling said.
Other panelists disagreed with Teeling's assessment of South Africa's future mining prospects, citing new
technology that can extend the life of older mines. Indeed, the consensus was strong that mining will
continue to play a major economic role throughout Africa, as emerging markets like China and India fuel
a long-term commodity "super cycle" and African nations learn to contend with the so-called "resource
curse," or the inability to extract value from their abundant natural resources.
Like any industry that has endured for more than a century, mining in South Africa has had its share of
problems. Teeling alluded to the historic difficulty of obtaining permits -- "it took years to get them" --
and recent changes regarding the terms of mining titles, which are now under government control. (In the
previous regime, titles were under mixed public and private ownership.) And earlier this year, the
industry was forced to a standstill by rolling blackouts caused by a national electrical system
overburdened by the massive demand from post-Apartheid urban development. (Eskom, the state-owned
power supplier, has said it will take at least five to seven years to correct the problem by building new
coal and nuclear power plants.)
Despite these hurdles, mining remains the top industry in South Africa. Wharton marketing professor David Reibstein
David Reibstein, who moderated the panel, noted that mining is the country's biggest employer: a
half-million people are employed directly by mines and another 400,000 indirectly through associated
services like shipping. South African mines produce nearly 90% of the world's platinum, 80% of
manganese, 73% of chrome and -- despite its recent slip in position -- 43% of the world's gold. Mining
overall contributed 7% to South Africa's GDP in 2006. When adjusted for associated services and
additional industry output, such as electricity production, the total rises to 18.4%.
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