Instability, wars hobble African mining investment -Jonah

African countries seeking to lure foreign mining companies to their mineral-rich but impoverished continent heard a familiar message on Tuesday -- stop the wars, ensure stability and the dollars will come.

Africa, which has some of the world's biggest deposits of gold, base metals and diamonds, can boast successes in Mali, Tanzania and in South Africa where the gold mining industry is enjoying a revival after a painful restructuring.

But there is pre-election turmoil in Zimbabwe, uncertainty over the future of Zambia's copperbelt, a decades-old civil war in Angola, and shaky peace in the Democratic Republic of Congo.

``There is a lot of prejudice out there against Africa, but we have to improve ourselves politically and economically,'' Sam Jonah, Chief Executive of Ghana's Ashanti Goldfields Co Ltd , said on the sidelines of an African mining investment conference.

``Investment capital is scarce and nomadic and it will go where the greener pastures are,'' Jonah added.

``When we get the issues of governance and economic management right, we will create the conditions to attract investment,'' he said.

Gerard Holden, global head of mining and metals for Barclays Capital, told the conference: ``Africa continues to be a paradox -- the world's richest, poorest continent''.

In his outlook for African mining in 2002, Holden said there was growing frustration among investors that regional leaders were not ``dealing with issues in their own backyard''.

RULE OF LAW

Southern African leaders, particularly South Africa's President Thabo Mbeki, have been criticised for a soft approach to the growing political and economic crisis in Zimbabwe, which has hurt investor sentiment toward the region.

``It takes many years to attract investment, but only days to lose it,'' Holden said.

That message was echoed by Canada's mining minister who urged African leaders to work harder on issues of governance, adopt sound economic policies and ensure the rule of law.

``It is time for political leaders in Africa to show that they will address these things. If there is no rule of law, people will not invest,'' said Minister of Natural Resources Herb Dhaliwal, the only Western mining minister at the conference.

Canada is among several countries who have pledged support to Mbeki's African recovery plan which aims to address the continent's political, social and economic ills.

Mbeki assured the delegates that the outlook for Africa was not as bleak as some speakers suggested.

``I am quite certain that progress will be made in the resolution of these conflicts,'' he said.

Mbeki added that mining would play a key role in his New Partnership for Africa's Development (NEPAD). But he said the industry should help mining countries add value to their products and not just be an exporter of raw materials.

The head of exploration and acquisitions for Anglo American Plc said African countries like Tanzania had sought foreign participation in building their mining sectors in recent years.

``In previous addresses to this conference, I and others have urged African governments to create fiscal regimes that attract the mining investment the continent so desperately needs,'' said Anglo exploration and acquisitions chief Bobby Danchin. ``Happily there has been progress in this front''.

ZAMBIA COPPER CRISIS

Danchin's company is under fire in Zambia after announcing it was considering the sale, transfer of assets or closure of the Konkola copper mines it acquired about two years ago.

The government has said it will take over the mines, but analysts say uneconomic mining areas will have to be closed.

Anglo's decision was based on low copper prices and the lack of project financing, and the company has tried to fend off critics by stressing its commitment to the continent.

``Anglo American and its associates have spent or committed some $4.5 billion to investment in the African continent over the last five years,'' he said.

Danchin said Africa continued to receive the largest share of Anglo's exploration spending, although the budget worldwide has dropped 31 percent to $42 million in 2002.

Africa accounts for 27 percent of Anglo's exploration budget, focused on the copperbelt straddling Zambia and Congo, Namibia, South Africa and Mozambique.