China, UK expand mining presence in Africa; US, Canada, Australia lose ground

Companies headquartered in the US, Canada and Australia still dominate ownership of mines in Africa, a key source of minerals with geopolitical importance. Since 2019, however, China- and UK-based companies have been gaining ground, with mine ownership increasing by 21.3% and 11.0%, respectively, according to S&P Global Market Intelligence data.

"A trend we are seeing in Africa is China's increased influential role in the [African] region," Kate Apostolova, a partner at law firm Clifford Chance, said during a Sept. 6 panel at the Africa Down Under conference in Perth, Australia.

In May, Leo Lithium Ltd. sold its remaining stake in Mali's Goulamina, one of the world's largest undeveloped hard rock lithium deposits, to Ganfeng Lithium Group Co. Ltd. That same month, AVZ Minerals Ltd. delisted from Australia's bourse after an ownership dispute with Zijin Mining Group Co. Ltd. for the globally significant Manono lithium project in the Democratic Republic of Congo.

Competition with China "is taking place largely in West Africa right now," Timothy Foden, co-head of Boies Schiller Flexner (UK) LLP's international arbitration practice, told S&P Global Commodity Insights.

China, UK ownership increasing

Jason Holden, senior mining analyst for S&P Global Commodity Insights, attributed the increase in the number of UK-owned assets to junior exploration companies picking up projects, which are likely to be focused on gold and lithium.

For the larger UK-based miners, Endeavour Mining PLC's African ownership has increased the most, with 11 assets added since 2019 mostly from the acquisition of Endeavour Canada Holdings' projects in 2021, Holden observed.

The increase in Chinese ownership, meanwhile, is "probably more likely to be Chinese companies taking stakes in operating/feasibility-level projects, for example CMOC Group Ltd. and Tenke Fungurume, and Zijin Mining's stake in Kamoa-Kakula," Holden said during a Sept. 13 email interview. Tenke Fungurume and Kamoa-Kakula are in the DRC.

"Chinese companies, particularly the state-owned entities, are more likely to buy into mining projects further down the value chain when companies have a prefeasibility/feasibility study and the projects have been de-risked, rather than greenfields exploration," Holden said.

Skepticism remains Down Under

Amid the drop in the number of mines controlled by North American and Australian companies, Apostolova said "there is a lot of skepticism in the mining industry about arbitration and starting legal proceedings" against African governments.

"I have represented several Australian companies [that] have had their permits revoked," Apostolova said, adding that the permits were then issued to Chinese companies.

"Resource nationalism is on the rise again. ... It has increased specifically in the copper belt in Africa," Foden said.

Price is often the underlying issue of "why governments get to a stage where they want to revoke somebody's license," Christer Mhingo, director of EcoGraf Ltd. unit TanzGraphite Ltd, said during a Sept. 6 panel. Industry and governments should collaborate to make critical minerals price volatility easily understandable, Mhingo said.

This poses a hazard for risk capital that faces "years, and in many cases decades" to develop mines, John Welborn, director at Equatorial Resources Ltd., said during a Sept. 5 Africa Down Under panel. Equatorial and the DRC are in arbitration for a dispute over the Badondo and Mayoko-Moussondji iron ore projects.

Apostolova said the "geopolitical risk" for projects can be mitigated by creating a subsidiary domiciled in a country that has an investment treaty with the host African state, such as the Netherlands or the UK with the DRC.

Foden also noted a "big shift in the attitude" of Australian miners willing to engage about protecting their assets from expropriation. Australian miners several years ago "viewed legal action as pointless, as 'we'll never get paid anyway'. The [Indiana Resources Ltd.] victory has demonstrated the fact that that attitude was wrong," Foden said.

In July, Tanzania agreed to pay $90 million to settle a dispute with Australia-listed Indiana Resources over the Ntaka Hill nickel project. Tanzania had canceled the project's license in January 2018, when the country updated its mining regulations after a protracted dispute with Barrick Gold Corp. and Acacia Mining PLC.

In October 2023, Tanzania also agreed to pay $30 million to Toronto-listed Winshear Gold Corp. in relation to a dispute over the SMP gold project.

Foden's firm acted for both Indiana and Winshear.

"The days of just saying, 'oh, shucks, we lost that one' and walking away [from African investments when countries expropriate the assets] are gone," Foden said.