The president of Ghana, Nana Akufo-Addo, stepped up to the podium at the Mining Indaba conference in Cape Town last year and delivered a powerful message to the miners in the audience. “For centuries, our minerals have been the attraction for adventurers and fortune seekers,” he said. “Many foreign thrones and crowns are adorned with the gems taken from our lands, not always through straightforward means.”
President Akufo-Addo’s point was that not a whole lot has changed, in terms of foreigners arriving and removing the resources of countries in Africa.
It's true, of course, that plenty has changed in the industry in recent decades. Royalty and tax agreements are stronger than ever, miners routinely build schools and hospitals and train up locals to do highly-skilled jobs, while employing and paying handsomely those who already have those abilities.
But one factor has largely stayed the same.
No chief executive or chairman of a mining company listed on London’s main board is black. There are few people of colour or women, either, and some companies with a single asset in one African country do not have a national on the board or management team at all, as if they could not find one capable person in the whole country.
The boss of Aim-traded miner Bushveld Minerals (BMN), Fortune Mojapelo, is a rare exception.
White South Africans such as Barrick Gold (Can:ABX) boss Mark Bristow are commonplace at the pointy end of the industry, however. Barrick has mines across West Africa, the Democratic Republic of Congo (DRC) and Tanzania, but no black directors. Glencore (GLEN) also has no black directors or division bosses, across both its mining and trading divisions. It has major operations in the DRC, Zambia, South Africa and also produces oil in Chad.
Further down the ladder, there are plenty of experienced general mine managers or country managers, who could be in charge of thousands of workers at a single mine, but the shift from the operational level to the c-suite rarely happens for black mining professionals the way it does for their white colleagues.
Segun Lawson is the chief executive of TSX-listed Thor Explorations (Can:THX). He is in the midst of building a 100,000-ounce-a-year gold mine in Nigeria, and told Investors Chronicle there was a “glaring lack of diversity” in the markets in the UK, North America and Australia.
Junior, midcap and major
Mr Lawson said in the junior space he operated in, being in the right circles was critical in moving up the ladder.
“I hate to use the word club – but it almost seems like there was almost a club in the mining sector, that has developed over years, a couple of generations,” he said. “A lot of Africans, who are in the host countries of these mines, haven't really had the capital behind them to advance these projects. The countries that have had the capital behind them have been predominantly these majority white countries.”
Executives at junior miners will often be geologists and engineers who have teamed up to develop a resource, funding the initial stages themselves or with a familiar financier. White Australians, Canadians, Brits and South Africans dominate the top jobs.
Even at bigger miners, where senior managers and directors do not need to bring funding to the table, African operators still ignore locals.
This difference becomes starker when miners with African operations are compared with those elsewhere.
Fresnillo (FRES) has a Mexican boss, the Russian miners largely have Russian leaders and Atalaya Mining (ATYM) found a Spanish copper expert – not an easy thing to do when the country has few mines – to lead it into production. Rio Tinto (RIO) has the key Oyu Tolgoi copper mine in Mongolia, and hired former investment banker and Mongolian national Bold Bataar as its copper boss in 2013.
Natural Resource Governance Institute (NRGI) East Africa manager Moses Kulaba also said lack of access to capital had limited host-country nationals’ involvement in the top roles.
“The industry has been constructed in such a manner that if you don't have the finances, then you can't speak on the board,” he said. “That's precisely why you don't have Africans on the boards, but also why you don't have women.”
He told Investors Chronicle miners were shooting themselves in the foot by not bringing in talent from the countries in which they operate, describing the current situation as a tragedy.
“What we see now is that the tragedy of the African extractive landscape is anchored in its past, whereby there was a clear distinction between the owner of the resources and the one who controls them,” he said.
A consequence of this approach from miners is resource nationalism, he said, which has sprung up across the continent in recent years.
The DRC and Tanzania have both changed their mining codes against heavy opposition from operators, to take either higher royalties or a ‘free-carried’ interest. A free-carry is a stake without the need to jointly fund a project or local holding company, diluting a miners’ take from an asset.
The numbers
NRGI West Africa regional manager Nafi Chinery said there was a lack of data on the diversity of companies’ leadership.
“We need to develop hard data on why we don't have diversity at senior levels, to be able to discuss the issues appropriately,” she said.
Ms Chinery, who oversees the Anglophone countries in the region, said the inclusion of women also had to be a part of the diversity conversation. This has been a more common topic for miners to speak up about. BHP (BHP) made headlines in 2016 when it announced it would aim for gender balance across its 50,000-strong workforce by 2025.
But just because the lack of women in the industry has been recognised by most miners as an issue that needs to be fixed, it doesn’t mean there has been an immediate resolution.
Additionally, this is clearly not just a mining issue. Former Anglo American (AAL) chairman Sir John Parker runs an annual review looking at the composition of FTSE 100 boards.
This year, 37 per cent of the 83 constituent companies that took part in the review had no black, asian or minority ethnic board members. A target set in 2017 for each board to have a member from an ethnic minority looks like it will fail.
Bringing black leaders into companies that operate principally in Africa seems like an obvious marker of improvement on this front.
Thor Explorations chief executive Mr Lawson said the oil and gas sector, where he worked before founding his company, was in a better state than mining on this issue.
“If we look at the oil and gas side of things on the Aim-traded companies, you see a lot more emergence of the black senior managers going into executive positions,” he said.
Ms Chinery said a strong plan had to be put in place to improve diversity of boards.
“The companies, if they are really interested in addressing these issues, should have a strategy around ensuring you have host-country representation in senior management levels,” she said.
Ms Chinery and her NRGI colleague were clear that appointments should not be “box-ticking” exercises. “I think that is one of the biggest challenges,” Mr Kulaba said, citing problems with South Africa’s Black Economic Empowerment programme and lack of say given to former London company Acacia Mining’s Tanzanian-national directors.
Improvement will not happen by itself, according to Mr Lawson.
“I don't think it will just come with time,” he said. “There has to be a concerted effort, by companies, and a shared vision by companies that this is what they're trying to do. There is a lot of talent, a lot of skills in-country, that need to come to the top. It's win-win.”
