Sheila Khama is an extraordinary voice in mining. In September 2020, the renowned mining executive, former CEO of De Beers Botswana, and DPI Board Member sat down with DPI Board Chair Peter Bryant for a conversation. Their exchange touched on issues including building trust between mining companies and the communities they wish to operate in; how asymmetries in understanding the mining process can lead to misunderstandings; and what steps we need to take to make responsible sourcing truly sustainable and effective.

 

We are publishing a three-part series on this rich and engaging dialogue which captures the depth of Sheila’s experience and perspectives. Here is the second installment:

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PB: The Africa Mining Vision is coming up to its 10th anniversary next year. I’d be interested to get your perspectives on that so far. Did it achieve its goals? What have we learned? What do we need to do? How far did it go?

SK: The Africa Mining Vision, if you will, is a Pan-African aspirational statement, by the 54 member states, who in 2009 expressed their views as to how, collectively, they see Africa’s natural resources being developed. And I use the word ‘aspirational’ in the knowledge that my masters may not agree with me. But I use it deliberately, anyway, because if you think about it, you have 54 governments, a continent large enough that it takes you eight hours from Cape Town to Alexandria, you know for sure in the end, there will be diverse environments, there will be diverse political, economic, and geological environments. And so, at best, the Mining Vision serves as a framework to create guiding principles.

Embedded in that is also what is called ‘The Mineral Development Framework’. That is the tool that the Mining Vision aspires to use to guide each and every sovereign state to then develop its own vision. And as you can imagine, given the diversity, it’s a mixed bag. My sense is that the African Mining Vision has succeeded in highlighting the importance of mineral resources and the importance of responsible stewardship. That in itself is an achievement. The second thing is that for countries with limited resources, seeking to have some kind of coherence around the way the resources are developed – the Mineral Development Framework has been, at least in my view, a very useful tool.

"​My sense is that the African Mining Vision has succeeded in highlighting the importance of mineral resources and the importance of responsible stewardship. That in itself is an achievement."​

 

But, of course, you interject with that politics; you interject with that the odd economic or health crisis, you will find, inevitably, some level of erosion of the success that has been made in some countries. And so, again, I’m reminded that it’s not an end in itself. It’s a process that guides, and it will continue to evolve. And I think those who are responsible for that, politically and technocratically, understand this.

PB: Part of it was to help to guide the wealth for resource development, to spur development and prosperity in those countries. Do you think there’ve been good examples where progress has been made in that?

SK: I think so. And when I say that I think specifically of two things: one of the important aspects of the Mineral Development Framework is the decision by the member states to push for value addition, which is to say mineral processing, local content. These things have really taken root. There has been a groundswell of acceptance of the importance of not just focusing on exports, but also to the extent that the economics of the project can survive to value add in different ways.

But there’s also been an acceptance of the issue you raised earlier, which is that of transparency. Not just transparency between multinationals and host governments, but also host governments, their citizens, and the communities, which, if you think about it, is probably much more important than anything else we speak about in the pipeline of transparent relationships.

PB: I want to jump to artisanal mining in the African context. I’m not talking about illegal mining, but artisanal mining. The number of people that rely on artisanal mining is staggering. How’s that playing out in Africa? Does the African Mining Vision really embrace that? Obviously, Western people, when they hear artisanal mining and see pictures, they have horror movies in their mind. But many people rely on artisanal mining for their economic wellbeing.

SK: So, first on the Mining Vision, the answer is yes. The Mineral Development Framework has several tenets. And artisanal mining, as in orderly, responsible artisanal mining, both in terms of responsible sourcing, in terms of the environment, and in terms of fair reward for those who are involved, is something that is an integral part of the Africa Mining Vision.

I always think it’s important not to take things on face value. I’ve taken a step back and thought, ‘What is artisanal mining?’ Not in the sense of how it’s practiced, but what is it socially? I think there’s been a grave error historically. Artisanal mining is subsistence mining, traditionally, in many parts of Africa and Latin America. And by that, I mean generations in the past lived off mining iron ore in Zimbabwe, gold in Ghana, gold in Columbia and Peru. We see this in the museums. The gold nuggets that were used to produce artifacts that we see today.

"I’ve taken a step back and thought, ‘What is artisanal mining?’ Not in the sense of how it’s practiced, but what is it socially? I think there’s been a grave error historically."​

 

I think the error that was committed is when we moved from a subsistence economy to, if you wish, the formal economy, cognisance wasn’t taken of how to accommodate artisanal mining in this formally regulated mining space. We thought only of mechanising large-scale mining, and later small-scale. And so, artisanal mining has, in perpetuity, fallen between that crack, which is why in part, as you say, when we see artisanal mining, it’s horror. Because we haven’t brought it into mainstream. So, I think we need to find ways to bring artisanal mining into mainstream. The same way we do with small and medium businesses.

The second thing I see about artisanal mining is that, in a way, the horrific images we see are not of artisanal mining. This is an injustice to the legacy of artisanal mining. This is poverty. This is people desperately finding the first opportunity to make a living. And if you are in the DRC, in an area which is prolific with alluvial gold, what are you going to do? You are going to artisanal mine.

So, I think it is important to distinguish things that are distinctly in the domain of artisanal mining, and things that are distinctly in the domain of poor regulations. Poor border control, poor environmental stewardship, and poverty. That they intersect with artisanal mining is a certainty. That they are not artisanal mining, per se, is another certainty.

"I think it is important to distinguish things that are distinctly in the domain of artisanal mining, and things that are distinctly in the domain of poor regulations."​

 

PB: Sheila, that’s actually one of the best explanations of artisanal mining I’ve heard in a long time. So, poverty is a good segue into ESG activism. I attended the Resource Minister’s summit the World Economic Forum holds every year in Toronto. I listened to the lament from several ministers from both Africa and Latin America, who said that ESG activism is actually having unintended consequences, because it’s creating problems. The West looks at certain jurisdictions and countries and doesn’t want to give capital or access to technology to have those resources developed. But the ministers are wanting to develop those resources to generate funds and alleviate poverty, you know the basic things. So, there’s some unintended consequences of ESG resulting in a gap. How do we bridge that gap?

SK: A rose is a rose by any name. And this is how I see ESG as it is now. It is an evolving concept around what was originally called the triple bottom line, and then it was called sustainable development. Essentially, we’re grappling with the social, the environmental, and the governance aspects, however you put it. What I see as the latest drive is primarily that we have tagged standards and we have linked it directly to the capacity to raise finance. The challenge is that we have left others behind because most people, and this is what I meant by lack of understanding of how the industry works…most people think that when De Beers comes to Botswana, somebody is carrying a wad of money with them, and don’t realise that De Beers is beholden to banks, to be able to finance.

This is the kind of mapping of how the industry works that is so critical. And because there isn’t the fundamental understanding, the assumption now is that mining companies will not fund; will not do mining. Actually, it is this ecosystem, where you have the producing countries, where you have those who finance, those who are shareholders and those who buy the end product.

I was at great pains when I worked in Botswana to explain to the government that unless we, as a country, understand our position in the world as a diamond producer - what that means in terms of how we relate to civil society elsewhere in the world, how that impacts our ability to generate income from our diamonds – then, that will be our Achille’s heel.

"The importance of governments demonstrating responsible stewardship is one of the most important components."​

 

So, again, what I think is needed, is not to argue for or against, but to map it out and ask, what is happening here? How is it that a firm or a bank or a civil society in Paris might determine whether a mine in the DRC is funded? Because there is an ecosystem, and it always existed. It’s just that the miners knew it, the financiers knew it, and we didn’t. So, I think we need to step back and help people understand that. It is not about, do you or do you not have a right to extract your resource? It is, who are the stakeholders you must engage to convince that this is the right thing to do? And the importance of governments demonstrating responsible stewardship is one of the most important components of overcoming this.

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You can watch the full conversation between Sheila Khama and Peter Bryant on the DPI YouTube channel. If you missed it, read Part One of the conversation and stay tuned for Part Three coming soon.