On renegotiating mining contracts in Africa

To assert national sovereignty and regain control over strategic resources, several African countries have opted to renegotiate mining contracts with multinational companies exploiting these resources. But is sovereignty the only argument put forward in response to critics who condemn these renegotiations, often initiated following political change?

Here are three good reasons to renegotiate mining contracts:

1. Adjusting returns in line with new commodity prices
The earliest mining contracts were signed during periods of low commodity prices. They granted disproportionate advantages to multinational companies. Renegotiation makes it possible to rebalance economic returns and address fiscal inequalities. New contracts can incorporate revised tax rates, mechanisms to curb aggressive tax optimisation by mining companies, and a clear intention to increase the economic impact of mining for development.

2. Strengthening local content
Revising mining conventions and contracts now enables African countries to effectively implement local content policies. National frameworks are designed to place domestic companies and national human capital at the heart of the mining industry. Renegotiation can therefore guarantee quotas for national employment, promote genuine skills transfer, and prioritise local processing of mineral resources—now a central element of discussions.

3. Integrating sustainability considerations
Renegotiating mining contracts allows African states to align mining operations with new environmental, social and accountability requirements. New mining codes increasingly emphasise sustainable mining development, particularly mine closure and rehabilitation processes. These requirements carry costs that must be negotiated and imposed on mining firms.