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Mining West Africa – Navigating a Diverse Risk Landscape

By 29/12/2011March 9th, 2018News

Members of WIM (UK) gathered at Mayer Brown on the morning of 28 September 2011 with a team of experts from Control Risks, an independent specialist risk consultancy, to examine the risks facing mining companies with operations in or looking specifically to expand to West Africa.  This is very much one of the key regions of the moment with many companies recognising the high level of opportunity and, in some cases, relatively benign investment and operational environments.

Speakers Hannah Koep, Control Risks’ Head of Africa Analysis and Nick Smart, Senior Security Consultant for Africa, focused their presentation on a realistic depiction of the risk environment in which mining operations are situated and how the actions of the managers and stakeholders of such operations can have a direct impact on the risks they face.  With the increased attention this particular region has been receiving as a result of strong commodity prices and Asian demand, companies cannot not lose sight of the importance of doing their homework and making an effort to fully understand the operational environment of each project.

Regional roundup

 It is easy to assume the worst or the best about the region given the varying risk profiles of the most well known countries; however, even the most stable of countries will come with its own challenges.  To illustrate this, the presentation commenced with a brief snapshot of the key issues facing the mining industry in each country.

 These can be summarised as follows:

  • Senegal – The issue of Wade’s succession has the potential to destabilise the country and could lead to a deterioration of the security environment; increasing popular unrest, poor infrastructure and unemployment are also issues to be considered by potential investors;
  • Niger, Mali, and Mauritania – These countries are all seeing an upsurge in terrorist activity particularly along border areas which, in some areas, are AQIM strongholds;
  • Ghana – Although Ghana is traditionally deemed a relatively ‘safe’ environment, companies are faced with artisanal mining which continues to persist in gold mining areas and can lead to security and community relations issues;
  • Cameroon – At the time of the seminar Cameroon was going through an election period which saw the re-election of incumbent Paul Biya, raising issues relating to election violence, the succession itself, corruption and governance;
  • Gabon – With little experience dealing with the mining industry, having been primarily oil and gas focused, Gabon is also characterised by institutional weakness and highly personalised politics;
  • Nigeria – Despite its focus on oil and gas, Nigeria’s importance within the region cannot be ignored by mining companies: following recent elections, the primary issue is that of security with the continuation of issues in the Niger Delta and the emergence of Boko Haram;
  • Côte d’Ivoire – It has been a turbulent year for Côte d’Ivoire following the post election crisis that saw the majority of foreign players withdraw completely; the new government is making a review of the mining code a priority for 2012 which, in addition to the existing security issues, could present more pressure on companies to renegotiate contracts and comply with more stringent taxation and government participation regulations as the government will want to see foreign investment being used to its advantage and the advantage of the population;
  • Liberia – There is concern regarding the impact of the Ivorian crisis on Liberia as well as localised violence linked to the election period; corruption remains a big issue for investment despite attempts by Johnson-Sirleaf’s government at a clean-up; and
  • Guinea – The new president, Alpha Condé, is under pressure to carry out mining policy reform which could lead to the renegotiation of contracts, even as security remains an issue, with an assassination attempt on the president in July demonstrating that politically motivated unrest is still a credible threat.

Despite these challenges, it is possible to operate successfully in the various countries of West Africa provided sound intelligence is sought and continuous review of procedures is implemented.

Security issues do range from low to medium within specific countries; therefore, understanding regional and local dynamics is just as important as having an overall knowledge of the country itself.  Issues such as religious and tribal differences are prevalent across the region and, if not addressed or acknowledged, can become a contributing factor to security and other issues.

Key concerns

Aside from  the aforementioned regional and country dynamics, some of the main concerns identified by Control Risks’ teams when assisting clients across the board include:

  • Significant falls in commodity price;
  • Government stability and expectations (including tax);
  • Community stability and expectations;
  • Attention from NGOs;
  • Artisanal mining;
  • Industry inflation;
  • Bureaucracy approvals process; and
  • Continuity of supply – water, power, etc.

At first glance, these may seem unrelated to security; however, Control Risks’ experience shows that these can be significantly impacted by a company’s attitude to security.  Control Risks has been active in helping to reduce the impact of these concerns through active understanding of the operational environment and the employment of robust community liaison and security planning.  The approach will always be adapted to the specific context, with a focus on helping a company to manage its project impact.

Managing project impact

Control Risks also explained its work based on two recent case studies in Ghana and Liberia which are not generally characterised by insecurity.  It is very easy to assume that a threat environment is high as a result of the locality but Control Risks have often observed companies facing challenges as a direct result of their impact, both externally (communities and environment) and internally (work force).  Quite often companies face community-related issues relating to

  • High unemployment and grievances over lack of employment opportunities;
  • Grievances related to hiring and working practices – especially related to that of contractors; and
  • Tensions between and with artisanal miners.

All of these are exacerbated by a company’s failure to manage expectations from the outset of a project.  They can be managed through the development of specific policies covering all aspects of corporate social responsibility and governance practices.  As regards recruitment of local employees and contractors, expectations and regulations should be clearly articulated to both parties.  Companies should establish grievance mechanisms giving communities have a voice, which is in line with the Voluntary Principles on Security and Human Rights (1) of which all companies operating in such environments should be aware.  Additionally, a company should define its level of tolerance towards artisanal mining, understanding that in some locations it is a way of life.

In addition to community relations concerns, some areas present significant security issues ranging from collaboration between contracted security personnel, mine workers and communities in order to steal goods from the site, endemic fuel theft (often 25% of mine costs) and assault of personnel either in the local area or on the mine site itself.  Depending on the context and commodity, certain measures can be put in place to reduce these threats.

 Certain responses to theft varies depending on commodity:

  • Gold – Clear zoning and robust security to manage access control and surveillance;
  • Fuel – It is possible to outsource distribution and responsibility to contractors but this does not totally transfer the risk: centralised parking and a 24/7 guard operation are key as well as maintaining accurate records of projected and existing of fuel loss;
  • Scrap metal ($2-4m loss in a month) – It is necessary to define the responsibility for looking after scrap which can be highly valuable to local communities, and should thus be considered an asset and protected as such;

Guard force review may also be warranted.  In this case the recommendation would be to first identify the requirements before going through a transparent tender process to cover the registration, vetting and training of contracted guards; consideration should be given to issues related to fair pay, the use of weapons and compliance with the Voluntary Principles on Security and Human Rights.

Human resources is generally an issue throughout a mining project’s lifecycle and companies should be aware of not putting managers in a position that could see them targeted.  The firing of staff is a particularly difficult issue to manage and clear policies and guidelines should be in place to manage this.  Adequate physical barriers should also be provided around housing and office space for expatriate personnel.

Although not all of these issues will be a priority for every company, adopting a formal stance is necessary and should ideally come from the corporate level.  Community acceptance is the key and a defined policy for relations should be implemented at the earliest opportunity; this policy should see the company demonstrating a positive influence and not just being tolerated by the communities.  Companies are encouraged to support and nurture local talent through active mentoring, training and the integration of departments (security, human resources, corporate social responsibility, etc).

Managing regional challenges

In many cases, a company’s risk exposure is linked to the political and security environments.  This means that, even without taking project impact into consideration, a company must have robust plans on how to manage the risks associated with investment in addition to operational procedures and plans.  In Côte d’Ivoire for example, Control Risks carried out a review on behalf of a company in 2010 that identified a variety of existing security issues that were outside of the company’s control and needed to be addressed prior to any next steps being undertaken.  The specific issues being faced were as follows:

  • Lack of effective government;
  • High levels of opportunistic banditry and violent crime – and associated impunity;
  • High levels of road traffic accidents

This combination of factors made it impossible to present financially-viable mitigation strategies that could sufficiently reduce the risks to a visiting exploration team.  As such, the recommendation was to lobby the government to drastically increase security forces in the area and for the company to establish a robust evacuation plan which would see the phased withdrawal of personnel in the lead up to elections which were expected to be problematic.  With this plan in hand, the company was successfully able to get the government to increase support to the project thus allowing them to proceed.  Staff was indeed withdrawn prior to the elections which saw significant incidents in the area of operation and could have resulted in attacks or loss of life.

Following the elections, the company approached Control Risks to assist with the development of a phased re-entry to Côte d’Ivoire.  Security was, of course, a concern and the client wished to understand any new risks (if applicable) and manage the return of its personnel in a fashion that mitigated these identified risks.  In addition, the company actively sought to engage positively with the communities in light of recent changes and took steps to review security policies and evacuation procedures to ensure they were prepared should the situation deteriorate.  This approach saw the emergence of several key strategies that can be taken in addition to those related to the management of project impact, including:

  • Ensuring evacuation plans are understood and watertight;
  • Rehearsing of crisis management plans especially between the corporate and local levels;
  • Monitoring the effectiveness of government forces and recognising when an MoU with the government might be required; and
  • Full understanding of political movements and how these can impact operations.

In summary

The issues facing mining projects and companies in West Africa might seem overwhelming at first glance, yet the region remains the focus of investment and growth in the industry, demonstrating that reasonable homework and preparation are key to operating in medium to high risk environments.  Companies must take steps to understand the environment, define a solid approach and stick to it.  The project plan is obviously a priority; however, ensuring that plans are in place to manage external risks will eventually maximise the success of a project.  Also, the empowerment of and communication between managers responsible for community relations, human resources and security are of the utmost importance throughout the lifecycle of a project.

Please click here to view the presentation slides.

For more information about this event and Control Risks, please contact Gemma O’Loghlen, Senior Account Manager – Mining, at gemma.o’


(1) In 2000, a small group of governments, companies, and non-governmental organizations co-operated to develop and launch a set of Voluntary Principles on Security and Human Rights.  The Voluntary Principles are designed to help extractive companies maintain the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms and, when applicable, for international humanitarian law.  Since then, other companies, governments, and NGOs have joined the initiative, and many other companies have publicly signalled that they apply the Voluntary Principles at their operational sites.  For more information, including implementation guidelines, visit