Subterranean Upheaval: Coups and Their Impact on African Mining Sectors

Africa has a well-documented history of experiencing coups. These abrupt changes in political leadership span decades and can often happen in quick succession. Just between 2021 and 2023, so far, seven coups have taken place in  Mali, Guinea, Sudan, Burkina Faso, Niger, and Gabon. According to an Aljazeera report, out of 214 military attempted or successful coups in Africa, 106 have been successful.  

The suddenness and sometimes violent nature of coups tend to drastically restructure governments, alter borders, and often cause a change in national priorities in a matter of days. Coups leave in their wake a tapestry of consequences that impact economic stability, foreign relations, industrial productivity, and societal development. These political upheavals can affect not just the country in turmoil but the continent at large, reshaping the future of a region rich in resources and potential.   

Coups, invasions, and abrupt shifts in the government policies of mineral-rich countries can have a substantial and far-reaching impact on the global mining industry. World events like Russia’s invasion of Ukraine and the sudden upsurge of coups in Africa, particularly in West African countries like Mali and Burkina Faso, have sent shockwaves throughout the global mining supply chain.   

Mining companies have been forced to reassess their investment policies and strategies, as well as risk management approaches. Unsurprisingly, geopolitics ranked number two in Ernst and Young’s (EY) 2023 list of the top 10 business risks and opportunities for mining and metals. Given the direct impact of geopolitical stability on global mining activities, it becomes crucial to confront challenges with resilience and adaptability to maintain the industry’s role in driving the global economy forward.  

Guinea, a leading world producer of bauxite and possessing large deposits of iron ore, diamond and gold, suffered a coup on September 5, 2021. The Alpha Condé government had been ousted by military forces, with one of the driving frustrations behind the coup being that revenue generation from mining had not been directed towards addressing poverty in the country.   

Mamady Doumbouya was the leader behind the military takeover of the government. He vocalized strong concerns that underscore the immediate influence that coups can have on the mining industry. Doumbouya emphasized the need for mining companies to adhere to practices that minimize environmental degradation and uphold social norms. The coup had been condemned by the Extractive Industries Transparency Initiative (EITI), even though Doumbouya had affirmed Guinea’s commitment to EITI’s principles built on good governance and transparency.  

Despite the coup in Guinea, no significant hindrances to mining operations and the export of bauxite were recorded. There was, however, a series of tense and extensive discussions regarding certain mining projects, such as the Simandou iron ore mining project.  

The country of Niger also experienced a coup on July 26, 2023. Uranium is one of the main minerals mined in Niger. According to the World Nuclear Association, Niger accounts for about 5% of the world’s uranium output. The country is also the seventh-largest producer of uranium in the world. The military junta that staged the coup had reportedly threatened to halt uranium exports to France. However, it remains to be seen if they will proceed with this.   

The EU's nuclear agency, Euratom, affirmed that even if exports were indeed halted, current uranium inventories were enough to fuel the EU’s nuclear power reactors for three years. There have however been concerns about the long-term, as Niger remains one of Europe’s primary sources of uranium. According to the Organization of Economic Complexity (OEC), France met 99.3 percent of its uranium demand through imports from the Niger Republic in 2021.   

Even with diversified supply chains, should exports from Niger cease or pose supply issues, the EU may find itself in an exacerbated uranium demand crisis. Russia, which is currently on the receiving end of several global sanctions, is one of the largest uranium producers in the world. The EU may be forced to reconsider punitive measures on Russia should Niger’s uranium situation become complex.  

By the end of August this year, Gabon had also suffered a coup. Gabon is known for its large manganese deposits and being the world’s second-largest producer. On the day of the coup, army officials had deposed the country’s president, Ali Bongo, forcing the French mining company, Eramet, to pause mining operations in Gabon. Eramet is the largest producer of high-grade manganese ore globally.   

Cessation of mining activities, even for a few hours, can have serious consequences. Maintenance and repair schedules are affected, supply chains are disrupted, and substantial production losses are incurred. Such reasons may explain why Eramet restarted mining operations the day following the coup. Eramet, in 2022, recorded an expenditure of $442 million and directly employed 8,767 people in Gabon. This shows the important role of the manganese mining industry in economic growth and job creation in Gabon.  

The halting effects of coups on mining sectors are usually short-term, with most mines choosing to resume operations as long as safety is not compromised. The coup that occurred in Mali in August of 2020 illustrates this: gold mining companies continued to operate while closely monitoring the situation on the ground. However, shares had also tanked as anticipated due to heightened political risk.   

Given that substantial investments are pumped into mining sectors across Africa, protracted shutting down of mines poses heavy risks and challenges. A cloud of uncertainty is likely to meet prospective investors, especially for countries that continue to experience recurrent coups. Existing investors may also face tough renegotiations and in-depth dialogues to adapt to changing political landscapes. Such unexpected courses of action become necessary to allow for the continued viability of mining operations. It is thus key that countries experiencing political instability strive hard to find balance.   

The intentions of coup initiators vary widely, and many have their actions driven by personal and selfish ambitions. There are a few who seemingly undertake such drastic actions to address corruption and grievances of the general population. What may be concluded about the impact of coups on mining operations is that it is multifaceted and contingent on various factors.  

Dwindling investor confidence, disrupted mining operations, and supply chains, temporary mine shutdowns, and potential resource nationalism are some detrimental effects that can spring up because of coups. The extent of such consequences is complex and hinges on the specific circumstances that precipitated the coup and the reactions of all involved stakeholders.