Part 2: CPR’s Africa Arbitration Day-New York Panel on Africa Natural Resources Management

On Nov. 1, the International Institute for Conflict Prevention & Resolution held the Second Annual Africa Arbitration Day—NY, which included a panel on Africa’s natural resources and the impact of the shifting legal landscape in Africa on the future of foreign investment in Africa’s natural resource sector. 

While the panel discussed several issues arising from Africa’s natural resources, an issue that deserves special attention is the question of how African states can coordinate their efforts regarding ways to exploit their resources for the benefit of their national economies. 

This question is of particular importance given the expected increase in foreign investment in Africa’s natural resources, driven by the world’s transition to renewable energy in response to the fight against climate change.

This blog post addresses this question in light of the CPR AAD-New York panel discussion. It first sheds light on Africa’s role in the world’s energy transition and some of the recent measures African states have adopted concerning their natural resources and then explores the possibility of adopting uniform or regional measures regarding Africa’s natural resources.

[For a synopsis of the first panel discussion, see Stephanie Argueta, “Part 1: Highlights from CPR’s Africa Arbitration Day-New York on the State of the Practice,” CPR Speaks (Dec. 17) (available here); Argueta’s first-panel account and a summary of the second panel’s discussion, as well as highlights from the conference and its accompanying 2024 AAD-NY Arbitration Moot Competition, will appear in the forthcoming February 2025 Alternatives to the High Cost of Litigation.] 

Africa’s Vital Role in 

Achieving Energy Transition

Africa holds a significant proportion of the world’s natural resources: nearly half the world’s gold reserves, 8% of the world’s natural gas reserves, and 12% of the world’s oil reserves.  It also contains the world’s largest reserves of minerals necessary for the production of batteries and other components of electronic devices, such as lithium and cobalt. 

In 2023, mines in the Democratic Republic of Congo produced 70% of the world’s cobalt, while mining activities in Zimbabwe, Namibia, and the Democratic Republic of Congo continue to show that Africa contains one of the world’s largest lithium reserves.

As the world transitions to renewable energy and zero-emission technologies, the demand for critical minerals and rare earth elements that are needed for this transition is expected to rise. Indeed, at the United Nations Climate Change Conference held last year in Dubai, the participants agreed in what has become known as the UAE Consensus (linked at this page) to “transition away from fossil fuels in energy systems . . . [and] to achieve net zero [emission] by 2050 in keeping with the science.”  

In addition, the International Energy Agency has predicted that, by 2030, the world’s demand for critical minerals needed for clean energy technologies (like lithium, cobalt, nickel, and copper) will significantly increase.

The world’s demand for critical minerals and rare earth elements will substantially increase foreign investment in Africa’s natural resources. In addition, the Agreement Establishing the African Continental Free Trade Area (the “AfCFTA”) and its Protocol on Investment (for more on these documents, see Mohannad A. El Murtadi Suleiman, “Is the “Africanization” of International Investment Law Needed?” Kluwer Arbitration Blog (Jan. 25, 2024) (available here)) will likely bolster Africa’s natural resource sector.

Meanwhile, African states have taken steps to maximize their benefits from natural resources by increasing their share of revenues from these resources or imposing restrictions on raw mineral exports.

Legal Framework Reforms of

Africa’s Natural Resource Sector

Over the past few years, many African states have adopted laws or renegotiated existing agreements to increase their share of revenues from their natural resources.  For example:

• In 2017, Tanzania issued several legislative reforms, which required that any dispute relating to Tanzania’s natural resources be “adjudicated by judicial bodies or other organs established in Tanzania” and empowered the Tanzanian government to renegotiate or remove “unconscionable” contract terms relating to its natural resources, including any provisions that are deemed “inequitable and onerous to the state” or subjecting it “to the jurisdiction of foreign laws and fora.” Such reforms have precipitated arbitration proceedings against Tanzania by investors impacted by them.
• In 2022, Uganda, which is rich in copper, issued the Mining and Minerals Act, allowing Uganda to acquire a 15% ownership interest under some mining licenses through the Uganda National Mining Co.
• In May 2023, Mali adopted a new Mining Code, which allows the Malian government to acquire a 10% stake in mining projects and an additional 20% within the first two years of commercial production. This Mining Code also allows private Malian actors to acquire a 5% interest in mining projects and abolishes certain tax exemptions.
• In July 2023, leading diamond producer DeBeers announced an increase in the Botswana government’s share of diamond production after demands from the Botswanan government to increase its share.

African states have also imposed restrictions on raw minerals exports to cause foreign companies to invest in domestic refineries, ensure a more significant economic benefit for their citizens, and spur the development of their refining infrastructure. 

While Africa is a leading producer of cobalt, lithium, and nickel, almost all of the world’s mineral refining facilities are located outside of Africa. Most of the world’s lithium and cobalt refining plants are in China, while Indonesia hosts more than 40% of nickel refining plants.

To maximize its benefit from its raw minerals, Uganda placed a moratorium on the export of raw minerals in 2015, which continues to this day.  Nigeria also banned raw mineral exports in 2022.  The same year, Zimbabwe banned the export of unprocessed lithium.

Adopting Uniform Measures

As demand for minerals necessary for clean energy production will continue to rise, Africa’s natural resources will continue to attract foreign investment. 

African states may need to coordinate their reforms regarding their natural resources to ensure a maximum benefit and to exchange knowledge and technology about those resources. To coordinate their reforms, African states can use existing initiatives regarding investment promotion and protection in Africa, such as the AfCFTA or the African Union’s Pan-African Investment Code.

African states may also rely on existing efforts for harmonizing African states’ laws and supplementing their policies regarding foreign investment.  In 1993, 17 West and Central African states created OHADA—the Organization for the Harmonization of Business Law in Africa—to establish a uniform corporate legal system and institutions by adopting “uniform acts.”

In addition, in December 2022, the African Development Bank issued an “approach paper” regarding the development of an “African Green Minerals Strategy,” which aims to augment existing mining policies in Africa and create a better environment for foreign investment.  Those initiatives provide a platform for African states to coordinate their reforms regarding their natural resources.

African states can also utilize their regional economic communities to coordinate their reforms regarding natural resources. Since the early 1990s, many regional economic communities have emerged in Africa, including, for example, the Arab Maghreb Union, the Economic Community of West African States, and the Southern African Development Community. Those communities provide an excellent starting point for coordinating reforms regarding Africa’s natural resources. 

By coordinating their reforms, African states can also avoid any conflict with the initiatives that are being considered at the continent level regarding Africa investment. For instance, the 2017 Tanzania legislative reforms prohibited investor-state arbitration to resolve disputes relating to Tanzania’s natural resources.

In addition, in 2015, South Africa issued the Protection of Investment Act, which applies to any investment in South Africa and bans investor-state arbitration. Meanwhile, the draft annex to the AfCFTA’s Investment Protocol, which is still being discussed, provides arbitration to resolve disputes between African states and investors. By coordinating their reforms, African states can ensure that their individual reforms are in line with those that are being discussed at the continent level.

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Africa’s natural resources will continue to play a critical role in shaping the future of energy production and attract substantial foreign investments. 

The AfCFTA and its Protocol on Investment are expected to increase foreign investments in Africa’s natural resource sector. While the AfCFTA represents a major step toward increasing foreign investment, African states may need to coordinate local measures regarding their natural resources to maximize their benefits from their resources and ensure that those measures are in line with parallel reforms that are being considered at the continent level. 

Such coordination can also allow for knowledge and technology sharing to enable African states to optimize their efforts to use their resources for the development of their local economies. 

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The author is a partner in the Dubai, United Arab Emirates, office of Curtis, Mallet-Prevost, Colt & Mosle and a member of the firm’s International Arbitration Group. He is a member of the Libyan, New York, District of Columbia, and the U.S. Supreme Court Bars and a fellow of the Chartered Institute of Arbitrators. He wrote the cover story in the current issue of Alternatives, “Preliminary Injunctions in International Proceedings: How ‘Irreparable’ Should the Harm Be?” 43 Alternatives 1 (January 2025) (available at https://www.cpradr.org/alternatives-newsletter). The views expressed in this article are the author’s and do not necessarily reflect those of Curtis or its clients.

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