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The Growing Trend of Resource Nationalism-based Disputes in Africa – How to Mitigate Risks?
Nearly a third of global mineral reserves are in Africa.[1] Whilst the African mining sector is often associated with diamonds and precious metals, such as gold, it is the continent’s abundance of critical energy transition minerals that will shape its future. The production of these minerals will be key to the world’s transition to renewable energy and green technologies. It also has the potential to greatly accelerate economic development in Africa.[2]
In parallel to African governments uniting their ambition to develop green projects,[3] there has been a rising trend of African states taking action to increase their control of mining activities and related profits. This movement, which has been described as “resource nationalism”,[4] manifests itself in the various measures taken by countries such as Tanzania, the Democratic Republic of Congo (“DRC“), and more recently Mali, Burkina Faso and Niger. In these important hubs for natural resources, each government has introduced new mining laws,[5] coinciding with their respective military coups.[6]
This development has inevitably created tensions with foreign mining investors, who argue that their rights with respect to their investment in the host African state have been affected under the applicable investment treaty and/or contract. As a result, there has been a sharp increase in international arbitration between mining investors and African states or state entities.
In the last six months alone, the International Centre for the Settlement of Investment Disputes (“ICSID”) has registered eight such disputes against African states,[7] half of which are against Niger.
Similar disputes may emerge in Senegal, Zambia, Zimbabwe, Botswana or Uganda following their respective recent mining legislation reforms.[8]
In this context, exacerbated by the current global political turmoil and wave of protectionism, it is crucial for both foreign investors and states to review existing international investment agreements (“IIAs”) and contracts to prevent future disputes costing millions, if not billions of dollars to all affected parties.
What are “critical energy transition minerals” and where are they found?
The United Nations Environmental Programme defines critical energy transition, or ‘green’, minerals as “naturally occurring substances, often found in rocks, that are ideal for use in renewable technology”.[9]
For instance:
- Lithium, manganese and cobalt are used in the manufacture of electric vehicle batteries; and
- Chromium, bauxite and rare earths are essential for the production of wind turbines and solar panels.[10]
Africa holds significant global reserves of these minerals:
- 48% of the world’s cobalt is found in the DRC; and
- Nearly 50% of the world’s manganese is concentrated in Africa, with the largest reserves located in South Africa.[11]
What is resource nationalism, why is it happening and why is it causing investor-state disputes?
Resource nationalism can be defined as “the assertion of control by a government over its country’s mineral wealth (notably critical minerals, rare earth elements…) and other natural resources for strategic and economic reasons”.[12]
Resource nationalism may manifest itself through a variety of state actions including:
- Seizure of mining facilities, equipment and resources belonging to foreign investors;
- Revocation of mining licences;
- Increases in mining taxes and royalties; and
- Any other legislative reforms directly or indirectly affecting existing investments.
Since 2014, 31 African countries have reformed their mining codes to increase the participation of governments and local communities in the exploitation of resources.[13]
These reforms include:
- Obligations to treat and process minerals locally before export;[14]
- Stricter environmental and Corporate Social Responsibility (“CSR“);[15] and
- An increase in mining royalties.[16]
Some of these reforms have led to investment arbitration proceedings, notably against Tanzania and the DRC.[17] Tanzania is currently facing three arbitration proceedings, two of which are ongoing, while the third has reportedly been settled. The DRC is involved in three similar arbitration proceedings, all ongoing, two of which were initiated between 2023 and 2025.[18]
These tensions arise when state actions prejudice the rights of foreign investors to whom the state has made commitments under investment contracts or IIAs.
When contracting with investors, states often commit to guaranteeing stable investment conditions for a specified duration through a stabilisation clause. The application of new legislation to beneficiaries of a stabilisation clause, or the revocation of an investor’s mining licence on the basis of failure to comply with new legislation, may in this context constitute a violation of the investment contract and lead to the initiation of arbitral proceedings by the investor in accordance with the contract’s dispute resolution provision.[19]
Similarly, such measures could be considered an unlawful expropriation or a breach of the standard of fair and equitable treatment (“FET“), protections guaranteed by most bilateral investment treaties (“BIT“), opening the way for recourse before an international arbitral tribunal in relation to potential claims for compensation for losses suffered, or even lost profits.[20]
How to prevent future mining disputes?
It is in the interest of both foreign investors and states to prevent disputes related to mining projects in particular which, if not managed properly, may cost millions, if not billions to the parties involved.
Disputes with foreign mining investors risk deterring future investments at a time of radical reform of the continent’s infrastructure and energy sector.[21]
To encourage foreign investments, African states must strike a delicate balance between economic sovereignty and investment attractiveness. Foreign investors should maintain sustainable and amicable relations with host states. Failing to do so may have a long-term damaging impact on the future prospects of investments in the host state.
In the event of a dispute, it is often preferable to explore alternatives disputes resolution (“ADR“) mechanisms. In addition to international arbitration, the parties could consider:
- expert appraisal proceedings, to settle specific technical issues;[22]
- mediation, which facilitates an amicable settlement;[23] or
- conciliation, in particular through ICSID, which aims at reaching a compromise acceptable to both parties.[24]
Conscious of the benefits of such procedures, a number of African states have undergone legislative and institutional reforms to promote ADR. For example, several African states have signed the Singapore Convention on Mediation, which “provides a harmonised framework for the enforcement and invocation of international settlement agreements resulting from mediation”.[25]
In parallel, a number of states have also established governmental bodies for dispute prevention and management in an attempt to deter investors from arbitrating disputes.[26]
Amicable settlement procedures and/or engaging with the state in preventative action should therefore be seriously considered by investors who wish to preserve business relationships with states and reap the benefits of Africa’s mineral reserves.
A careful review and, where necessary, renegotiation of existing commitments under investment contracts and IIAs must also be conducted. Thorough, clearly-drafted substantive provisions addressing both investor and state rights (and exceptions thereto), as well as detailed procedural clauses outlining dispute management, prevention and settlement procedures, can assist all parties in the avoidance of timely and costly disputes. This will also ensure that investors and states benefit from more collaborative, sustainable and fruitful investment relationships for years to come.
A review of existing investment treaties and mining contracts is essential. A total of 910 bilateral investment treaties have been signed by African states, out of which 548 are still in force, the majority of which have been signed more than two decades ago.[27] These ‘old-generation treaties’ contain several wide-reaching investor protections with little rights for African states. In the absence of reform, disputes will continue to rise on the Continent.
How can we help?
Our dedicated team of dispute resolution lawyers, based across our offices in Paris, London, and in Africa, have decades of experience aiding both foreign investors in Africa and African states to prevent or settle international disputes arising out of mining projects. We act in arbitration proceedings, mediations, renegotiations of contracts and treaties and other ADR procedures.
We are committed to defend the best interests of our clients by optimising their investment and risk management strategies on the African continent.
