As global demand for energy transition minerals surges, Africa’s vast mineral reserves have become a focal point for international investors, governments, and policymakers. Yet alongside the continent’s extraordinary resource potential lies a legal landscape marked by rising dispute risks, geopolitical flux, and intensifying scrutiny of environmental and social obligations. This was the theme behind a recent roundtable discussion at Cleary Gottlieb’s Paris office, which explored the evolving nature of mining-related disputes in Africa.
Projected Revenues for African Metals Markets From 2022 Onwards
PGM = platinum group metals (platinum, palladium); f = forecast
Source: S&P Global
Demand Surge and Geopolitical Tensions Reframe the Mining Landscape
The session opened by highlighting the macroeconomic and geopolitical backdrop that has propelled critical minerals to the center of international trade policy and investor focus. Speakers noted the attention that has been paid to the tariffs and trade wars, such as China's recent export restrictions on key minerals.
This comes as demand projections continue to rise. For example, the International Energy Agency (IEA) has estimated that current global copper reserves will only cover about 70% of forecasted demand through 2040, with lithium coverage even lower, at 50%. This imbalance between supply and demand is fueling a rush for exploration and development, particularly in Africa, which holds significant mineral reserves. However, increasing investment is being met with mounting political and legal obstacles.
Demand Surge and Geopolitical Tensions Reframe the Mining Landscape
The session opened by highlighting the macroeconomic and geopolitical backdrop that has propelled critical minerals to the center of international trade policy and investor focus. Speakers noted the attention that has been paid to the tariffs and trade wars, such as China's recent export restrictions on key minerals.
This comes as demand projections continue to rise. For example, the International Energy Agency (IEA) has estimated that current global copper reserves will only cover about 70% of forecasted demand through 2040, with lithium coverage even lower, at 50%. This imbalance between supply and demand is fueling a rush for exploration and development, particularly in Africa, which holds significant mineral reserves. However, increasing investment is being met with mounting political and legal obstacles.
Mining Sector in Africa: Opportunity Amid Risk
Despite Africa’s resource wealth, the panel emphasized the growing difficulties that international investors face in navigating mining projects on the continent. Governments are increasingly exercising regulatory and fiscal sovereignty—often through sudden changes to mining laws, taxation frameworks, export controls, and mandatory local ownership requirements.
Jurisdictions such as Mali, Burkina Faso, and Niger were identified as particularly volatile at the moment due to recent regime changes, increased military intervention, and shifting political alliances. The resulting uncertainty is directly impacting mining operations, as evidenced by the high volume of recent disputes. According to data from the International Center for Settlement of Investment Disputes (ICSID), over 60% of the new African disputes registered in the past two years have involved the mining sector. Fraser Institute rankings reflect this tension, with four of the 10 least attractive jurisdictions for mining investment located in Africa.
Disputes commonly arise from license revocations, failure to renew concessions, tax reassessments, and ESG-related obligations. Notably, many disputes proceed to the brink of arbitration but are ultimately resolved through negotiated settlements, underscoring both the strategic importance of these assets and the parties’ mutual interest in preserving long-term economic relationships.
Mining Sector in Africa: Opportunity Amid Risk
Despite Africa’s resource wealth, the panel emphasized the growing difficulties that international investors face in navigating mining projects on the continent. Governments are increasingly exercising regulatory and fiscal sovereignty—often through sudden changes to mining laws, taxation frameworks, export controls, and mandatory local ownership requirements.
Jurisdictions such as Mali, Burkina Faso, and Niger were identified as particularly volatile at the moment due to recent regime changes, increased military intervention, and shifting political alliances. The resulting uncertainty is directly impacting mining operations, as evidenced by the high volume of recent disputes. According to data from the International Center for Settlement of Investment Disputes (ICSID), over 60% of the new African disputes registered in the past two years have involved the mining sector. Fraser Institute rankings reflect this tension, with four of the 10 least attractive jurisdictions for mining investment located in Africa.
Disputes commonly arise from license revocations, failure to renew concessions, tax reassessments, and ESG-related obligations. Notably, many disputes proceed to the brink of arbitration but are ultimately resolved through negotiated settlements, underscoring both the strategic importance of these assets and the parties’ mutual interest in preserving long-term economic relationships.
Contractual and Treaty-Based Disputes on the Rise
Panelists explored the evolving nature of mining disputes, particularly the increasing use of counterclaims by states and state-owned entities. These often rely on environmental, social, and human rights obligations, either embedded in domestic legislation or invoked through broad treaty interpretation. ESG-related counterclaims—previously more common in energy disputes—are now surfacing in mining arbitrations, including those arising under bilateral investment treaties (BITs) and host government agreements.
During the panel, several cases were discussed where such defenses played a pivotal role . In one instance, a tribunal in a mining dispute declined jurisdiction based on the investor’s non-compliance with environmental permitting obligations, highlighting the growing weight placed on social license and regulatory legitimacy.
What is particularly challenging for investors is the multiplicity of legal frameworks that apply—ranging from concession agreements, host country mining laws, regional export regimes, and evolving ESG standards. Counsel emphasized the importance of comprehensive due diligence, scenario analysis, and flexible investment structuring that can adapt to legal fragmentation and shifting enforcement priorities.
Investment Structuring, Risk Mitigation, and Local Engagement
The panel also shared detailed insights into how political risk is analyzed and prioritized in due diligence and structuring processes. Once considered a secondary concern, geopolitical risk is now front and center, with firms deploying external advisors to model risk scenarios, track policy developments, and evaluate the enforcement environment in both host and investor jurisdictions.
Practical mitigation strategies include embedding stabilization clauses, maintaining contractual transparency with host governments, and building robust local partnerships. Some funds have even re-domiciled their portfolio companies to avoid the exposure to foreign investment screening laws introduced by OECD governments concerned with critical mineral supply chains.
Crucially, speakers emphasized the enduring value of strong local engagement—citing examples where relationships with community stakeholders and regulators were key to defusing tensions and avoiding escalations. The importance of "boots on the ground" cannot be overstated in navigating opaque permitting regimes or in responding to abrupt regulatory changes. One panelist cited a near-crisis that was ultimately resolved through swift communication and clarification with government officials, facilitated by local teams.
Investment Structuring, Risk Mitigation, and Local Engagement
The panel also shared detailed insights into how political risk is analyzed and prioritized in due diligence and structuring processes. Once considered a secondary concern, geopolitical risk is now front and center, with firms deploying external advisors to model risk scenarios, track policy developments, and evaluate the enforcement environment in both host and investor jurisdictions.
Practical mitigation strategies include embedding stabilization clauses, maintaining contractual transparency with host governments, and building robust local partnerships. Some funds have even re-domiciled their portfolio companies to avoid the exposure to foreign investment screening laws introduced by OECD governments concerned with critical mineral supply chains.
Crucially, speakers emphasized the enduring value of strong local engagement—citing examples where relationships with community stakeholders and regulators were key to defusing tensions and avoiding escalations. The importance of "boots on the ground" cannot be overstated in navigating opaque permitting regimes or in responding to abrupt regulatory changes. One panelist cited a near-crisis that was ultimately resolved through swift communication and clarification with government officials, facilitated by local teams.
The Role of Alternative Dispute Resolution and Political Risk Insurance
With increasing scrutiny of arbitration as a dispute resolution mechanism (particularly by governments wary of large damages awards), panelists noted a tentative shift toward earlier-stage dispute resolution frameworks. Mediation clauses, structured negotiation timelines, and hybrid dispute resolution mechanisms are being introduced more frequently into contracts as a way to de-escalate conflict and maintain project continuity.
Political risk insurance was also discussed as a supplemental tool, though with limitations. While useful for insuring against defined losses (e.g., expropriation, currency inconvertibility), political risk insurance potentially undervalues the true economic worth of an asset. Thus, while political risk insurance is gaining traction particularly with DFIs and major infrastructure investors, many investors remain cautious in relying on it as a primary risk-mitigation strategy.
The Role of Alternative Dispute Resolution and Political Risk Insurance
With increasing scrutiny of arbitration as a dispute resolution mechanism (particularly by governments wary of large damages awards), panelists noted a tentative shift toward earlier-stage dispute resolution frameworks. Mediation clauses, structured negotiation timelines, and hybrid dispute resolution mechanisms are being introduced more frequently into contracts as a way to de-escalate conflict and maintain project continuity.
Political risk insurance was also discussed as a supplemental tool, though with limitations. While useful for insuring against defined losses (e.g., expropriation, currency inconvertibility), political risk insurance potentially undervalues the true economic worth of an asset. Thus, while political risk insurance is gaining traction particularly with DFIs and major infrastructure investors, many investors remain cautious in relying on it as a primary risk-mitigation strategy.
Outlook: Heightened Vigilance and Adaptive Legal Strategy Required
As regulatory pressures mount and the global push for energy transition minerals accelerates, Africa’s mining sector will continue to serve as both a vital supplier and a legal battleground. The risk of expropriation, contract renegotiation, or regulatory interference is compounded by the rising expectations of host governments, local communities, and international ESG frameworks.
While investment appetite remains strong thanks to high commodity prices and long-term demand forecasts, investors are increasingly turning to legal structuring, scenario modeling, and local intelligence as essential tools. The success of mining ventures in Africa will hinge not only on mineral grades or financial models, but on an integrated strategy that spans legal risk, stakeholder engagement, and long-term regulatory adaptability.
This article was authored by Tiago Duarte-Silva, PhD, Vice President at Charles River Associates and covers themes discussed at the Mining Arbitrations in Africa panel event as part of Paris Arbitration Week.
Built with Shorthand