World Bank turns resource demand into an engine for development

Belgium is supporting the World Bank's Extractives Global Programmatic Support (EGPS) program. EGPS helps mineral-rich low- and middle-income countries to leverage their mining sector for their overall development. At the same time, it gives us greater diversification and autonomy for critical raw materials.

We reported earlier on how our FPS is playing an important role in making our country and the EU more autonomous when it comes to critical raw materials. One of our tools for this is Enabel, the Belgian Agency for International Cooperation, which is gaining a great deal of experience in mining-related activities.

EGPS

But the World Bank is also a crucial partner: this multilateral 'giant for development' is indeed working hard to ensure opportunities for the Global South to benefit more from its wealth of (critical) minerals.

For example, Belgium is a loyal partner of the Extractives Global Programmatic Support (EGPS) program, which is already on its third fund. In short, EGPS helps mineral-rich low- and middle-income countries to leverage their mining sector for their overall development. As a financier, our country – through an employee of our FPS – sits on the Partnership Council of EGPS, among other organs.

Stability and climate

Our country's interest in EGPS is closely aligned with the priorities identified by our Minister of Foreign Affairs Maxime Prévot. Thus, through a thriving, fair mining sector, we want to contribute to stability, globally but also nationally, by securing our supply of raw materials.

In addition, critical raw materials are crucial to arm ourselves against climate disruption, another of the Minister's priorities. After all, they are enabling the transition to renewable energy, including wind power, battery storage, electric transport, and more.

Roadmaps

In our relationship with the Global South, we are moving away from merely importing raw materials that are then processed elsewhere. Low- and middle-income countries also want to be able to separate, smelt and refine their own minerals, and we want to support them in doing so. In time, they should be able to make products from those minerals themselves: from simple copper cables to a finished battery, for example.

One of the ways the World Bank does this – at the request of the governments in the Global South – is by drawing up very detailed roadmaps: a meticulous review of what is needed to create a thriving resource sector and how they can attract (foreign and domestic) private investment to do so.

Very broad picture

EGPS looks at the whole broad picture for this purpose, since a suitable enabling or supportive environment is required for a sound mining industry as well as mineral processing. Some examples include transport options, power plants (processing is energy-intensive!) and water.

Economic sustainability of the proposed roadmaps is key. Strategies for linking the mining sector to energy and transport infrastructure will need to be tailored to the corresponding region, existing infrastructure, available skills and the potential of other economic sectors such as agriculture.

Also the specific commodities have a role to play. While large-volume base metals such as copper, iron, nickel and aluminium might justify building energy and transport infrastructure, critical minerals such as rare earths, gallium and germanium might not because of the smaller volumes needed.

All this is happening in an increasingly complicated geopolitical environment, in which the competition threatens profitability of many mining and processing operations. EGPS helps countries to identify opportunities for successful investment, that allow for economic development while adhering to the highest social and environmental standards and seeking the lowest possible greenhouse gas emissions.

Private investment

Such a roadmap therefore requires large-scale studies but is very useful for the governments in question and for investors. It outlines the possibilities of how the mining sector can drive the country's broad development and how the country can attract much-needed private investment to do so. Belgian companies can also do their part.

Two World Bank institutions play a prominent role in the financing: The International Finance Corporation (IFC) focuses on the private sector and the creation of markets, while the Multilateral Investment Guarantee Agency (MIGA) provides political risk insurance that reduces investment risk and facilitates the provision of private financing in high-risk environments.

To work more efficiently, the World Bank limits itself to a number of country clusters. For example, a roadmap for Zambia and Malawi, in southern Africa, was recently completed, and roadmaps for DR Congo, Burundi and Tanzania are in the pipeline. EGPS also operates in South America, Kazakhstan, India and South-East Asia (through the regional organisation ASEAN), among others.

Artisanal mining

The fact that EGPS is mostly concerned with people is illustrated by its focus on artisanal and small-scale mining. About 45 million people work in that artisanal mining industry, often in unsafe and unhealthy conditions. Women make up 18 to 50% of the workforce, while 315 million people – in Africa, Asia and Latin America – depend on it, indirectly for their livelihood.

EGPS is committed to professionalising these artisanal miners and formalising their informal activities. It is seeking better working conditions, higher incomes, more attention to the environment, job creation, and so forth.

Furthermore, transparency is also essential: all financial flows must be transparent and benefit local people to a much greater extent. To this end, EGPS is supporting the Extractive Industries Transparency Initiative (EITI), a joint venture between authorities, the mining industry and civil society.

Therefore, with the World Bank's EGPS program, Belgium clearly has the ideal partner for a fair, transparent mining sector that benefits everyone.