Across the African continent, mineral exporters in numerous countries sometimes undervalue their exports, often in an effort to avoid paying mineral royalty tax or simply to rob the respective country of as much revenue as possible.
In “Mineral Mining in Africa,” Evaristus Oshionebo writes that this phenomenon is especially noticeable in Guinea, such as when Beny Steinmetz Group Resources (BSGR) was granted a concession to mine iron ore. Two years later, in 2010, when BSGR sold a 51% stake for $2.5 billion, according to Reuters, they earned a 3,000% profit, a gain “two times higher than the entire national budget of Guinea in 2011.”
Meanwhile, CGTN Africa reports that in 2020, mines ministry officials in Zambia declared that they would be collecting samples from mines around the country in order to prevent companies from undervaluing mineral exports. At the time, foreign mining companies operating in Zambia included Glencore, First Quantum Minerals, Vedanta Resources, and Barrick Gold. It’s through this reported scheme that companies like Glencore have revenues “10 times that of the GDP of Zambia,” per War on Want. As of February 2021, the Zambian government purchased both Vendanta’s and Glencore’s operations, per Bloomberg.
According to the African Network of Centers for Investigative Reporting, companies use offshore companies created by Mossack Fonseca to assist in oil, gas, and mining deals and exports in up to 44 African countries.