Political transitions in Africa and the mining sector: an outlook for the remainder of 2025 and 2026

As noted in December
2024, global demand for metals and minerals, especially those required for energy transition infrastructure, remains high. Many of these resources are found in Africa, where mining projects continue to draw substantial foreign investment.

However, mining investments can be subject to significant political risk. Elections, particularly in resource-rich states, frequently become flashpoints for debates on resource nationalism, local content, revenue distribution, and environmental stewardship. These are all issues that can directly impact the risk profile and economic viability of mining projects. 

Election
cycles and the need to attract political support can also lead to the adoption
of short-termist policies designed to be “vote winners” rather than any
reasonable long-term solution. The political allure of resource nationalism is
undeniable, but it can often come at the expense of long-term interests,
including those of foreign investors, and thereby the relevant economies as a
whole.

Mining companies are leaders in building effective relationships with the government in the states in which they operate. Good partnerships are an essential element of doing business. But if there is a change in government, those relationships can disappear immediately. And even if there is no change, good relationships with foreign investors may be a distant second to vote-winning policies in the heat of an election cycle.

The
Mining in Africa Country Investment Guide 2025 concludes that Africa is
probably riskier today than it was a decade ago, but the rewards are much
higher. As demand continues to increase, it is more important now than ever
that investors take sensible steps to protect themselves against political
risk.

How
can elections affect investments in the mining sector?

Elections in resource-rich states can often centre on a few recurrent themes that can mean risk for mining investments. For example:

1. Resource nationalism: A common electoral claim, particularly by opposition candidates or populist candidates, is that existing mining concessions are unfavourable to the state. Such a claim can include demands for increased royalties, higher state equity participation, stricter local content requirements, or even outright nationalisation. Many elections are contested on a platform that the state should have a greater share of its resources, and is better placed to exploit them, over experienced investors who have invested significant amounts of time and capital in identification, exploration, development, and even production.
2. Regulatory uncertainty and the rule of law: Changes in government can lead to wholesale overhauls of mining codes, environmental regulations and tax regimes. For foreign investors, such overhauls can affect the economic viability of a project, potentially leading to increased operating costs, delays in permitting, or even the revocation of licences. A robust legal framework, consistently applied, is the bedrock of investor confidence. Where elections lead to a weakening of independent institutions, judicial capture, or a less predictable regulatory environment, the rule of law – a cornerstone of investment protection – is eroded, increasing political risk.
3. Social licence to operate and community relations: Elections can amplify local grievances, particularly within communities directly impacted by mining operations. If those communities are also electorally significant, promises of greater community benefits, improved environmental protection, or more equitable land distribution may become manifesto commitments. A new administration, often seeking to demonstrate its responsiveness to local populations, might exert pressure on mining companies with renewed vigour. Engagement with local communities is key to the success of any project, but politically motivated demands can escalate beyond commercially acceptable parameters, jeopardising projects in the process. Understanding the political economy of community relations and managing stakeholder expectations is paramount during election cycles.
4. Geopolitical alignment: The outcomes of elections can signal shifts in geopolitical alignment, either increasing or decreasing the influence of certain foreign states. This can, in turn, affect the preferred sources of foreign investment and the ease of doing business for companies from different jurisdictions. This is particularly relevant given the global competition for critical metals and minerals necessary for the energy transition.
5. Economic stability and currency risk: Political change can lead to economic volatility, potentially resulting in currency depreciation, inflation, and tighter fiscal conditions. For capital-intensive mining projects with long-term profit horizons, currency fluctuations can affect profitability and increase debt service costs. New governments may also introduce economic policies such as exchange controls or import/export limitations which can directly impact mining operations.

Major elections in Africa in 2025-2026

Several elections are due to take place in the remainder of 2025 and 2026. Some examples of how political parties have made the mining industry an issue for the electorate are as follows:

1. Côte d’Ivoire: Presidential elections are due to be held on 12 October 2025. Opposition candidate Tidjane Thiam (who is contesting his ability to run after previously being disqualified) of the PDCI party has pledged to increase royalties to local governments. Former President Laurent Gbagbo of the PPACI party has criticised alleged foreign dominance in gold mining and has proposed that concessions be renegotiated to ensure 30% local ownership.
2. Tanzania: Presidential elections are due to be held on 29 October 2025. Under the late President Magufuli, there were sweeping changes to mining laws, renegotiation demands and significant tax disputes. His successor President Hassan’s administration has worked to restore investor confidence, but the upcoming elections will be a crucial test. The opposition ACT Wazalendo party has made a manifesto commitment to shift from licensing to an “ownership and contracting” model, where the state retains mineral ownership and investors act as contractors.
3. Zambia: General and presidential elections are due to be held in August 2026. Successive Zambian governments in the past have adjusted royalties and corporate taxes to align with changing fiscal priorities and electoral promises. While President Hichilema’s administration has sought to stabilise the fiscal environment and attract new investment, an intense electoral contest could see opposition parties campaigning on promises to claw back more from Zambian miners, potentially through increased taxes or more stringent local ownership requirements.
4. Guinea: Guinea has been under military rule since 2021. It plans to hold a constitutional referendum on 21 September 2025 which is being presented as a first step back to civilian rule, and a potential precursor to national elections in December 2025. The junta government has recently taken aim at the mining sector, cancelling several mining concessions in May 2025. While a “yes” vote in the referendum could reduce headline risk for mining investors, if the referendum does not succeed, there will be greater uncertainty around mining timelines and contract sanctity.

How can investors protect themselves?

Mining
companies operating in Africa may not be able to fully insulate themselves
against the winds of political change (or upheaval). One way of obtaining
protection is through ensuring that their investments benefit from the
protections contained in investment treaties.

This
is done by ensuring that an entity in the ownership structure of a foreign
investment is incorporated (in most cases) in a state which has an investment
treaty in force with the host state of the investment. This can be done at the
outset of an investment but, provided a dispute is not foreseeable, also during
the life of the investment. It can also frequently be achieved in a manner
complementary to corporate and tax considerations.

Thereby
investors gain access to investment protection standards which provide
international protection to their investments against wrongful state
interference. This “interference” can manifest itself in a variety of ways. For
example, it can be targeted conduct against a particular mining project or a
wider regulatory change that has damaging economic effects on a mining project.

If a state interferes with a mining project in such a way, negotiations may not always succeed. Arguing before domestic courts may be futile. Most modern investment treaties give access, without any further steps being required, to international tribunals, who hear claims under international law. Success can mean the payment of damages which, in certain cases, can be the only way to return value to investors. Arbitral awards are enforceable against non-state immune assets in practically every state worldwide. 

Having
protection available under investment treaties does not mean that it has to be
used. Mining companies should continue to prioritise effective engagement and
relationship-building with states. However, if those efforts were to fail and
steps had not previously been taken to ensure protection is available, the
method of last resort is lost. Structuring investments to benefit from
investment protection is therefore a highly effective means of preparing for a
potential worst-case scenario.

Equally,
investment treaties can be a helpful tool in negotiations with governments. Most
investment treaties have a “cooling-off” period before arbitration can be
commenced. This requires the aggrieved investor to file a notice of dispute
with the relevant state and commence negotiations in good faith. The
availability and threat of arbitration under an investment treaty can give
investors who perhaps lack political leverage a focal point for outlining their
position.

How can we help?

Forming
part of our market-leading global disputes offering, the Hogan Lovells
international arbitration team has extensive experience in investment
arbitration matters. We often advise on investment treaties, including at a
pre-dispute phase. We help clients to ensure that their investments are
structured in a way which not only reflects investors’ corporate and tax
requirements, but also the availability of investment protection. We can help
you best take advantage of the protections set out in investment treaties in
order to avoid disputes. When disputes cannot be avoided, we assist our clients
in investment arbitrations, seeking favourable settlements or awards.

Markus
Burgstaller, Kieron O’Callaghan and Scott Macpherson will be attending the
Financial Times Metals & Mining Summit in London on 9-10 October 2025. Markus
Burgstaller will also be speaking at the 9th MINEX Europe Mining and
Exploration Forum in Lisbon on 21-23 October 2025. If you are also attending,
please feel free to discuss the points raised in this article with them.

 

 

Authored by Markus Burgstaller and Scott Macpherson.