Modern Mining September 2024

MINING INSURANCE

Africa leads the world to a cleaner, greener future By Brian McGregor (Director of Underwriting & Head of Property) and Martin Boreham (Director of Underwriting & Head of Liability) With large reserves of so called “green energy transition” metals, such as copper, cobalt and rare earth elements, Africa will be a crucial player in the global decarbonisation journey for decades to come. The continent is home to almost a third of the world’s mineral reserves, and its mining sector represents a cornerstone of the continent’s economy. Despite the strong growth in African industrials, the continent is leading the way towards a cleaner, greener future.

A frica’s mining industry however stands at a pivotal juncture. Whilst the continent is experiencing a significant surge in attention for its rich deposits of minerals and metals, global insecurity and fluctuating commodity prices are diverting investments away from what are perceived as “riskier”, more complex, jurisdictions. The continent has seen challenges, particularly in the form of political and regulatory uncertainty, infrastructure deficits and commodity price volatility, as well as the ever more stringent ESG standards that mining companies must adhere to. In 2023 foreign direct investment (FDI) into Africa declined by 3% to $53 billion, however, it is expected that Africa will benefit from a surge in FDI in the mining sector in light of the global energy transition. In comparison, Latin America and the Caribbean received over $190 billion in 2023, whilst Asia saw over $600 billion. Insurance has long been a way to manage risk, which is why closing the insurance gap is crucial. In Africa insurance penetration sits at under 3%, compared to the global rate of approximately 10%.

Africa Specialty Risks (ASR), aims to bridge this insurance gap by offering innovative and comprehensive products, enabling businesses and communities to manage risks effectively and drive economic growth. Over the past three years, ASR has seen exponential growth, driven by a robust understanding of the unique challenges and opportunities within the African continent. ASR started writing business in 2021 and has now participated in the de-risking of $28bn of projects and assets across 66 African and Middle Eastern countries. ASR derisks investment from initial investment (i.e. political risk & trade credit) through to construction of those assets, hence Construction and Political Risk & Violence (PVT) covers apply, through to the operation of those activities (Liability, Energy, Property, PVT and Parametric). From the outset, ASR’s mission has been to increase insurance coverage in Africa through collaborative partnerships with local and international (re)insurers and brokers to secure additional capacity for the continent. This collaborative approach has enabled ASR to underwrite larger, more influential lines and be at the forefront of insurance innovation on the continent, providing

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