Business development company MineAfrica reports that African mining is encountering signifi- cant competition for investment from Latin American, Asian, Canadian and, currently, to a lesser extent, from Russian jurisdictions.
MineAfrica vice-president Wayne Floreani says that uncertainty over energy supply, particularly in South Africa, where low-cost energy was once one of its more attractive selling points, is a challenge.
Further, changing legislation and mine- ral rights tenure and the uncertainty these cause, as well as security issues and crime in various parts of Africa, are a significant deterrent to investing.
“As a first step, African governments must address these fundamental, internal issues. However, this in itself is not enough. They must also make a concerted effort to promote their countries as attractive mining investment destinations to the international investor. Otherwise, there are many other jurisdictions globally where mining companies will invest their exploration dollars,” asserts Floreani.
He explains that a mining company’s decision on where to invest is a business case decision entailing many factors, such as the economic viability of the asset and the costs of doing business there. Such a decision is usually based on the risk/reward equation.
Africa’s Mining Attractiveness
Investment in some African countries is generally seen as a high-risk venture. Global think-tank, The Fraser Institute’s 2008/9 survey of mining companies, aimed at calculating the attractiveness of 71 juris- dictions for mining exploration expenditure, included ten African countries. Botswana fared the best, ranking eighteenth out of 71, while Zimbabwe ranked the lowest at sixty-fifth place.
However, what Floreani found disturbing is the decline of South Africa, which has dropped from thirty-seventh out of 64 in 2005/6 to forty-ninth out of 71 last year.
“There are about 150 TSX- and TSX-Venture-listed mining companies explor- ing, building a mine or producing in Africa out of a total of about 300 non- African mining companies operating in Africa. Most of the 150 are active in more than one country in Africa. This is also the case with many of the members of the Canada-South Africa Chamber of Business – hence its decision, in 2008, to expand its focus from South Africa to Southern Africa, generally,” he says.
Floreani adds that there is a definite upswing in interest in mining financing, especially in gold, for example, Banro Corporation, which recently raised C$100-million for its Democratic Republic of Congo project.
MineAfrica provides a platform for mining companies, service providers and African governments to market themselves to a mining and financial audience with a specific interest in mining in Africa.
It does this primarily through mining seminars focused specifically on Africa. Further, MineAfrica also provides business development and marketing services to mining companies, service providers and African governments.