After a downturn of several years in the mining and mineral resources sector globally, “green shoots” are appearing off the back of a recovery in commodity prices that began in 2016, with a corresponding improvement in investor sentiment, according to Botswana-based coal and energy development company Shumba Energy chairperson Alan Clegg.
He says the general sentiment in the resources sector is that a recovery is under way, and that for the mining sector to secure a sustainable future, smaller projects need to be focused on. “The bottom line is: We are in a new ‘bull’ market that is just moving into the second innings and will this time likely be hot for the next eight to ten years.”
Junior mining companies, notes Clegg, are well placed to take advantage of the better-performing commodities in 2016/17, among which are gold, copper, silver, nickel, tin and zinc, as well as lithium and graphite. However, he points out that in a continent desperately requiring strong growth in its infrastructure, building materials are likely to be the “shining gem” in the commodity market.
However, it remains uncertain whether junior minors in South Africa will benefit from this resurgence in the sector, as the local mining industry is at a “tipping point”, with ongoing political and regulatory uncertainty and recent ratings downgrades adding additional stresses, says Clegg. “South African junior miners are likely to feel the ramifications of recent events even more acutely than the majors.”
From a South African perspective, he states that the main obstacles remain resource nationalism, which encompasses “unrealistic and unsustainable political ideologies” propagated by the African National Congress government and organised labour expectations. “Hopefully, post 2019, we will see a reversal that will once again attract foreign direct investment into the sector,” suggests Clegg.
He adds that local mining majors will continue to either consolidate with mergers, shut down unprofitable operations or divest in favour of offshore assets in more supportive jurisdictions in Africa and globally.
Meanwhile, similar topics and the future of the junior mining industry will be highlighted during the Junior Indaba, which takes place at the Johannesburg Country Club in Auckland Park, Johannesburg from June 7 to 8.
Government representatives, mining industry leaders, financiers and experts will probe junior mining issues, such as the current state of the exploration and junior mining sector, the development of a competitive regulatory regime, which commodities are attractive and where funding is going.
In addition, several junior miners have lined up to provide insights into mining projects. Senior representatives set to speak include those from Kuyasa Mining, Pan African Resources, Botswana Diamonds, Shumba Energy, Kibo Mining, Kalagadi Resources, Tranter Resources, DRDGold, Petra Diamonds and Masimong Group.