Mining has a considerable positive economic impact on most African countries, but with the right kind of support from government, industry, individual stakeholders and the general population, it can be even greater, says African Mining Network chairperson Yolanda Torrisi.
She suggests that a more positive attitude to mining and greater cooperation by all stakeholders would help present a united industry. “There are opportunities, but all must work together to realise the benefits.”
In realising these benefits, some regions and countries are doing better than others, with Zimbabwe, Namibia and Botswana making progress to the advantage of their entire populations. Surprisingly, Torrisi says, West Africa, is also, generally, moving along the right path. Other countries that have recognised the paybacks presented by the mining sector and are actively trying to improve their status as preferred mining destinations include Côte d’Ivoire, Malawi, Morocco, Nigeria, Ghana, Mali, Madagascar and Burkina Faso. Torrisi is encouraged by what Morocco is doing for its phosphate industry and intends to do for other mineral resources.
However, she says the lack of unity on the continent continues to impede the realisation of the African Mining Vision (AMV), adopted by heads of State at the February 2009 African Union summit. Although generally on track to achieving its goal of ensuring transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio- economic development, Torrisi highlights that these intentions are not always matched by policies.
In Southern Africa, the traditional continental powerhouse of South Africa is wallowing owing to its policy decisions, while Zambia and Angola could do with some positive direction from government.
In East Africa, some countries have been treading water for some time, with countries such as Kenya, Uganda and Tanzania having gone backward, owing to government intervention excluding industry involvement.
In Central Africa, including the Democratic Republic of Congo (DRC), the climate is generally riskier, although South Sudan is determined to develop more mining friendly policies.
Consequently, although most African countries well-endowed with mineral resources realise that they need the mining industry to grow their economic base and increase employment opportunities for locals, the overall intention of the AMV is hindered by the absence of the necessary policy structure needed to see these resources exploited in a sustainable manner to the benefit of everyone.
“There is no doubt that all aspire to work towards the AMV but this needs to be done on a cooperative basis in each and every country at all levels,” emphasises Torrisi, adding that a united approach will also be attractive to foreign investment, which is needed to provide infrastructure as well as the technical know-how to be able to mine transparently, equitably and optimally. “This, in turn, can result in broad economic and social development.”
Challenges Influencing Investment
There is currently cautious optimism surrounding the African mining sector, as with the rest of the world, but sentiment is better than that during the 2008/09 global financial crisis, says Torrisi.
“Although resources prices have mostly improved and demand is strong, there is plenty of volatility exacerbated by mixed economic measures from the US. This is giving rise to a cautious outlook for the future,” she tells Mining Weekly.
A lack of transparency and poor infrastructure, as well as resource nationalism, continue to dampen investor confidence and stall mining development in Africa.
Torrisi describes resource nationalism as the curse of much of the industry in Africa. “Rather than working with industry to ensure more general benefit from mining, many governments are going out on a limb in an attempt to gain more revenue through their policies without thinking of their consequences – the contracting of investment, the curtailing of mining activities, job cutbacks and declining revenue.”
These consequences are not favourable when tackling Africa’s infrastructure needs. Torrisi says, despite an abundance of mineral resources, there is a distinct lack of infrastructure in Africa that increases the difficultly and cost of developing mines, let alone the transportation of bulk commodities to ports for export.
Nonetheless, she points out that steps have been taken in many countries to improve transparency. Yet, little is known about the mining industry in the north-west and North African countries, if it exists at all, owing to government control and lack of transparency.
Meanwhile, there is much being done to improve awareness, with greater action being taken by mining companies regarding their social responsibilities. Torrisi says the resulting work being done in many areas is encouraging; however, much more needs to be done by mining companies to make people aware of their intentions, progress and achievements.
The demand for battery minerals, including lithium, cobalt, vanadium, titanium and rare earths is proving a drawcard throughout Africa, with mining companies from Australia, Canada, the US and the UK all staking claims.
This trend also encompasses brownfield copper and nickel deposits, which traditionally contain cobalt, but which has never been actively sought, notes Torrisi.
European, US and Asian manufacturers of electric vehicles and other technology, such as smartphones and energy-storage batteries, are seeking to safeguard their supply needs as demand increases and is driven higher in coming years. As such, numerous manufacturers, including Tesla, BMW and LG, are opting to forge deals with mining companies for the direct supply of sought-after battery metals rather than go through a middle party.
This trend, says Torrisi, is being seen in the DRC and Zambia, which are traditional copper providers, as well as in Zimbabwe, Namibia and Tanzania, among other countries.
With global economic conditions proving more volatile at present, gold is again looking like a strong hedge with the West African nations of Ghana, Côte d’Ivoire, Mali and Burkina Faso leading the way.
“China is still serving as a driver of global mining trends, owing to its ongoing need for minerals, albeit now to satisfy the different needs of a growing middle class. Therefore, its investment in Africa will continue as the continent is still a primary source of many of the metals it needs,” says Torrisi, adding that Chinese demand for minerals will subsequently translate into investment in infrastructure, to ensure effective transport of these minerals from mine to port for export to China.
Torrisi notes that the exploitation of battery metal deposits is focused in Central Africa and the easiest routes to the closest ports, while increased activity in the gold space is forecast for the lucrative and primarily untouched greenstone belts of West Africa.
Where SA Stands
While statistics point to South Africa still being the leading mining nation in Africa, inroads are being made by other countries, with The Mining Journal World Risk Report indicating that the continent’s best improvers as far as risk is concerned are Burkina Faso (up 14%), Guinea (up 11%), Mali (up 10%) and Mozambique (up 10%).
Combined with the great uncertainty being created by the drawn-out Mining Charter saga, Torrisi says the South African mining industry is faced with rising costs, labour unrest and deposits that are increasingly difficult to mine efficiently and effectively.
Technology needs to be adopted, she stresses, pointing out the need to include offerings from external sources, such as Australia, North America and Europe, if the industry is to retain its lead. “This needs to be done sooner rather than later, that is if it is not too late already.”
Torrisi states that the few South African companies that appear to be prepared to take advantage of South Africa’s endowment, its location and its traditional mining strength tend to be those backed with overseas funds and those prepared to think outside the box when it comes to exploration, development, mining or processing.
A strong player in this regard globally, including South Africa, is Rio Tinto, Torrisi highlights, noting the company’s Richards Bay mineral sands operations, in KwaZulu-Natal, as an example. “Others making strides in the gold sector are ASX-listed Stonewall Resources and ASX-listed exploration and development company West Wits Mining, while Canadian mining company Platinum Group Metals, in conjunction with platinum producer Impala Platinum, is making encouraging plans with platinum-group metals.
“Increased interest in vanadium for the battery metals market also seems to be good news for South Africa with a number of companies, including Bushveld Vanadium and Tando Resources, having recent encouraging news.”