The expected turning point in the African mining sector has not yet been reached, owing to continued soft economic growth in emerging economies allied to uneven global economic recoveries, divergent monetary policies and significant geopolitical/social issues, which continue to create further uncertainty and, hence, volatility for the short to medium term. Various regional factors also play a role, dampening demand for minerals and metals and impacting negatively on Africa’s mining sector.
Africa remains underexplored and the full value of its resources is yet to be discovered, as most minerals produced on the continent are exported without local downstream processing.
This is according to integrated solutions provider Takraf Africa – part of the global Tenova Takraf group – engineered technologies GM Richard Späth, who says commodity prices did rebound in 2016, but mining companies continued to adopt a conservative approach, focusing on brownfield projects with fewer risks and that are less taxing on cash flow.
The industry continued to rely heavily on resources from more stable regions, such as Canada and Australia, instead of staying the course in Africa.
However, with Africa’s boundless wealth of resources, recent more-investor-friendly trends and the infancy of exploration in many countries, Takraf Africa foresees considerable growth in Africa’s mining future.
Africa contains “pockets of opportunity”, highlights Späth, especially with regard to assets already in production.
Much of the potential in the African mining industry remains untapped owing to investor concerns over political, labour and economic instability, investor-unfriendly regulatory regimes and other factors, such as poor infrastructure, he says.
Späth adds that there is, however, a realisation among certain African authorities that open-minded policies are needed to retain and attract foreign capital for the sustainability and development of the continent’s mining sector, emphasising that stable policies and regulatory regimes, such as those of Namibia and Botswana, are essential in encouraging foreign investment and capital.
He foresees that countries such as Zambia, Uganda, Tanzania, the Democratic Republic of Congo (DRC), Sierra Leone, Ghana and Angola will grow considerably in the future. These countries are considered among the fastest-emerging economies in the world because of their vast mineral wealth.
Countries, such as Kenya, Rwanda and Botswana have been flagged as providing future potential as well, as they show signs of continued business development and stability, says Späth.
The depletion of reserves and the high cost of mining in developed countries will force major companies to seek investment opportunities in Africa, which boasts stronger reserves and relatively low production costs, owing to, among other factors, lower labour costs, he adds.
Although the China-driven mining boom has not yet fully materialised, other Asian investors, such as India, are also influential players in Africa. They invest in infrastructure across the continent, aiding in unlocking Africa’s resource wealth and essentially creating “an African market for Asian products and Asian markets for Africa’s commodities”, Späth explains.
Junior and major mining companies are increasingly focusing on Africa’s diamonds and precious metals, as well as coal, he notes.
Challenges such as interrupted power supply negatively affecting copper production in the DRC and Zambia in 2016 resulted in one of the largest retreats in investment in Africa, which attracted only 13% of global spend that year, Späth explains.
He highlights declining productivity as the primary business risk in the African mining sector. A shortage of skilled labourers, the capital-intensive nature of mining, increasingly difficult access to orebodies and declining ore grades are other issues the continent faces.
The need for a mine to have a social licence to operate is another challenge. Späth says this issue is becoming more prevalent, as it requires mines to partner with mining communities and other stakeholders to address community concerns over issues ranging from land and water access and environmental safety to social and economic infrastructure.
There are many examples of conflict and delays at projects, as a result of community action regarding mine-related environmental and social issues, Späth says.
Africa’s business environment is further complicated by complex infrastructure and logistical challenges, such as requiring infrastructure development in neighbouring countries to transport product from landlocked countries to port facilities across areas that lack the required rail and road facilities. In addition, the remoteness of Africa’s mineral resources generally requires upfront, massive investment in transport infrastructure in a new project to access and develop potential mining projects. Such a scenario is accompanied by challenging intergovernmental, community and joint venture interactions, Späth adds.
Solutions to Sustainability
Short-term results involve improving productivity to a sustainable level. To best improve productivity, Späth suggests the integration of various mining processes, from the mining operation, through materials handling to processing operations, such as comminution, flotation, leaching and dewatering. “Achieving this will require supporting the workforce to use and understand [Industry 4.0] technology and data to support processes and ensure efficiency.”
Increased automation in the mining industry allows for enhanced operations at mines and also solves problems such as shortages in adequately trained staff. Capturing data on mining processes demonstrates the difference between good and poor performance and productivity to companies.
Innovations – such as automation – are a “productivity game changer”, declares Späth. He adds that there must be constant investment in innovation, technology and research and development if the African mining sector is to overcome increasingly difficult mining conditions, meet the pressures to prioritise workforce health and safety, and implement the required cost and energy efficiencies to effect sustainable mining.