While the African mining industry is in a downturn, countries that boast favourable mining regulations will capitalise once the industry improves, says global engineering, project and technical services firm Wood Mining & Minerals Europe, the Middle East and Africa business development director Trevor Anderson.
He describes Wood as a global leader in engineering, project and technical services, which combines the experience and expertise of Amec Foster Wheeler and Wood Group into one full-scope service company supporting industrial assets for customers worldwide.
Anderson says, as it is a cyclical industry, mining has experienced a downturn in the current commodities cycle over the past few years – compounded by a more general economic downturn.
Subsequently, Wood has had to ensure that it maintains momentum in terms of providing its services for clients. Although this has been challenging, Anderson says the company has kept abreast of development by delivering solutions suited not only to the client requirements but also the current economic situation.
During a downturn, clients shift their focus to capital and asset optimisation – to which the company’s solutions have to acquiesce – but when there is an upturn, clients are more willing to consider executing projects, he explains.
Anderson believes, however, that there are encouraging signs indicating an upturn in the industry: “I am optimistic about the outlook for Africa’s mining industry. Of late, green shoots are starting to emerge, with more mining activities taking place and exploration budgets increasing, which is always positive.”
He adds that more mining jurisdictions are realising the importance of having investor-friendly regulations, as this directly affects the growth of their resource sectors. Countries with favourable mining regulations and jurisdictions will benefit and grow, as they support mining activities and accommodate the ease of operation in their countries, he adds. In this vein, such jurisdictions present the biggest opportunities in Africa for service providers like Wood.
He says there are several factors that influence a country’s favourability, including security, accessibility, government stability, regulations and the transparency of mining codes.
He cites Botswana as a country that has favourable mining regulations. As a result, Botswana is benefiting from an open and transparent mining code, with mining operations subsequently having become much easier to undertake. Rwanda, he says, is also becoming more investor-friendly and is, therefore, starting to show similarly favourable results.
Meanwhile, South Africa is a mining jurisdiction that is hindered by unfavourable mining regulations. Anderson laments that, as a result, it is becoming increasingly difficult to undertake mining activities.
He avers that, with regard to mining, Africa is an “undiscovered jewel”, as the continent still has a lot to offer in terms of resources and future potential. “The amount of resources still untapped in Africa will result in the continent’s offering on the mining front being [considerable] for many years to come. This potential, coupled with the upturn in the commodities cycle that will hopefully materialise soon, will provide opportunities for the mining industry to grow and to produce for global consumption.”
While Wood has enjoyed a relatively favourable experience in the African mining industry overall, Anderson clarifies that this varies from country to country.
He adds that, while some mining industries in Africa share some commonalities, each mining jurisdiction on the continent has different requirements and mining codes, and operating within these regions, therefore, requires stakeholders to come to terms with each country’s rules and regulations.
Wood benefits from its work experience in multiple countries on the continent, during which the company has gained valuable experience and knowledge in adapting to different conditions, as well as the technical aspects of mining and the commodities being mined.
Anderson explains that this is especially useful in the current environment, as the company can leverage its experience and expertise to provide solutions for the mining of orebodies that are becoming more difficult to access.
Further, amid the current economic climate, financial institutions investing in mining operations are looking for companies that can execute the required work well, and have strong balance sheets and proven records. “When an investor puts money into executing, the investor knows that it is being done by a reputable company and will expect results reflecting what has been invested, which is a surety our company provides.”
Anderson says Wood’s expertise lies across various resources, including gold, uranium, copper, cobalt, platinum, potash, phosphate, diamonds, graphite, lithium and tin. He says the company has followed this range of commodities, as well as complied with the trends these commodities follow.
Anderson says the best way to stay abreast of resource trends is to heed economists’ analyses – for example, there is more spending on exploration. He indicates that, over the past 12 to 18 months, there has been greater interest in speciality commodities, such as lithium and graphite, compared with traditional resources such as copper and gold. While the latter will always remain a consistent fixture through their entrenched position, the former are gaining momentum, Anderson concludes.