What’s South Africa doing to become mining finance centre for Africa?
Africa’s minerals potential is being commented upon increasingly at the highest of levels.
The Cameroon-Congo-Gabon region is being likened to Australia’s iron-ore-rich Pilbara and the coking coal resources of Mozambique-South Africa-Zimbabwe to Australia’s Bowen Basin.
It is said to be only a matter of time before the Democratic Republic of Congo-Zambia region overtakes Chile as the world’s major producer of copper, with cobalt as a valuable coproduct, to boot.
What is South Africa doing to become part of these potential economic developments that are expected to take place on its doorstep?
It is almost three years ago to the day since Xstrata CEO Mick Davis told those who attended his stimulating talk at the Wits Business School that South Africa has an outstanding opportunity to become a centre of mining finance for Africa.
Davis grew the London-listed Xstrata, which may now team up with Glencore, led by fellow South African Ivan Glasenberg, from a $500-million entity into a globally diversified $50-billion contender.
Investec Asset Management strategist Michael Power sees the commodities supercycle – which ran from 2000 to 2008 – as something that is merely “resting between courses”.
While China added an Australia to its economy last year, it could, he wrote, be adding a Germany every year by 2020, Power wrote in an article first published in the China Daily and then Business Day.
He foresees volume- and cost-focused companies becoming the real winners in the more substantial and subtler main course to come.
Chamber of Mines of South Africa senior executive Roger Baxter says there are significant opportunities for mining inherent in the United Nations population division’s expectation that, by 2050, three-billion more people will urbanise, 800-million of them in Africa, where the population will double to two-billion people, and more than a billion of them in India, China and the rest of Asia.
Investec Securities analysts Hunter Hillcoat and Marc Elliott speculate whether the possible increased but separate involvement of Glencore and Xstrata in iron-ore in Cameroon-Congo-Gabon could be the start of an assembling of companies, governments, financiers and end-users in a region that could give the iron-ore Top Three of Vale, Rio Tinto and BHP Billiton a run for their money.
South Africa should begin taking down the barriers to entry on the mining finance front and to create an environment where any credible company with an appropriate record can actually list on the JSE.