Mining projects need to be “exceptional” to attract investors in the current global mining climate, states business development company MineAfrica president Bruce Shapiro.

“A project would need to be a low-cost producer with excellent potential returns and present minimal risk before parties would even consider investing.”

He further notes that companies would only know if a project meets the aforementioned criteria, once the exploration and feasibility processes are near completion or, at the least, have passed the initial stages.

Regarding international investment in South Africa’s mining industry, Shapiro believes that among international investors, the country “is pretty low on the totem pole”. He explains that operations outside South Africa are more attractive if they are based in countries with more conducive investment opportunities, better legislation and less bureaucracy.

“While South Africa has the right geology, it has the wrong investment environment.” The Fraser Institute’s 2014 Investment Attractiveness Index, which measures mineral potential along with policy perceptions, ranks South Africa in sixty-sixth place, below the Democratic Republic of Congo (DRC), Côte d’Ivoire, Tanzania, Madagascar, Ghana, Morocco, Zambia, Botswana and Namibia.

Shapiro points out that the DRC is an anomaly, as the country’s governance policies are perceived to be worse than those of South Africa; however, its mineral potential more than compensates for this. He adds that, particularly in the DRC, “the geology is so phenomenal that investors are prepared to take the risk”.

Shapiro emphasises that, while the crash in commodity prices is a concern, investors generally consider primarily only four factors: “The process has to be transparent, there shouldn’t be any Ministerial discretion, labour conditions have to be stable and the outlook has to be positive.”

African Identity
Shapiro, who is also the president of the Canada–Southern Africa Chamber of Business, vehemently believes that it will be beneficial for African countries to distance themselves from an all-encompassing “African identity”, adding that he dislikes local and international media’s promoting the perception of Africa as a single entity, rather than a continent with 54 countries that have differing attributes, challenges and ideologies.

“When attempting to attract investment, African governments should promote themselves as separate destinations and create their own identities.” He explains that, currently, people outside Africa tend to ascribe the problems of a country or region as problems affecting the whole continent.

Even if countries market themselves independently, it does not mean that they cannot work together or that a successful marketing campaign by one country will be solely detrimental to its African peers – it will rather encourage further interest in the continent, Shapiro affirms.

2016 Outlook
“Man is by nature an optimist,” he notes, stating that mining companies and governments are waiting for commodity prices to improve.

Shapiro emphasises that, while the mining industry is cyclical by nature, parties should be aware that commodity prices were initially expected to improve by 2016. Now, however, some analysts are saying prices will improve by 2016/17 and others 2018. He adds that parties with vested mining interests should err on the side of caution, as “things will turn, but no one can really say when”.

Despite the current state of the market, Shapiro expects positive growth in the mining industries of Namibia, Botswana and Côte d’Ivoire, with West and Central Africa remaining stable.

MineAfrica Events
MineAfrica will cohost its seventeenth Annual Mining Breakfast with the Canada–Southern Africa Chamber of Business at the Prospectors and Developers Association of Canada (PDAC) convention on March 8. Up to nine African delegations are expected to attend, including representatives from the South African Department of Mineral Resources. Shapiro states that the Chamber’s mining breakfast, in conjunction with MineAfrica’s Investing in African Mining Seminar during the PDAC, is the biggest African mining event in North America.

The company will also host its fifth yearly Focus on West Africa seminar in London, in October 2016.