After Mining Indaba MD Jonathan Moore
CAPE TOWN (miningweekly.com) – The rising prominence of investment in consumer-linked industries in Africa is significantly eclipsing investment in mining, with mining’s share hitting an all-time low at only 2% of foreign direct investment (FDI) in recent years.
Technology, media and telecommunications have risen to 20% of the FDI into Africa, retail and consumer products to 17% and financial services 15%.
Hauntingly, renowned economist Damisa Moyo speaks forebodingly of the world moving on to a highly volatile, low-growth platform for a prolonged period.
With the consensus forecast for iron-ore rising to only $85/t by 2020, iron-ore projects in Africa have taken a knock.
However, Core Metals MD Lara Smith, who addressed this month's Investing in African Mining Indaba run with MD Jonathan Moore at the helm, tells how Africa has the potential to make a far bigger contribution in rare earths and minor metals, including tantalum and minor platinum group metals (PGMs), while SFA Oxford chairperson Stephen Forrest outlines how real opportunities exist for growth in PGMs mining in Southern Africa, where he describes the earth as “bursting” with a plethora of the precious metals.
Gold at $1 250/oz has resulted in 12% of production being below its all-in sustaining cost and some consensus averages only see the gold price rising to $1 350/oz by 2020.
the same consensus average compilers put copper at $6 500/t in the next five years, platinum at above $1 700/oz and palladium at $850/oz.
Smith highlights the demand potential for minor metals, including PGMs and rare earths, in the huge global uptake of smartphones, laptops, tablets and desktops as well as television flat screens.
This is also so in energy and the environment in wind, solar and nuclear power.
Wind power is expected to grow by 6% compound annual growth rate by 2018, with a long list of minor metals coming into play as a result.
Because of constraints applied on rare earths by China, there was a trend towards national self-sufficiency in minor metals, which were also needed increasingly in defence equipment.
With increased instability among nations, more was expected to be expended on defence, as well as self-sufficiency through natural gas, which also created minor metals demand.
Combined military expenditure of Japan, China and the US was expected to increase by 4% compound yearly growth rate going forward.
China’s success in rare earths, Smith says, can be related to factors including the low cost of production and government support in the form of subsidies of downstream products.