Mining Weekly

The sub-Saharan Africa region has massive reserves of copper and other strategic minerals and, if it can pull its act together to present an investor-friendly destination, will be the world’s largest copper supplier in 25 years, South African foundry and engineering company Thos Begbie CEO Edwin Dreyer tells Mining Weekly.

To take advantage of this forecast, as well as the decreasing copper reserves of global producers, the company is planning to establish a branch in Zambia, in sub-Saharan Africa, which is ideally placed to service its Central African neighbour, the Democratic Republic of Congo (DRC), with which it shares Africa’s Copperbelt region.

Thos Begbie’s Zambia branch will help enhance service delivery directly to the company’s existing and potential new customers in the region. “We supply furnace components to four mining and smelting operations in Zambia and we visit them once a month,” notes Dreyer.

Thos Begbie currently supports the needs of these clients from its facilities in Mpumalanga, which include a vast foundry and pattern shop, heavy engineering works and pipe manipulation divisions, which provide it with versatility to cope with demanding pyrometallurgical requirements.

Thos Begbie also hosts the official Mpumalanga branch of Dekra Industrial RSA, previously Raysonics, which puts it on the receiving end of valuable on-site inspection and nondestructive testing services from a newly built metallurgical laboratory.

“As a successful company, we focus on being competitive by offering excellent services to our customers, delivering high- quality products and developing trustworthy relationships with our clients,” Dreyer points out.

He

says the largest suppliers of copper worldwide are in North and South America, but highlights that these producers are facing a declining copper price and dwindling copper reserves of a lower yield per ton that are becoming increasingly expensive to mine, thereby, realising less value.

However, sub-saharan African countries are also having to tackle the lower copper price, although having untapped reserves of a higher yield per ton ore. Their challenge is to appeal to international investment by creating a stable political environment.
In addition to Zambia, the DRC and Zimbabwe, Namibia also boasts a nonferrous smelter and that country is attracting foreign investment, owing to its stable environment. Botswana has smelting capability, and, although small by comparison, its future in mineral mining and beneficiation is certain.

Angola and Mozambique are fresh out of civil war and, although the Chinese have a strong foothold there, future opportunities for Thos Begbie should not be ignored.

“The DRC is currently a no-go area because of the country’s political infighting. I won’t send my people there, it is too dangerous and risky to do business,” states Dreyer.

Morevover, the country’s State mining company Gécamines has not directed certain revenues to the public treasury and are largely beyond the realm of public oversight, resulting in the DRC and its people being deprived of many of the benefits of its rich minerals endowment, according to a report published in November by nonprofit, nongovernmental organisation the Carter Centre.

“We deal with blue chip mining companies across the world in 22 countries and most of them are holding back new capital investments until there is political certainty in the region. No company wants to develop a mine just to later have it nationalised by government. As soon as this uncertainty is dealt with, doors will open and companies will increase the capital they invest in these countries,” he says, displaying a robust optimism about the future of copper mining in Central Africa.

Dreyer adds that, once investment in the mining sector improves, sub-Saharan Africa countries can focus on beneficiation and start producing finished products instead of raw ore.

The same applies in Zimbabwe, which has finally seen President Robert Mugabe step down, giving way to newly sworn-in President Emmerson Mnangagwa. Thos Begbie says it has faced resistance in Zimbabwe, where two Chinese-owned mines, a copper and a platinum mine, have declined to consider Thos Begbie as a supplier, owing to the companies’ close relationship with Mugabe, which restricts them in their choice of contractors.

A poor political reputation has resulted in a lack of capital for mining projects in Zambia and Zimbabwe, and policy uncertainty, such as the threat of nationalisation of mines and banks, are some of the main risks that deter international investors from investing in these countries because it would have detrimental effects on their investments.

Dreyer says nationalisation, of which there are different degrees, is a red flag for investors, noting that investors will rather look to Australia’s stable business environment, despite the higher cost of mining.

In 2013, Mining Weekly reported that it had been determined that Zambia had lost $45-billion in mining rents as a result of the nationalising of its mines in 1969, an amount considerably greater than the foreign aid it received in those years.

This is according to a study on African economic advancement through resource development by consultancy Eunomix. At the time, Zambia was producing 700 000 t/y and would have generated mineral rents totalling $65-billion if it had continued to produce at this rate over the 40 years of nationalisation.

Post nationalisation, the country went downhill, with mineral rents actually declining to a far greater extent than the rate of the fall in prices, leading to the conclusion that bad government policy exacerbated the downturn during periods of low commodity prices and resulted in an anomalous destruction of economic wealth, Mining Weekly reported.

However, this is no longer the policy of the government of the day. With Zambia’s changing political climate and the country being “more stable than in Zimbabwe”, Dreyer says mining prospects look bright.