JOHANNESBURG (miningweekly.com) – Africa needs to cultivate a cluster of “real catalytic investors to mount strong, build-back better resilient mining investment” in response to the global Covid-19 pandemic, says Africa investor Hubert Danso.
Speaking during the opening keynote of this year’s Africa Mining Forum, held virtually, he explained that a compelling Covid-19 mining investment response is needed to retain current investors and local producers, while helping them to increase and expand their investment, rather than “focus on new investors”.
This plan should be in the form of a government partnership with local producers, premised on a four-point plan, to optimally increase investment by firstly expanding and working with government and local producers to expand existing mines, Danso suggested.
In addition to this, such a partnership should also assist local producers to buy new mines and bring in new joint venture partners to invest in growth, so that growth is intentionally targeted and attracts a larger percentage of the global exploration spend.
He added that the post-Covid-19 era presents a “very strong and unique” opportunity to work with local producers and the investment community, who can partner to “really expand on local partnerships”.
Further, Danso said that, considering that capital markets play a critical role on the listed side, similar to that of private equity on the unlisted side, “[Africa] needs to appreciate that the cheapest form of stimulus is confidence and the ability to provide confidence and clear signals to the investment community, which is paramount and really very important”.
An example of a successful mining investment partnership and collaboration is that of the African Union’s (AU’s) Presidential Infrastructure Champion Initiative, currently chaired by South African President Cyril Ramaphosa.
“This type of leadership presents a real opportunity to have something that level focused on the mining sector,” Danso enthused, adding that Africa’s mining sector “is rife for participation”.
However, he warned that investment in the sector was “very complex and competitive” compared with global peers, and that “investors are harder to find than good projects”, which are, in themselves, very hard to find.
Meanwhile, commenting on Rwanda in particular, Rwanda Development Board CEO Francis Gatare said that while Covid-19 had affected many other industries beside mining, “there is often a silver lining”.
Rwanda’s “silver lining”, he added, was found when, during the pandemic, the small-scale nature of operations in the Rwanda mining sector were leveraged while much of the world was shutting down larger operations.
Following the suspension of Rwanda’s 45-day hard lockdown, the mining sector had an opportunity to use technology to resume mining operations and ship minerals and commodities to the international markets, while much of the world still remained unable to do so.
When the Asian markets – particularly China – recovered, and demand for technology and commodities recovered as well, prices began to increase, which further supported Rwanda’s position in being able to supply materials.
However, while the sector performed well as it exited the lockdown, Gatare said the pandemic also presented the country with an opportunity to review some of its incentives to attract exploration companies.
For the first time, the government of Rwanda has put in place a ten-year loss-carryover incentive for exploration companies to be able to invest in exploration, knowing that the investments put in place can be recovered through tax incentives over a period of ten years.
While Rwanda has seen interest in the new incentive, Gatare said the pandemic also highlighted the importance of diversifying and identifying new minerals and materials that are counter-cyclical, “especially during the time when most metals are facing a decline in demand and international prices”.
Rwanda has since expanded into the gemstone and precious metals mining sectors.
The country also concentrated more on local value addition, which saw some local refineries, smelters and processing plants leverage international travel restrictions to add scale to their operations, giving Rwanda “an added opportunity to retain value”.
“It’s the reason why we still feel very strongly that the mining sector in Rwanda will begin to carry the heavy lifting of the economic recovery of the country,” Gatare commented.