South Africa’s, Guinea’s and the Democratic Republic of Congo’s iron-ore sectors are expected to grow significantly in the coming years, owing to the large “high-quality” iron-ore reserves in these countries, as well as increasing demand from global steel markets, such as in China, says mining advisory firm Mineral Insights MD Mathapelo More.

However, South Africa has a number of challenges to overcome to remain a competitive player in the iron-ore sector, as the country continues to battle issues with rail and port infrastructure, power supply issues, regulatory delays, uncompetitive steel imports, the use of scrap metal, inefficient infrastructure spend and escalating fuel costs, she says.

In addition, despite expanding production and investment in rail, ports and other infrastructure, African countries such as Sierra Leone and Liberia also face a unique set of challenges, including energy shortages, infrastructure deficits, regulatory uncertainty, skills gaps and limited financing. For these countries, increased investment from Asia and the Middle East is required to enhance industrialisation and grow regional trade in the iron-ore sector, says More.

“The sector has good opportunities if these challenges are addressed. Improving rail and port infrastructure, producing more high-grade iron-ore for low-carbon steel, and adopting new technologies such as automation and AI can make mining more efficient and competitive,” she says.

Low-Carbon Steel as a Solution

The increasing global demand for high-grade iron-ore is driven by the international rise in low-carbon steel production. This premium ore significantly reduces emissions during the steelmaking process; however, refining it will remain energy-intensive until such time that renewable energy can meet the baseload required at the mines, explains More.

There should be increased focus on acquiring investment for such beneficiation, infrastructure development and the adoption of modern technologies to produce higher-value products, as this could strengthen the global competitiveness of African countries, she adds.

“Low-carbon steel is widely used in the construction and automotive industries, presenting a significant opportunity for African countries to also strengthen their industrialisation strategies while also fostering greater intra-continental trade through the development of regional value chains,” outlines More.

She adds that beneficiation also offers South Africa the opportunity to enhance its iron-ore sector through value-creation of iron-ore products, producing steel products and other manufactured goods instead of simply exporting raw ore to be converted in another country to the benefit of foreign economies. This would, in turn, create skilled jobs, improve export earnings and promote industrial growth.

However, More says African iron-ore producers still need to improve their environmental, social and governance (ESG) standings to attract the required additional investment from global markets, in addition to addressing the identified challenges of poor transport infrastructure, regulatory uncertainty, limited funding and unreliable energy supply – particularly in South Africa, where ESG factors are becoming key considerations for investors, in large part owing to the country’s water scarcity problem, which is posing a major challenge to mining operations.

“Mining companies that manage water responsibly, reduce environmental impacts, engage meaningfully with local communities and deliver benefits such as jobs, skills development and infrastructure are more likely to attract investment and maintain their social licence to operate,” she explains.

Addressing these challenges will enable African countries to increase their contribution to global iron-ore export beyond the current 4%, through improved mapping of geological data and increased investment in mineral exploration activities, which would enhance resource discovery, attract investment and strengthen the continent’s competitiveness in global iron-ore markets.

“Southern Africa and the rest of Africa have significant potential to become leading players in the global iron-ore industry because of their large high-grade iron-ore reserves. “To maximise this opportunity, countries need to move beyond exporting raw materials by investing in beneficiation, industrialisation, infrastructure, skills development and regional cooperation through initiatives such as the African Continental Free Trade Area. Stable policies, transparent regulations and a favourable investment environment will also be essential to attract long-term private investment,” concludes More.