The African mining industry is largely holding its own, despite factors discouraging investor interest, with China delivering the sector’s foremost source of investment for mining projects and infrastructure development, says African Mining Network chairperson Yolanda Torrisi.
She says the Asian country looks set to remain a significant participant in the continent’s mining sector, for at least the medium-term, as its demand for metals continues to grow.
However, Torrisi warns that it is important for Africa to avoid having “all its eggs in one basket”, which is why Europe and North America must be greater players in the development of the continent’s mining industry.
UK, Canadian and Australian companies are prominent players in exploration, development and mining investment in Africa, but Europe and North America have plenty more to offer Africa, especially in terms of mining expertise, technological support and investment.
Policies that encourage the adoption of technology will help the industry to perform better, especially during mining downturns, says Torrisi.
“Technology must be implemented to improve safety, mining and processing output, and improve the bottom lines of the companies that are trying to explore, develop and mine while keeping costs to a minimum, boosting productivity and improving economics.”
The Fear Is Real
Torrisi says there is too much investor fear in the investment strongholds of Europe, North America, Australia, Singapore and China.
This uncertainty is fuelled by perceptions of the unknown, previous unfortunate investment experiences, past and present political mismanagement and, in some cases, corruption, high risks of change at national, regional and local political levels, as well as outdated mining and exploration practices.
Increasing resource nationalism, a lack of infrastructure and growing opposition from groups not directly involved in the industry – such as green lobbyists, often from outside the area of concern – are also contributing factors, Torrisi tells Mining Weekly.
Subsequently, Africa is considered as too risky by most investors. Even countries where some or all of these factors are not present, or are being dealt with effectively are struggling to gain investor confidence.
Taxes, royalties and regulations are not the answer, states Torrisi, emphasising that Africa should aim to encourage investment through supportive and proactive policies for its mining industry, thereby creating employment, lifting economic growth and improving infrastructure.
In turn, African countries will realise improved revenue growth at all levels of government.
“Then there are the other important benefits such as improved gross domestic product; better, healthier and safer communities; and improved community facilities at local, regional and national levels,” she says.
Alive with Possibility
Besides the usual demand for gold, Torrisi says Africa’s graphite mining future is bright in the east of the continent.
Further, lithium mining activity in south-central and south-west Africa is spurred by the need for so-called tech metals, with increasing demand for improved battery technologies, owing to the global electric vehicle drive.
However, demand for another tech metal, cobalt, has simmered down somewhat, although future fundamentals at this stage look promising, says Torrisi.
Further, West Africa, particularly Mali, Ghana, Burkina Faso, Côte d’Ivoire and Senegal, are doing significantly well, primarily owing to strong gold prices, excellent projects, skilled management at company level, improving infrastructure and encouraging government policies.
The introduction of positive policies has also resulted in improvement in Botswana’s mining sector.
Torrisi expects mining booms from Zimbabwe, in Southern Africa, and Eritrea, in East Africa, where there is increased exploration on the back of an improved investor climate.
“Mining will flow on from the exploration, providing both countries maintain their positive approach to the industry, but the future appears brightest of all in Zimbabwe.”
The Zimbabwe government is arguably the most proactive on the continent regarding mining, advances Torrisi. Besides improved investor confidence, Zimbabwe is also showing better returns from its existing mining operations and growing community support for the industry.
However, the country still has a way to go, she adds.
Eritrea’s supportive government is encouraging mining companies to develop their projects, with the Colluli potash project, owned by developer Danakali, expected to play a leading role in the country’s future development.
Meanwhile, there is growing recognition throughout Africa of the importance of encouraging, supporting and assisting artisanal mining, says Torrisi.
The artisanal and small-scale mining sector accounts for the largest mining workforce in Africa and is estimated to comprise nine-million people, according to information supplied by the Southern African Institute of Mining and Metallurgy (SAIMM) last year.
“This is an increase from an estimated three-million to 3.5-million in 1999,” notes SAIMM.
The sector is a big contributor to the continent’s mining industry, particularly to its communities.
“Artisanal mining is not going to go away by banning and restricting it, so it makes more sense to legalise artisanal mining and improve practices, including safety, to help grow the continent’s resource-rich, defiant and resilient mining sector and ensure that greater economic benefit is realised,” concludes Torrisi.