https://www.miningweekly.com

Greater consistency and transparency in Africa could spur investment

7th March 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

Font size: - +

TORONTO (miningweekly.com) – Investors are often naive when it comes to their perception of Africa as an investment destination; however, despite the continent having significant challenges to deal with, there have, in recent years, been remarkable changes taking place that set the scene for increased mining investment.

Mining Indaba LLC's VP and MD, Jonathan Moore, told Mining Weekly Online on the sidelines of this week’s Prospectors and Developers Association of Canada (PDAC) convention that at the top of the list of things investors were waiting to see, were consistency and transparency from government in Africa.

He said that African economies and governments continued to get more positive about their ability to attract investment. For instance, when one looked at Rwanda, for about 25 years one could not do any business there. This year, the World Bank ranked the country just above Italy.

“If you think about that kind of change, governments are getting to a point where there is consistent legislation, consistent stability and a transparent mechanism for investors to feel like ‘the rules are not going to change on me two or three years in,’” Moore explained.

He conceded that there were obvious challenges relating to energy and infrastructure on the continent, particularly as mining was taking place in increasingly remote and challenging areas, which made getting people and equipment to site and products out to market increasingly challenging.

Another challenge was labour, which could hurt investor sentiment and negatively impact operations, as witnessed in South Africa in recent years.

Moore also noted that the African Union’s African Mining Vision (AMV) had the potential to change investor perceptions. “The big question about the AMV is, however, is there potential for harmonisation of practice and for best practices to be adopted?” he asked.

“From an investor standpoint, doing business in one African country could be vastly different to doing business in another. One might not necessarily want a blanket solution across the entire continent, but improved consistency and greater harmonised concepts would help investors look at the continent a little differently,” he said.

MIXED REALITIES
New York-based Moore, whose organisation arranges the yearly Investing in African Mining Indaba, in Cape Town, believed that 2015 would be a year of mixed realities.

“We will have individual companies performing well, because they did all the hard work that they needed to do, and we’ll have countries that garner additional investment because they have written good policies, have transparency and stability, and I also believe that we’ll have individual commodities outperform each other,” he said.

However, towards the end of the year, Moore expected to see a little more of a rising tide, with high hopes that 2016 would send the mining industry in the right direction.

He noted that, at some point, the reality of things such as urbanisation, population growth and increased technology would kick in, which pointed to a bright future. “It’s just a question of when it’s going to happen,” Moore said.

He pointed out that there had been so little exploration in the past two years that it was going to catch up with the industry at some point, potentially driving a significant upswing in investment.

“Between these things, 2016 looks to be the year when things get better".

Moore said the PDAC was an opportunity for him to gain a broader perception of the global market and understanding of where the industry was in the cycle.

He noted that the industry seemed to be waiting for some event to happen, before the risk capital would start flowing again.

“I don’t know what that is. It could be the release of some of the big money that’s been raised in private equity, [perhaps] some spike in one of the particular commodities, but there [is] a sense of patience to see what happens before [stakeholders] will  jump back in,” Moore advised.

Edited by Tracy Hancock
Creamer Media Contributing Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION