Any political and regulatory uncertainty will undermine African countries’ attractiveness as natural resource investment destinations according to financial institution Barclays Africa.
Speaking to Mining Weekly about the African sector’s mining outlook for 2017 Barclays Africa’s coverage head for natural resources Shirley Webber noted that the financial institution retains an optimistic view on the mining and metals sector.
She also notes that stable political environments, compliance with environmental legislation, labour peace and democracy in Africa is important to ensure growth and investment in the sector this year.
“Volatility in the US$:rand exchange rate and commodity prices are important factors to monitor in this industry,” she said.
Meanwhile, Barclays Africa has noted consolidations happening in the form of mergers and acquisitions across the African mining sector and Webber expects this trend to continue.
She highlights that African mining companies are expanding their operations abroad, citing gold major Sibanye Gold’s recent acquisition of US mining company Stillwater for $2.2-billion as an example.
“Each financial institution has its own view on commodity prices and the outlook of the industry. Gold is an important indicator in precious metals. The gold price, for example, has traded at various levels over the last few months; therefore mining companies with lower cost curves will survive,” she said.
She also says that, as long as wage strikes and remuneration negotiations, especially in the gold and platinum sectors, were managed by all with the objective to promote economic development, social justice, labour peace and democracy in the workplace, the industries would survive.
She points out that the unfortunate long platinum industry strike of 2014 has influenced the shape of the market and to repair the damage done will take a number of years.
“I believe sanity will prevail in future labour negotiations.”
Webber noted that the upcoming Investing in African Mining Indaba 2017, taking place in Cape Town in February, is important for building relationships and delegates from Barclays Africa will definitely attend.
“There has been an increase in the number of value-added service entities participating in and attending the Indaba. The Indaba connects Africa with the rest of the world and we see this as an excellent networking opportunity.” she said.