The African mining industry, which is full of opportunity, will need to learn how to manage the complexities of establishing mining projects if it is set to reap the benefits of the new demand profile for commodities, says professional audit, tax and advisory firm KPMG global mining leader for projects Rodney Nelson.
He says this new profile is being driven by the continuing urbanisation in large parts of China, India, South-East Asia and Africa.
Derisking and properly managing a mining project will enable a mining company to meet market demands and bring a deposit into com- mercial reality. Achieving this also provides benefits not only for the mining company but also for the community in terms of wealth crea-tion, infrastructure, jobs and skills transfer.
While it is not more complex and difficult to establish new mining projects in Africa – especially those that require infrastructure – than in the rest of the world, there are some aspects of an African project that are more difficult to deal with than projects elsewhere in the world.
Costs, for example, are much easier to deal with and are lower in Africa, while access to infrastructure, skills expertise and special ser-vices is more difficult to obtain on the African continent, explains Nelson.
Further, the complexities inherent in estab-lishing infrastructure result in mining houses continually having to deal with regulatory forces, stakeholders and the need to secure large amounts of finance, as well as the engi-neering and geological challenges of getting the minerals out of the ground.
Despite the challenges and complexities, Nelson says there is a significant number of mining projects in Africa, which mainly involve the provision of large pit-to-port infrastructure.
One such potential project is being undertaken in Zambia, which is aimed at transporting copper from the mine to the processing plant. This project requires the initial construction of a 400 km railway line within Zambia that eventually links up to a railway line in Angola, allowing for the copper to be transported to port.
Further, Brazilian miner Vale is constructing a 1 000 km railway corridor logistics solution for the transportation of coal mined at Moatize, in the Tete province of Mozambique, to the maritime terminal in Nacala as an alternative to its current Sena railway line.
Meanwhile, there are three pit-to-port projects in South Africa servicing the iron-ore, manganese and coal industries, as well as various iron-ore pit-to-port projects being undertaken in Cameroon, the Republic of Congo and Guinea.
The large growth on the African continent, with respect to an increasing number of mining projects in Africa, has positive and negative effects on the community, the regulatory authority and the mining company, says Nelson, adding that it is important to discuss and determine the different expectations of all the stakeholders when the project starts.
He also emphasises that a mining com-pany has to have a deep understanding of the country in which it is operating and an under-standing that a one-size-fits-all approach does not work. “The mining company and government need to understand what is impor-tant for the jurisdiction in which they operate: equally, governments need to understand the motivation behind mining companies’ actions and the way in which they operate. Only then will a project be successful,” says Nelson.
He highlights that, while going through this commodity demand reprofiling, African min- ing companies should learn to reduce their capital and operational expenses and ensure that they are economically sustainable to emerge successfully.
Africa can also take advantage of the sig-nificant technological breakthroughs in mining technology over the last ten years in terms of sophisticated mining techniques that cost less to operate and could make some min-ing projects more economically viable to run.