The iron ore industry has seen phenomenal growth recently, fuelled by ambitions to recover from economic suppression caused by the COVID-19 pandemic.

While the current global iron ore price is painting a rosy picture the reality of the medium-term outlook for Africa is somewhat gloomy. It is anticipated that the price will fall within the second half of 2021. In our webinar, co-hosted with African Mining Forum, titled: Iron ore boom – is Africa ready? held on 1 July panellists outlined several reasons for this.

Sabrin Chowdhury, Senior Commodities Analyst, Fitch Solutions, Singapore – Erik Hedborg, Principal Analyst: Steel, CRU Group, London and Rudolph de Bruin, Director, AMED Funds advised a cautious approach to riding the wave while preparing for the inevitable trough.

Chowdhury emphasised that lithium, rather than iron, has a much better outlook as far as mining in Africa is concerned. Hedborg pointed out that the record high iron ore price, is unfortunately, not sustainable. De Bruin opined that iron deposits in South Africa will be developed but the reality is that Brazil and Australia have a stranglehold on global supply. This makes Africa a third-in-line to the crown as their resources will inevitably diminish.

All three panellists agreed that the major hurdle facing Africa is its high-risk investment profile. Several concerns include corruption, security concerns and resource nationalism. In addition, projects will need to be built at scale and necessary infrastructure to transport large volumes to ports will need to be developed.

Laura Cornish, Head of Mining at Clarion Events Africa content, admitted she, as a devotee to the future of mining in Africa, expected positive short-term feedback on the back of the high price.

Elodie Delagneau Savasta, Project Director – Mining at Clarion Events Africa expressed her mixed feelings on the topic. She outlined a delicate balance between investors remaining in trusted destinations at the expense of those who have great potential, but uncertain business environments.

It is hoped that the only potential prospect for a large African iron ore mine, Simandou in Guinea, will be developed and contribute to global requirements.

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