Taking into account the experiences of a variety of groups, ranging from banks to engineering companies, a few clear trends have emerged in Africa’s mining sector.
One is that sentiment has improved a lot, but people are watching and waiting before they commit to new projects. As a result we are seeing a lot of studies being undertaken as companies prepare themselves to move, while not yet taking the leap.
Two is that finance, while not flowing as freely as a year and a half ago, is available, and while the exploration cycle still remains at low tide, it suggests that those who are able to act now will benefit from the early mover status. That the demand for many commodities will stretch supply remains reasonably clear over the medium to longer term.
Third is the increasing manner that the mining sector has shifted in Africa from its traditional developer base in Canada, Australia and to a degree South Africa toward groups from Brazil, China, Russia and India. At the same time, due to poor policy in South Africa, and power and other infrastructure constraints, the percentage of mining activity north of the country’s borders is increasing relative to that within its borders.
In particular, such factors have exacerbated the decline of South Africa’s gold sector – which continues to fall down the world production rankings – and it now being claimed that mineable reserves are in fact far lower than previously estimated. However, in other commodities, the lull in the long term positive demand cycle has given South Africa an unexpected second chance to capitalise. Whether it will remains to be seen.
The developments over the past year and longer should be placed in perspective, in that by many definitions the mining sector across the continent is no worse off now than it was in 2006, before the spike that peaked in 2008. That is a long way off the doldrums of the early 2000s.
There have been some notable cases of poor governance and countries which are unable to fully capitalise on very good mineral potential because of this. In this bracket can be mentioned the obvious cases, such as Zimbabwe and Guinea, but many others are far from innocent, such as Angola and the DRC. In many other minerals jurisdictions across the continent, the oft used statement that Africa is a difficult place to do business has been illustrated in a variety of ways.
But again, compared with a decade previously, the continent as a whole has evolved positively in terms of available infrastructure and in terms of mining opportunities.
What all these trends translate to is that over the coming decade Africa’s mining industry is well poised to be an important cornerstone in the evolution of the continent towards higher degrees of prosperity and well being for its people. That was the outlook three years ago, and it has not changed.