The lack of foreign investment capital for African mining projects may be due to the continent’s many challenges posed to investors, according to the Grant Thornton Global Mining Survey for 2014.02.03
“While foreign investors are reticent to invest in Africa, there is massive opportunity for mining throughout the continent, and as infrastructure grows, so mining will grow,” says Lauren Patlansky, managing director of Grant Thornton’s Asia Business Services.
The major challenges associated with foreign mining investment into Africa remain political, economic and regulatory uncertainty. In addition, black economic empowerment (BEE) regulations in many African countries and aggressive unionisation in South Africa make foreign direct investment (FDI) increasingly unattractive to global investors who are turning their attention elsewhere.
Grant Thornton’s 2014 Global Mining Survey reveals that the factors which are constraining miners’ abilities to expand / growth their organisations are increased government involvement / regulations (39% of all respondents stated this as a constraint), volatile commodity pricing (26%), access to funding (10%) and permitting or processing procedures (9%).
“The challenges are not new, but they are becoming more onerous,” says Patlansky. “African governments have matured and as a consequence, they are making it more challenging for foreign investors to access their resources, compared to in the past. They are far more cautious about foreign investment, having learnt the hard way.”