AMN - 2018 shows signs of best prospects for Africa – comment by Yolanda Torrisi

At this year’s Investing in African Mining Indaba, Standard Bank outlined that African mining has the best prospects of success it has experienced in a decade. Walking around the conference floor, meeting and talking to delegates and exhibitors, left me with no doubt that there is a buoyant mood not felt for a long time in the industry.

Standard Bank group head of mining and metals, Mark Buncombe said sustained commodity price growth and reduced costs were combining new technology trends with synchronised global growth to present Africa’s mining sector with the best prospects in more than a decade.    

Given Africa’s rich resource endowment, mining is and will continue to be central to the growth and global integration of African economies as well as a key determinant of the prosperity of Africa’s peoples.

“The centrality of mining to the development of the continent means that 2018 is likely to be a watershed year in Africa’s ongoing growth story,” Mark Buncombe told delegates.

For the first time in a decade most commodities, bar platinum, have seen significant price recovery. At the same time miners have done a lot of work cutting costs with margins, globally, on the increase. While the protracted absence of investment in prospecting will weigh on the industry for many years to come, reduced debt levels mean that going in to 2018 balance sheets are generally stronger too.

While the volatility of recent years means that many companies are reluctant to spend, “where real risk-managed opportunities present themselves in Africa investment is taking place”, he said.

Those countries offering stability and a degree of political certainty are likely to benefit most. Some countries in Africa have learned that the right legislation can achieve national development goals by creating a fair, responsible and conducive environment for foreign investment.

Those markets like Botswana, Namibia and increasingly Ghana, Cote d’Ivoire and Zambia, for example, that have developed balanced legislative regimes cognisant of the industry’s long investment cycles while also talking to local national development goals are likely to attract global interest.

While, in Africa, this interest is likely to focus on rejuvenating mothballed projects, as more money is spent on exploration in legislatively attractive environments, new investment is likely to pick up too. 

These improvements in Africa’s domestic mining landscape are coinciding with a unique period of synchronised global growth, presenting a number of opportunities across Africa in 2018.  

Meanwhile, further north in West Africa, continued global macro instability, has led to the gold price stabilising at a relatively high level and this is benefiting West Africa, where abundant shallow and, as yet, under-developed gold deposits are attracting interest from investors.

Standard Bank’s long-standing presence in Ghana and recent expansion into Cote d’Ivoire are allowing the bank to concentrate both global capital and the group’s extensive mining capabilities on these new opportunities. Moreover, a more favourable political climate in Ghana and stable mining legislation in Cote d’Ivoire are adding to West Africa’s improved prospects.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com