AMN - Change is around the corner, perseverance will be rewarded - comment by Yolanda Torrisi

John Turner, the head of Fasken Martineau’s global mining group, has forecast change is around the corner in what has been a very gloomy mining sector.

In a recent report he prepared, he stated:

There has been no shortage of challenge and controversy in the African mining industry in recent years. A few have viewed it as a unique buying opportunity while most have struggled to keep the lights on – in many cases literally.

Commodity prices continued to slide for the fourth year running challenging even the most seasoned miners, though some have been spared to a degree by similar downturns in exchange rates relative to the US dollar. Many have taken steps to improve their balance sheets by attempting to sell assets, cut or eliminate dividends, and reduce operating costs drastically.

In South Africa, away from the rock face, 2015 saw the Department of Mineral Resources and the Chamber of Mines jointly approach the courts to seek clarity on the application of the ‘once empowered, always empowered’ principle, and the unexpected replacement of Minister Ngoako Ramatlhodi with Mosebenzi Zwane, just as he appeared to many to be bridging the gap between the industry, labour and government. Adding to those challenges were access to reliable power due to load shedding and continued labour volatility.

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There have been notable exceptions. Neal Froneman of Sibanye Gold stands out for his bold moves to acquire Rustenburg Mines and Aquarius Platinum, together with Sibanye’s entrance into the coal sector and his impressive diversification strategy.

The news outside of South Africa was not entirely gloomy. One example is Zijin Mining’s recent $412 million investment in the Kamoa copper project in the DRC, which signals that China’s thirst for African resources has not yet been quenched.

At Fasken Martineau, we have seen many cycles come and go over the past 150 years. While it’s bleak at present with seemingly no end in sight, past experience indicates that when this becomes the perceived wisdom, change is around the corner.

To quote investment guru Don Coxe: “The best investment opportunities come from an asset class where those who know it best, love it least, because they have been disappointed most.” There has been no shortage of disappointment for mining investors in recent years, and hopefully those who know it best will shortly be rewarded for their perseverance.”

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