AMN - Gloom hangs over African mining as China growth slows - comment by Yolanda Torrisi

Mining companies are still wrestling with the lengthy downturn and the boom times gone bust with China suffering an extended cold period of low growth. Governments in mineral rich countries are urging that companies limit job losses while mining companies are asking governments to provide investment and stability.

The rhetoric is constantly stating terms such as ‘tough times’ and ‘extraordinary circumstances’. Companies need to develop the philosophy that if they don’t innovate, they die.

Looking at China’s growth of the past 10 years where infrastructure fuelled its economy, countries dependent on China’s buying power are going to be in for a bit longer of a bumpy ride with the Chinese economy moving towards more of a consumer-led economy.

The current commodity price slump is not going to get better quickly soon, despite some price recoveries for iron ore and gold still holding well against other mineral commodities.

This year has seen a continual deterioration in mining sector investment and very few infrastructure developments getting the green light. In fact, so few, that concerns are being expressed that the future looks seriously dire as aging mines will close.

Governments and investors throughout Africa have struggled for years over the distribution of the mineral wealth buried under much of the continent, which remains the poorest in the world. The debate about how its raw materials should be exploited, and for whose benefit, has gained renewed fervour with the fall in commodity prices.

Rio Tinto chief executive for diamonds and minerals, Alan Davies, says that despite the tough economic conditions he remains convinced that the extractive industry in Africa can serve as a powerful catalyst for broad-based economic transformation and long-term growth.

However, this cannot occur without partnerships between companies and governments, investment certainty and infrastructure development.

While China's downturn, along with an oversupply of minerals, is widely blamed for the crash in commodity prices, some still see its interest and investment in Africa as positive.

African Development Bank Natural Resources Centre director Sheila Kharma says with China coming in on minerals and other sectors, this will change the kind of opportunities that are available to African governments and African businessmen.

China is an additional player to traditional investors from the United States and Europe and this is good for Africa.

- 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