Sustained commodity price growth and reduced costs are combining new technology trends with synchronised global growth to present Africa’s mining sector with the best prospects in over 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,” says Mark Buncombe, Standard Bank Group Head for Mining and Metals.
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,” says Buncombe.
“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 adds.
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,” says Buncombe.
While, in Africa, this interest is currently 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,” he adds.
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.
“The combination of global capital reach and insight with local presence positions Standard Bank to leverage the very real opportunities that Africa’s mining and metals sector presents in 2018,” concludes Buncombe.