African Mining Outlook 2020: Mining Indaba Preview – PROJECTS

2020-01-10T13:30:17+00:00 January 10th, 2020|Mining Indaba|

Fortune Mojapelo, CEO at Bushveld Minerals and mining entrepreneur, discusses building and maintaining cross-continental business relationships essential to Africa’s sustainable economic growth.

Fortune Mojapelo, CEO at Bushveld Minerals and mining entrepreneur. Image credit: Bushveld minerals

Fortune Mojapelo, CEO at Bushveld Minerals and mining entrepreneur. Image credit: Bushveld minerals

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Fortune, what are your thoughts about the African mining industry?

It is believed that more than 30% of the world’s global mineral reserves are found in Africa. Thus, mining remains one of the most significant industries on the continent and contributes substantially to many of the countries’ foreign exchange earnings, government revenues, employment and gross domestic product and presents significant investment opportunities. African mineral reserves rank high in minerals such as bauxite, cobalt, diamonds, phosphate rocks, platinum group metals (PGMSs), vermiculite, zirconium and vanadium.

What challenges are companies mining in Africa likely to face in 2020?

In the past five years or so, African mines have navigated a commodity price downturn, increased input costs, significant changes in the regulatory frameworks and policies and unpredictable international politics. Regulatory shifts in the form of nationalism, taxation amendments and a drive for increased benefit for the state and surrounding communities in mining outputs have presented a need for African mining companies to give careful consideration on how to navigate the compliance landscape.

“African mining companies need to invest in infrastructure and technology that will not disrupt but enhance labour relations.”

Attracting and retaining foreign capital in the mining sector is critical. The emergence of the fourth industrial revolution has presented new opportunities and challenges for the sector, where careful consideration needs to be given to new skills, adoption of new technologies and agile organisation structure in order to efficiently operate in this environment. Other challenges include undeveloped infrastructure, particularly for getting minerals to markets; currency volatility coupled with, in some jurisdictions, currency controls; illegal mining; and managing the expectations of local communities. However, we are positive that progress is being made in many African countries.

What would you say makes the African mining landscape different from the rest of the world?

Africa has a richer resource endowment than any other continent. Building and maintaining cross-continental business relationships will be essential for Africa’s sustainable economic growth. Mining companies play an important role in finding development solutions in the countries in which they operate.

Does the African mining landscape make it conducive for junior miners to thrive?

Junior miners have particular needs, like access to exploration deposits and financing. There are challenges in finding historical data, securing licences and raising finance. Regulations need to be reviewed to accommodate the investment aspiration of junior miners and reduce the barriers they already face. South Africa’s junior miners are even more acutely affected than the bigger companies by ongoing political and regulatory uncertainty and recent ratings downgrades.

We are encouraged by the efforts by the Department of Minerals and Energy in South Africa where they have recently launched a ‘junior miners’ programme’ to provide opportunities for new entrants identified throughout the mining value chain, as well as assist with issues such as access to funding, and compliance and access to markets.

Looking at the year 2020 in particular, what changes need to take place within African mining companies to improve the industry as a whole?

The mining industry still presents substantial economic growth opportunities for Africa if we can harness the value chain opportunities associated with the emerging future industries such as energy storage. We suggest that by embracing the downstream opportunities associated with commodities in which Africa has a distinctive advantage, Africa can significantly improve mining’s contribution to its GDP. African mining companies need to invest in infrastructure and technology that will not disrupt but enhance labour relations.

African mining companies have a role to play in creating certainty – it does not only rest on government. There is a need to be more solutions-driven and identify ways to contribute to systematic changes in various parts of the continent. With the evolving regulatory environment, mining companies would need to adopt shared value principles in a manner that moves beyond compliance, and enables increased socio-economic impact, improved business and operational efficiencies, and sharing of value within a mine’s operating ecosystem. As mining companies, we have an important role to fulfil in the economic growth and development of this continent.