Exciting times for SADC
Namibia is among eight African countries in the Southern African region that have been recognised among the top 20 “most exciting African mineral jurisdictions”.
An investment guide released during the just ended 20th Mining Indaba in Cape Town, South Africa, from February 3-6 recognises South Africa, Zimbabwe, Namibia, Botswana, Mozambique, Zambia, Madagascar and Malawi.
The guide titled “Mining in Africa Country Investment Guide” and specifically produced for the African Mining Indaba and compiled by Singapore-based Global Business Reports, in partnership with Mining Indaba, examines five regions on the continent – Central Africa, East Africa, North Africa, Southern Africa and West Africa – encompassing 53 countries in total.
The guide splits the eight Southern Africa countries into two groups – those that offer a low-risk environment with proven geological potential and those that offer greater risk yet less exploited mineral resources.
“In the former, fall South Africa, Botswana, Namibia and Zambia. Zimbabwe sits in the latter, with Mozambique and Malawi just crossing the line.”
On Namibia, the report does not highlight much apart from stating that the country remains one of the few African states that have formulated an official strategy for engaging with emerging economies – a sensible step given the influx of Chinese investment into Africa.
On South Africa, it states that despite the country having had “a tough couple of years”, with labour unrest and falling production, it continues to dominate African mineral production “to an extent that is impossible to ignore”.
It further suggests that increased mechanisation of the local mining sector in that country could be beneficial if policies are well nurtured.
“The country still holds geological potential, and increased mechanisation of its mines – which tend to be labour intensive compared to other mining jurisdictions – could create a revival of the industry.”
It more or so recognizes the increased role the Johannesburg Stock Exchange (JSE) has played as a centre of African mining finance.
“Roughly 50 percent of JSE-listed mining issuers have either their primary or secondary projects abroad, predominantly in Africa…” the guide notes.
On Botswana, the investment guide noted that the country’s traditional strength in diamonds is arguably not as exciting as its other mining potential.
Botswana contained the second-largest amount of coal in Africa, but had to develop its infrastructure to fully exploit this resource.
On Zimbabwe, the guide finds the country remains the most risky jurisdiction for investors of any type, although certain points stood in its favour, including last year’s “peaceful” elections and the country’s undeniable mineral potential.
Zimbabwe holds an estimated 30 percent of the world’s diamond reserves, as well as substantial deposits of gold, platinum group metals and coal.
The guide labels Mozambique and Malawi as slightly higher risk investment destinations due to the relative immaturity of their mining sectors.
The report, however, highlights the potential of Mozambique’s coal sector, as well as Malawi’s burgeoning production of uranium and other strategic minerals noting that, “The emergence of both countries on to the mining scene has been substantial.”
On government intervention in Zambia’s mining sector, the guide says revoked tax incentives, an increase in mining royalties and more stringent laws regarding financial reporting have not been sufficient to substantially stall investment in Africa’s richest copper producer.
However, on efforts to increase beneficiation in Southern Africa, the guide warns on countries trying to compel mining companies to engage in downstream processing. Beneficiation has sparked fierce debate in South Africa between government, keen to promote this, and the Chamber of Mines, which represents the sector.
The guide in pointing to what it calls a very simple reality – “The mining sector deals in mineral extraction, while mineral beneficiation crosses into the realm of the manufacturing sector”.
On South Africa, the guide suggests that if South Africa and its neighbours seek to obtain greater value from their extracted minerals through industrial processes, their priority must be to make such an industry economically viable.
“If they attempt to force mining companies to engage in downstream processing (for example, through the full use of export bans) without making this profitable, the effect will be to hamper mining investment rather than to encourage beneficiation,” it warns.
The other 12 African countries to soon earn a position in the guide’s “top spot” investment category are the Democratic Republic of Congo, Kenya, Rwanda, Tanzania, Uganda, Burkina Faso, Cote d’Ivoire, Ghana, Guinea, Niger, Nigeria, and Senegal.
The mining indaba, dubbed “Investing in African Mining” attracted more than 1 800 delegates from various specialised fields from African and beyond representing 2100 international companies and 110 countries.
Download: The Official Mining In Africa Country Investment Guide 2014 (160 pages, 49.4 MB)