The mining industry worldwide is undergoing unprecedented changes, including high volatility of commodity prices and rising exploration costs.
BY PATSON CHAPEYAMA
Africa, which produces more than 60 metal and mineral products, has a huge potential with respect to mineral reserves exploration and production.
The continent hosts about 30% of the world’s total mineral reserves and even a higher share of deposits of diamonds, vanadium, manganese, platinum, cobalt and gold.
Investors are seeking expansion to new markets particularly in the developing world, which presents a new investment frontier for leading mining firms. In this context, the African mining industry is offering unparalleled opportunities for both local and international investors.
For the period from 2018 to 2030, an estimated $50 billion will be invested into mining projects over the same period.
This does not include Rio Tinto’s $20 billion Simandou project, which will drive the figure to
$70 billion. Africa has given rise to a number of global mining giants such as Anglo American, BHP-Billiton and Anglo Gold Ashanti.
South Africa and Zimbabwe hold the bulk of global platinum reserves, and the Democratic Republic of Congo has huge largely untapped mineral wealth.
It is important to highlight, however, that in addition to the continent’s huge reserves, Africa is also becoming a key industry player, with countries like Botswana now leading the world in diamond production and sales.
Addressing value addition and beneficiation
Despite the significant amounts of mineral resources held by the continent, Africa’s production represents only about 8% of the global mineral production. Most of this production is exported in raw form. Thus, in order to unlock its mining potential, Africa should overcome the obstacles that hamper the development of the industry.
Accelerated structural transformation could benefit from mineral processing and value-added manufacturing linked to the mining sector. However, this would require attracting technology and skills from mature markets in order to improve the quality of mineral products.
By improving the quality of mineral product exports, African countries could generate additional revenues that would be deployed
into other economic sectors. This is essential for employment creation and improvement of living conditions of the people.
Curbing infrastructure deficit affecting the sector
Infrastructure development is critical for the growth of the mining sector in Africa. Well-maintained and appropriately-sized capacity in rail, ports, power, roads and communications leads to more economic reliability, and maintenance of lower costs for mining operations.
Establishing an industrial base through backward and forward linkages and promoting regional integration are other means by which African countries can curb the infrastructure deficit faced by the mining sector.
More importantly, Africa needs to exploit innovative strategies by harnessing the potential of public-private partnerships as well as ensuring compliance by industrial players to regulations that would limit the environmental and social costs of mining.
Embracing the role of international development partners
The Africa Mining Vision (AMV) which was adopted by the African Union in 2008 has an ultimate goal of using Africa’s mining potential to meet the Millennium Development Goals by achieving rapid and inclusive socio-economic development.
The AMV’s action plan comprises nine programme clusters of activities. These include prudent management of mineral rents, building human and institutional capacities, mining sector governance, promoting research and development, dealing with environmental and social issues as well as linkages and diversification.
The African Development Bank is currently actively involved in supporting the development of the mining sector in Africa. Through its public and private sector operations, the bank has intensified efforts in recent years to foster the role of mining industry as a catalyst for economic growth and poverty alleviation on the continent.
lPatson Chapeyama is a young cutting edge writer and business growth-preneur. He can be reached on +263733551626/ email@example.com