HomeNewsAfrica’s pandemic-hit mining sector faces exploration challenge

Africa’s pandemic-hit mining sector faces exploration challenge

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TRAVEL restrictions, supply chain disruptions and risk aversion since the start of the COVID-19 pandemic have slammed the brakes on mining exploration in Africa, jeopardising the minerals supply pipeline.

Inward investment is now a key focus, with companies looking to capitalise on higher metals prices and the transition to green energy.

Without exploration, the continent’s rich mineral resources are at risk of being unutilised as older mines become unviable.

Mining companies’ exploration budgets for Africa fell 10% to a four-year low in 2020. COVID-19 has had an impact on all aspects of the mining value chain, and exploration is no exception.

While Africa did not fare as badly as Latin America, where budgets fell by 21%, the sharp decline was in marked contrast to the 1,5% dip in the United States and Canada.

In many cases, companies have been turning more towards their home jurisdictions and what they see as their safe-haven investments, said Chris Galbraith, senior metals and mining analyst at S&P Global.

With many of these companies based in Canada, the US and Australia, more of their exploration has been focused on domestic exploration and oftentimes that has come at the expense of African development.

For junior explorers and miners, raising capital on public markets has been a challenge while the pandemic has made it even more difficult to access private equity capital.

South Africa — a leading producer of platinum, palladium, chrome and gold — was the worst-hit African nation, with overall mining exploration budgets at a 17-year low.

In South Africa, 20 or 30 projects have probably collectively cut R200 million to R300 million (about US$13m to US$20m) worth of exploration spending this year.

Investors have been unable to visit projects during the pandemic while restrictions on borders have delayed equipment deliveries.

Orion Minerals, which last month said it had discovered further significant copper, zinc and nickel deposits around its flagship Prieska Project in South Africa’s Northern Cape province, has been waiting for equipment from Australia to conduct geophysical surveys.

With less exploration activity, African mineral resources might not be developed fast enough to replace older mines as they become depleted.

There is hope, however, that COVID-19 vaccination programmes will speed the world’s recovery from the pandemic and boost the mining sector.

Further Afrika

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