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African mining needs responsible investors – Shabangu

Mineral Resources Minister Susan Shabangu opened the Ministerial Mining ForumMineral Resources Minister Susan Shabangu opened the Ministerial Mining ForumThe Investing in African Mining Indaba got off to an energetic start on Monday morning, with a number of parallel sessions and workshops, as well as a rather busy exhibition hall. Mineral Resources Minister Susan Shabangu also opened the Ministerial Mining Forum.

With #MiningIndaba trending on Twitter, the morning was given over to various workshops and discussions, before the official welcome by Cape Town's executive mayor, Patricia de Lille, and Jonathan Moore, managing director and vice president at Mining Indaba. Throughout the morning, the focus was on transparency in the extractive industry, as well as on the scramble for Africa's resources – the continent accounts for 30% of global resources, much of it untapped.

It has been a challenging year for mining, with a commodity demand stabilising and prices dropping. But experts at the Indaba forecast an uptick globally. They believe there is plenty of growth potential, particularly in China. The message from the Securities Exchange Panel was that one month into 2014, things are "unquestionably getting better".

Red Door Research's managing director, Jim Lennon, said to, in the next five years, "expect recovery in non-Chinese demand. China provides ground to get bullish again about commodities".

China represents almost 50% of the global commodity demand, though there was "no question" South Africa was in a much slower growth period than China , but growth would remain strong in volume terms.

Lennon asked if the next 50 years would be Africa's period and answered, "Possibly, if challenges are overcome."

David Cox from analyst concern SNL Metal Economics Group had a gloomier outlook, predicting a 15% to 20% decrease for exploration in Africa in 2014. Canada currently draws 14% of world mineral exploration spending; South Africa only 1%. Spending on exploration was at $2.85-billion, although Africa was still lagging behind Latin America, while Canada continued to lose ground.

Worldwide exploration in 2013 was led by Latin America at 26.7%; the rest of world took 16.5%; and Africa took 16.5%. However, adding copper shifted Africa to second place.

Some good news came from Professor Magnus Ericsson, executive director at research group IntierraRMG, who said iron ore prices are expected to remain steady well into 2030, hovering around $120. And MoneyGold's James Turk put the case for a return to gold as money in the 21st century, pointing out that it retained its purchasing power over a long period.

A social compact to avoid exploitative mining

At the Mining Ministerial Forum, running alongside the Indaba, Shabangu focused on the need for a social compact between companies and communities.

She said Africa had high exploration potential, requiring local and international partners and investment to unearth and called for responsible investment on the continent, "not based on exploitative principles centred solely on expectations for unrealistic rates of returns that are disguised on the principle of high risk – high return". She said, "As you know, mining is a long-term investment and not about quick wins. Those who balance Africa's mineral development with growth will ultimately receive the greatest reward in the long term."

Strong themes in her remarks included enduring partnerships, community development, nurturing human capacity growth and development, and institutional collaboration on joint technology development and deployment.

"We also have to be cognisant of the fact that in order to effectively and comprehensively address the plight of the African continent, a gigantic shift and transformation in traditional mining jurisdictions is required," the minister said. "This should entail a shift from exporting of largely raw materials to ensuring that minerals serve as a catalyst for accelerated industrialisation through mineral value-addition. This will also require development corridors that are a subject of multi-purpose infrastructure development."

She said such investment required partners to agree on a creative win-win formula for financing infrastructure that would deliver "Africa's promise" and allow for a resilient Africa to emerge; the outlook for growth in the medium to long term was extremely positive, but Africa must speak with a single voice, adding, "The African Mining Vision is indeed that voice. However, it is important that the Mining Vision be driven and led by Africans, who must ensure that Africa's mineral resources are exploited in an equitable and optimal manner that underpins a broad-based sustainable inclusive growth and socio-economic development."

In his keynote address at the main Indaba, Phil Newman, chief executive at consultancy CRU Strategies, said he was optimistic; speaking about the changing face of world mineral supply he said, "I think we are due another game change."

His key point was that changing mineral supply is not new, and is something that would always change. It is important, however, to not miss it, and to remember that necessity is the mother of invention. "We can all learn from the ability of China to make the most of what we've got."

He added that mineral supply is affected by a number of drivers, two of which are technology and political will, or interference. He said technology is going to become more and more important to mining, and innovation is key. He would not make any political predictions, but concluded by saying: "I believe technology will surprise us this decade – if only I knew how."

 

 

 

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