Africa’s mining sector - Afrikan Heroes

Significant Growth Ahead for Africa’s Mining Sector in 2023

January 18, 2023

Things are looking up for the African mining sector even though it is still recovering from the post-pandemic slump. 2022 proved to be a turbulent year for the mining industry. However, the sector is primed for growth in 2023 on the back of several positive headwinds.

This according to Johann de Bruin, founder and CEO of Erudite, an engineering, procurement, and construction management (EPCM) company with operations across Africa.

“The mining industry has seen its fair share of incredible highs and lows over the past decade, 2022 being no exception. South Africa faced prolonged strikes early in 2022, as well as continued energy woes, higher than usual rainfall, global supply chain disruptions, and a volatile commodities market.

For some time, the world has realised that the only way that we could hand over this planet in a sustainable state to the next generation would be to ween us off our carbon fuel dependency. We knew that the change would be explosive, we just did not know when it would all start to happen, but it has. The focus of investors and explorers alike has shifted to battery related commodities. The interest in commodities such as graphite, lithium, nickel, cobalt, to name just a few has re-energized the mining sector across the continent,” says de Bruin.

De Bruin believes that exciting times lay ahead, offering four predictions for the mining sector in 2023:

Exchange rate slump

The rand was 8.47% weaker year-on-year against the US dollar in December 2022. De Bruin notes that it seems likely that the ZAR/USD exchange rate will stabilise around current values over the next two years.

“While a weaker rand is less than ideal for the average consumer, it is beneficial for exporters. Local goods and commodities become less expensive for our international trading partners to acquire in comparison to competing markets, while the rand value for exporters is higher, which means that producers receive more for the same goods.”

The depth of South African mining skills and expertise remains in high regard with global investors, yielding substantial opportunity for local companies.

Supply chain recovery

As the world enters the final recovery stage from the post-pandemic slump, and countries adjust to and find workarounds for disruptions caused by the war in the Ukraine and the lingering tail of Covid-19 in the East, de Bruin adds that most all of the supply chain issues plaguing the industry will largely continue through 2023. However, the past two years have taught us much in terms of alternative solutions and forced us to challenge the unconventional. This has placed us in an ideal position to add value to the wave of new projects in the local industry.

“South Africa, especially, has the opportunity to redefine its trading relationships in the coming year, finding partners with the ability to better supply us with essential products.”

A surge in new projects

As other issues are resolved globally, de Bruin believes that there will be a pronounced increase in industry investment for the exploration for new mineral deposits, the founding of new mining operations, and expansion of existing mines in the battery commodity market.

“The broader continent of Africa especially, has immense potential to quickly grow into a significant player in this market. Demand for electric vehicles and other electronic devices is expected to see a sharp increase in the next few years, and many African nations with large deposits of key battery commodities have the potential to dominate this space.”

International opportunities

Extractive industries, de Bruin notes, are driving the global post-Covid economic resurgence, regularly revealing new opportunities in the market.

Additionally, as the war in Ukraine seems set to further fuel global shortages of many commodities in 2023, Africa and South Africa, particularly, are poised to help resolve growing global demand issues.

“As an example, China’s severe congestion issues at industrial ports may reach the point of collapse in the coming year. The global reliance on Chinese exports is being tested, with most countries looking for alternative suppliers.”

As China is the sixth largest commodities producer in the world, de Bruin believes that Africa has the potential to gain market share if China’s issues continue.

As for Erudite, de Bruin states that the company is primed to help new and developing mining operations expand and become competitive on the international stage.

“We have been quietly building up capacity and specialised capabilities this year and are ready to increase our impact on the industry in 2023. We have attracted some of the top technical talent available, which places our engineering and project delivery competencies at a level where we’re able to confidently compete with any of the other multinationals with offices in South Africa.

“Additionally, we were recently awarded a large EPCM contract for a project in Limpopo, and nearly all of our existing projects across the continent have secondary phases in development.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Africa’s Mining Sector Reels Under Impact of Covid-19

April 2, 2020

Africa’s mining sector is not spared the bruises every other sector of the economy is receiving from the ravaging Covid-19 disease, especially as the global restrictions to encourage social distancing have meant that mining projects have either slowed or been put on hold until further notice. There is no doubt that mining executives are beginning to feel nervous as the spread of the virus accelerates. Share-prices of listed mining companies are in a downward spiral. Commodity prices across the industry have been tumbling as the industry considers the devastating aftershocks of this “Black Swan” event. To single out one example: platinum and palladium prices have dropped by more than 40% in just three weeks.

Global Outlook

With the crash of crude oil prices and low demands for gas, petroleum exporting countries in Africa that would have fallen back on their mining sector to buoy up foreign exchange earnings like Nigeria and Ghana is in a quagmire. Even Nigeria’s planned deregulation of the mining sector which was part of government’s Economic Reconstruction and Growth Programmes (ERGP) is now put on hold with recession knocking on the doors of the economy. In other countries, mining companies are feeling the pressure, despite recent positive results brought by surging commodity prices and various cost-cutting initiatives. South African miner Sibanye-Stillwater’s share price has lost over 60% in the past four weeks while Impala Platinum has lost a similar percentage, and Anglo American is down by as much as 40%. The response to the pandemic from governments and markets has shaken the mining industry. Restrictions imposed on mining companies have seen production shut down across multiple markets. Alta Zinc has shut-down production at its largest project in northern Italy. In Mongolia, Rio Tinto suspended non-essential operations following the country’s first confirmed COVID-19 diagnosis. And Anglo American is in the process of demobilising most of the 10,000-strong construction workforce at its copper project in Peru.

We’re also witnessing a halt on CAPEX growth. While capital expenditure for the world’s 20 largest mining companies grew by 12% in 2019 to reach $49.1-billion, we’re now seeing delays in project work and investments being put on hold. The recent announcement of a 15-day quarantine in Peru, the world’s second-largest copper producer, has meant miners such as Anglo American, Pan American Silver and Newmont, have had to put a halt to operations, which includes the slowing of work on Anglo American’s major copper project.

South Africa’s 21-day period of national lock-down has similarly ground all local mining operations to a halt until at least April 16th. Even where shutdowns are not occurring, restrictions on the movement of people and supplies will inevitably delay development work.

Mining industry ‘more exposed’ to pandemic

South Africa’s mining sector is particularly exposed to the spread of COVID-19. According to the Minerals Council of South Africa, the industry employs a workforce numbering almost 420,000, many of whom are underground on any given day. Some mines have thousands of men and women underground, descending into the depths in crowded “cages”. Before and after, dressing rooms are filled with miners preparing for their shifts or cleaning up afterward. It does not take an epidemiologist to realise that the mining work environment is a catalyst for spreading the COVID-19 pandemic.

In South Africa, this is exacerbated by the fact that the mining labor force remains migrant with constant movement between the goldfields and platinum belt and Lesotho, Mozambique and the Eastern Cape. In addition, the average age in the industry’s workforce is over 40, increasing their vulnerability to an illness that poses a greater risk the older the infected person is.

On a slightly positive note, the South African mining industry’s experience with AIDS and tuberculosis should stand it in good stead: It has invested in health infrastructure and has experience with contact-tracing because the procedure with a tuberculosis diagnosis is similar to that of coronavirus. The Minerals Council of South Africa has also published a 10-Point Action Plan for COVID-19 which outlines several measures to deal with COVID-19, however, it will take its lead from agencies like the World Health Organization and the National Institute for Communicable Diseases.

Industry to fast-track automation?

The COVID-19 outbreak has made the immediate future of several mining operations around the world uncertain. As a result, there may be an increased appeal and demand for solutions to reduce the human workforce at mine sites. The uptake of automated mine solutions including self-driving haul trucks and remote operations centers has been slow but steady. One of the earliest moves into automation came with global mining giant Rio Tinto’s Mine of the Future initiative in 2008. From a remote operations center in Perth, Western Australia, workers operate autonomous mining vehicles at mines more than 1,200km away in the Pilbara region of Western Australia. Today, around a third of the haul truck fleet at Rio Tinto’s Pilbara mines are autonomous.

The Syama underground gold mine in Mali became the world’s first fully autonomous mine operation. Designed in partnership with Swedish engineering company Sandvik, the mine operates with fully automated trucks, loaders, and drills. The fully autonomous operation means that the mine can operate 24 hours a day, with all operations overseen from a remote operation center. Depending on how long this crisis lasts, the mining industry could see big moves into autonomous mining technologies in the not-too-distant future.

Whilst it is not possible to predict how COVID-19 will further disrupt the mining industry, what is certain is that the mining industry must reconfigure and prepare itself to operate under a new normal, one in which it can operate and sustain itself under the new constraints and challenges that such pandemics bring with them.

Kelechi Deca