Today was the first day of the 20th Investing in Africa Mining Indaba. This year will once again see the influential mining houses, government, labour and other stakeholders converge in Cape Town until Thursday this week. If you have any interest in the African mining industry, companies that operate in Africa or you are an African it will do you well to keep at least one eye on proceedings this week. After all, many, if not most African economies are dominated by natural resource-based contributions to GDP. Therefore, what affects mining in Africa will probably affect Africa as a whole.
Despite the fact that the Indaba is not the space where major or significant decisions are made, it is a platform where stakeholders from all corners suss each other out, engage, and raise issues (or at least make there positions known on them). More importantly, I think many come to test the atmosphere, or to try and set it, for the year ahead. Now that I have managed to convince you to take some interest, here are the top 5 factors that might be setting the African mining climate at the Indaba and probably for the year to come. Attendees will be looking out for these, and so should you.
1. Legislative Changes
Most financial institutions still rank resource nationalization and the biggest risk facing the global mining industry. The legislative uncertainty around the proposed amendments to the South African Mineral and Petroleum Resources Development Act is sure to hot topic. The proposed amendments have drawn wide criticism from mining companies as well as many prominent mining lawyers in the country. The changes centre around beneficiation and the allocation of some minerals as “strategic resources”, with most criticism directed at the apparent “unfettered discretion” given to the Minister concerned. Below is a quick video with Peter Leon (Head of Mining at Webber Wentzel Law Firm) explaining the situation and his brief opinion.
This issue does not only affect South Africa, but many other African countries as governments try to find ways of maximizing revenue from the sector. Mineral policy in many African countries has been in a state of flux over the last 3 to 5 years including Zimbabwe, Ivory Coast and Ghana amongst others. This brings me neatly to the next discussion point to keep eyes peeled for.
2. Resource Revenue Management
Discussion is likely, as it has since I can remember, around how governments can effectively and rapidly advance the development of secondary industries on the continent. The reigning in of raw material exportation and increased focus of beneficiation will be the focus areas.
In my opinion, this is putting the cart before the horse. Many African countries are operating at near/ full capacity in terms of energy and transportation infrustructure. Would it not fare all stakeholders better to focus on increasing industrial capacity further down the mining value chain than to slam down “designatory” legislation?
3. Operational Challenges
The strengthening of the US Dollar to most African currencies in the last year has invariably helped keep basket prices and revenues buoyant. Cost inflation, of course looms around the corner with the added pressure of labour unrest and tensions, and the domino effect on productivity is certainly a topic that will front and centre during discussions and briefings during the week ahead. These issues are not free-standing and intertwine thoroughly with the attempt by mining companies to maintain a “social licence” within the country and communities with which they operate.
4. Social Licensing
Many larger mining houses have in recent years come around in not only complying to pressure to be forces of social good in the communities in which they operate but have often taken on the challenge of being leaders in this regard. Although many have successfully replaced the culture of “mere compliance” with a real drive to improve social circumstances, topics such as wages, environmental management and rural development will be discussed.
Sustainability is buzz word that will likely be thrown about tirelessly, what it means and how it should be applied. I think this is a particularly important aspect of the mining industry and one that should also be tackle with as much wisdom as possible. Politics and wisdom are unfortunately in-congruent and with the the next South African general election only months away, the issues around social engagement will likely remain a trot along the tightrope.
Finally, and most importantly, this is what many will, and should be looking out for at Indaba 2014. The complexities and inter-relatedness of the aforementioned points and their context in a continent that doesn’t really have time to waste when it comes to human, social and economic development as well as the often opposing idealogical wind directions demand strong leadership. Companies and investors will be looking to governments and unions to demonstrate strong leadership in perceived uncertainty and tension. Governments will be looking to companies to take initiative on social and developmental issues.
This is certainly what I will be looking out for. Collaboration, compromise and a broad-based step by all stakeholders to grow up and lead well in their respective fields.
There is likely to be a stream of information and updates regarding the Indaba from many news agencies (local and international). Eye Witness News from South Africa is has set up quite a nifty Mining Indaba Portal which will be regularly update with content from the conference and related discussions. There are already a handful of articles posted which set the context nicely for the week ahead. Go ahead a check it out.
You can stay up to date with the schedule and proceedings through the conference website here.
What will you be looking out for at the conference? What is your opinion on some of the central issues touched on above? Let me know by commenting below.
This article appears courtesy of The Economic Geologist, to read more insights into the mining industry or to subscribe to their blog click here.