JOHANNESBURG (miningweekly.com) – Africa remained a desirable mining investment destination, despite challenges and softer growth in the global mining sector.
The continent offered more “bang for its buck” from a value perspective and there was more upside in the continent’s growth, said Standard Bank global head of metals and mining Rajat Kohli.
Mining majors eyed development on the continent, particularly within sub-Saharan Africa, while juniors rose up in gold mergers and acquisitions, with at least four transactions occurring in the past three months, particularly in West Africa, he noted.
The global industry emerged from a “tough” year leaving stakeholders’ cautious on the back of declining commodity prices, continued deleveraging and moderate growth expectations for China, weak equity and challenging credit markets, declining investments and investors gaining the upper hand in dictating capital return as opposed to capital spend.
However, while the resource sector would remain challenged amid strategic divestments, investment curtailment, limited access to capital and continued regulatory and tax pressures in certain jurisdictions, Kohli pointed out that optimism existed, with the outlook for the sector stronger.
The industry was expected to prevail, albeit cautiously, in 2014, rallying during the second half of the year, he said.
China would remain critical as it maintained the lead as the largest consumer of key commodities and, with its increasing interest in Africa, could play a role in the development of the continent’s vast mining industry.
Chinese companies, particularly State-owned enterprises, were “open for business” and were hunting for assets in Africa.
While South Africa experienced turbulence within its own mining sector, with labour tensions and declining foreign direct investment in mining, an opportunity emerged through the JSE’s relaxation of limitations on local companies’ investment outside its borders.
The lifting of limitations allowed companies, specifically developing miners, to raise capital in the JSE through secondary listings for projects in Africa, Kohli said.