December 15, 2017

The good and the bad from South Africa’s mining sector

SRK Consulting partner and principal consultant, Andrew van Zyl

Signs of hope – visible in some commodity prices and increased exploration drilling – have lent a more upbeat tone to the buzzing Investing in African Mining Indaba taking place in Cape Town this week. But South Africa has some sobering lessons for those African countries present which have yet to fully launch their mining sectors.

SRK Consulting partner and principal consultant, Andrew van Zyl, highlights the importance of constructive dialogue and engagement between mining companies and key stakeholders like government and communities – warning that South Africa had still to improve its performance on this score.

“Many African countries are at this event to leverage their mineral resources as a catalyst for broader economic development,” says Van Zyl. “To do that effectively needs a strong relationship between the public and private sector – to build trust that will endure through the demanding but inevitable commodity cycles.”

He says the discussions at the Indaba about SA are often quite different to those about the mining future of most other African states.

“While SA is concerned mainly with sustaining an ageing industry – with its attendant challenges of productivity, viability and competitiveness – most of the continent must address issues like infrastructure, logistics and developing mining codes,” he says. “In either context, though, good leadership among stakeholders is vital to a successful outcome.”

A clear and shared vision, he says, gives stakeholders the comfort of knowing what their sacrifices and compromises are going to achieve; the prize must be worth what each stakeholder is prepared to give up.

“Mining today is more of a cooperative venture than ever before, requiring commitment from mines to engage broadly about their impacts and requirements,” says Van Zyl. “While, in the past, it was usually simpler for new operations to build their own infrastructure in remote areas, this process now demands a more inclusive approach that is sensitive to the wider social and natural environment.”

An area where Indaba delegates are already discussing these kinds of opportunities is in innovative financing solutions for energy generation in the African mining sector. Renewables form part of the conversation about how to finance in-house power generation without the traditional long-term power purchase agreements.

“It is heartening to see signs of revived interest in prospects for mining in various parts of Africa,” he says. “These prospects will be well served by acknowledgements in both the private and public sectors that mines are complex undertakings that rely on real collaboration and partnerships.”

Visit SRK Consulting at Booth 909 at the Investing in African Mining Indaba 6-9 February 2017 Cape Town, South Africa: http://www.srk.co.za/en/za-mining-indaba-2017

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