Earlier this year, global mining oligarch BHP Billiton announced an investment of US$100 million in a nickel mine project in Tanzania by British mining company Kabanga. This is the first time in 3 years that it has returned to Africa after it “cleared” its mining assets in Africa in 2019. 

Of course, it is not only BHP Billiton that is focusing on Africa again. Recently, the gold giant Barrick has also aimed at African copper mine assets, especially intensifying the exploration of the Central African Copper Mine resources.

At the Africa Mining Indaba held in Cape Town, South Africa, Robert Friedland, a global mining tycoon, founder of the world’s top exploration company Ivanhoe Mines, and known as the father of risk exploration “This is where the fate of the future world is concerned,” he said.

chairman Robert Friedland in action at the Investing in Africa Mining Indaba on May 11., image source from mining.com

A Brief History of Mining Development in Africa

Because of its extremely rich natural resources, Africa is known as a place blessed by God, but due to long-term political and social unrest, Africa is also relatively poor and backward compared to other countries.

In order to reduce risks to the greatest extent, Western mining giants who once followed the “footsteps” of the state to carve up the African continent had to withdraw or reduce their African business in pursuit of maximizing profits. The world-class copper-cobalt mine Tenke Mine was sold to China Molybdenum, and today, the mine has become the core asset of China Molybdenum.

In 2000, Africa was called “the hopeless continent” by the British “Economist” magazine. In the eyes of those Western mining companies, Africa is no longer the gold region for mining investment.

However, since the beginning of the new century, the African continent as a whole has been stabilized from chaos, the economy has grown rapidly for many years, peace dividends and demographic dividends have been continuously released, and Africa has gradually become a “continent of hope”. Driven by interests, Africa has once again attracted The attention of global mining giants.

Prospects and advantages of mining development in Africa

(1) The degree of exploration is very low, but the resource potential is huge.

Africa is one of the continents with the richest mineral resources in the world. The reserves of gold, diamond, platinum group metals, bauxite, cobalt, uranium and other important mineral resources rank first in the world, and there are also very rich resources such as chromium, manganese, vanadium, titanium, copper, nickel, oil and natural gas.

According to statistics, the total value of Africa’s resources accounts for about 23% of the world’s total, but its output only accounts for 9% of the world’s. Africa has also become the region with the most potential for the development of global mineral resources. Especially for developing countries such as China, the demand for mineral resources has surged, and high-quality mineral resources have long been divided up by global mining giants. To get rid of the predicament of being controlled by others and improve their own resource security capabilities, Africa has become a country. important breakthrough.

(2) Many African countries are highly dependent on mining.

At present, 24 of the 54 African countries have exchanged less resource products for more than 75% of their foreign exchange earnings. The disadvantage is that the industry is single, the level of economic development is not improving, and the ability to deal with external shocks is weak, but at the same time there are positive factors. Influence, is conducive to the government’s introduction of positive mining policies and regulations.

(3) The degree of industrialization of mining development is low, and the technology and equipment of beneficiation and metallurgy are backward.

Due to the lack of downstream beneficiation and smelting support, many large mines in Africa mainly produce and export raw ore or concentrate powder, and the added value of mineral products is not high. Therefore, improving the industrialization level of mining development and increasing the added value of mining projects have become common in resource-based countries in Africa. Consensus, and the policy has been continuously clarified and strengthened, which provides opportunities for Chinese dressing and metallurgical technology and equipment enterprises to “go global” and carry out production capacity cooperation.

(4) The development cost is relatively low, attracting investment from large global mining companies.

Mining costs in developed countries are getting higher and higher, with BHP Billiton cancelling about $40 billion in investment in Australian projects because of the high costs. By contrast, Africa’s low costs have attracted investment from major global mining companies including BHP Billiton, Rio Tinto, Anglo American and Xtrata. Currently, Australia alone has more than 200 companies operating more than 600 mining projects in more than 30 African countries. In recent years, Chinese mining companies have also made new progress in their investment in Africa, especially in the aspects of country selection, mineral type, investment method and project intervention stage, etc., there are still late-mover advantages and opportunities.

Since 2013, Africa has become the largest destination for China’s overseas mining investment projects. China’s investment projects in Africa mainly include copper, aluminum, diamond, gold, and uranium mines. At present, Africa supplies more than 15% of the mineral value of China’s mineral resources, and is one of the main suppliers of China’s mineral resources. Simandou Iron Mine, Kamoa Copper Mine, Tenke Copper-Cobalt Mine, etc. have become China’s business cards in the global mining market.

Africa, with the return of oligarchs, will also become the most important resource battlefield for mining companies in this century. But at present, Africa is still a place with distinct advantages and disadvantages. And the main disadvantages are largely concentrated in political conflict, regulatory instability, community and labor relations, and resource nationalism.