Mining boom in Africa could boost infrastructure, lead to more exploration
The mining boom that has occurred in Africa over the past decade has led to increased exploration trends all over the continent, as foreign mining companies are more apt to invest in the region due to improved infrastructure and stability, according to Mining Weekly.
This reversal in thought within the industry has led to a surge of foreign companies trying to invest in countries all over the continent. The significant amount of resources that exist in Africa may now be explored due to an improvement in the economies of many nations in the area, the news source reported.
According to the United States Geological Survey (USGS), the continent is richly endowed in mineral resources and holds a significant percentage of the world's reserves of bauxite, chromite, cobalt, diamond, gold, manganese, phosphate rock and platinum group metals.
The organization reported that until recently, companies were uneasy about investing significant capital into the region, due to the lack of infrastructure and stability that existed all over the continent. A reversal of this exploration trend first occurred with the development of many gold mines by mining firms in Africa once the price of the commodity began to rise in response to the global economic crisis that began in 2008.
"During the past few years, the continent had attracted significant investment in mineral development; this investment was expected to resume flowing to Africa in the future," according to the USGS report on the continent.
African exploration rose in the years that followed the crisis, as the activity on the continent accounted for 15 percent of the total expenditures in the world in 2009, and this number has continued to grow.
In 2009, early-stage projects account for 64 percent of the total activity on the continent, signaling a bright future for the industry in the coming years, according to the USGS.
Improved relations between the African countries have also led to a collaborative effort between governments, helping to increase the stability in the area.
Africa Review reported that 82 tons of smuggled minerals were recently seized by police in Rwanda. Officials from the country returned the resources to the Democratic Republic of Congo as a sign of improved relations between the neighboring nations.
"I think it [reflects] the spirit of cooperation between the two countries," Paul Mabolia Yenga, ministry advisor for the DR of Congo, told the news source.
Mining Weekly reported that developments like these have increased confidence that foreign firms have in the ability of African governments to deal with problems within their own borders.
The improved relationships between foreign miners and the local governments has also improved, leading to collaboration efforts that help both sides.
"When companies, which are at times assisted by the State, commit, it translates into the construction of infrastructure and the payment of taxes, which uplifts the economy," Noah Greenhill, senior manager for marketing and business development for JSE, told Mining Weekly.
The increase in demand for precious metals has had a significant impact on these relations, as companies are looking to secure vast mineral deposits to keep up with the rising commodity prices trends.
Success at sites in Sub-Saharan Africa could drive further gold projects in the region, as firms are preparing to invest in under-developed countries. This may lead to a development of infrastructure in these nations, helping to provide stability for the foreign companies, according to the news source.
This dual relationship is essential to the survival of the industry on the continent.
"Without a sustainable long-term view, the outcome is one sided when it needs to be a win-win situation," Greenhill told Mining Weekly.