The need to ensure that Africa, with an abundance of critical minerals, benefits from their extraction and beneficiation, and the consequent economic development, was a key takeaway from this year’s Investing in African Mining Indaba, says mid-market private equity firm Agile Capital.

With South Africa being a global leader in the production of several minerals, including platinum-group metals, manganese and vanadium, its mining industry remains a key area of investment focus for Agile Capital, with specific investment consideration placed on the provision of services and value-adding products to the sector.

Key considerations informing the firm’s decisions to invest in the mining sector include the cyclical nature of the industry, largely driven by commodity price changes and the required return on investment by mining companies; environmental protection and sustainability; operational stability, which includes labour and community development; and technological advancements and innovation in mining methods, which advance the ability to mine effectively, explains Agile Capital CEO Tshego Sefolo.

Reflecting on the insights garnered from the Indaba, held in Cape Town last month, Sefolo approved of the discourse, which focused on how governments and businesses could work together to improve economic development in the mining sector.

This was combined with discussion of the role that key players in the industry can perform in addressing the mounting challenges of climate change and community development.

“Mining contributes 6.5% to South Africa’s nominal gross domestic product [GDP] and, therefore, from an investment perspective, remains a critical sector.

“Coupled with this, some of the most critical minerals for the development of the global economy and technological advancement are . . . in South Africa and, despite the sometimes-cyclical nature of the industry, we have taken a long-term strategic view to remain invested in the sector.”

Some of the businesses that Agile Capital is invested in include mining services company Provest Group, which is involved in underground mining and support services; engineering consultancy BBE Consulting, which conducts independent mine ventilation consulting and development; and waste management company Spilltech Group, which undertakes environmental remediation services.

Meanwhile, Sefolo notes that private equity remains a significant enabler of new entrants to the market in a long-term, sustainable manner, as private equity funds provide capital for mining projects such as the construction and development of mines, quarries and processing plants.

Increasing financial investment in water management, mine waste, energy solutions, climate change and mine closure remain critical to continental economic development, he says.

Besides providing mining entrepreneurs with access to alternative forms of capital to grow their businesses in the sector, private equity funds have more control over the companies they invest in, which enables such funds to make more active decisions in responding to market cycles.

Further, the ongoing challenge of mine rehabilitation in the face of the growing threat of illegal mining and its negative impact on the mining sector, as well as on public health, safety and the environment, needs to be confronted directly, as it not only affects current operations but also future investment prospects, Sefolo says.

Improving legislative and policy frameworks and ensuring the necessary transparency and accountability regarding financial provision for environmental rehabilitation, remain key in addressing mine rehabilitation challenges.

Investors such as Agile increasingly find miners committed to going beyond immediate economic motives and to make significant efforts in finding a balance between profits and facilitating sustainable long-term improvements in African mining.