While mining in Africa is back in “full swing” as commodity markets are booming, the sector is still hampered by several factors that result in various bottlenecks, states commodities market analyst Core Consultants MD Lara Smith.

These factors include logistical bottlenecks caused by railway and port congestion, challenges in securing trade finance, security at mine sites and general corruption.

Smith argues that as long as these critical challenges are not addressed, the African mining sector will not be able to capitalise on significant growth opportunities, regardless of a positive commodity cycle.

“Intra-African trade will also be a key driver for African countries and a way for Africa to support itself. Despite the presence of regional organisation the African Union, there still needs to be progress before neighbouring countries can do business with one another.”

The cost of travelling in Africa – it is often cheaper for individuals to travel from Europe to Africa rather than between African countries – and the impact of tariffs, customs and similar taxes are also prohibitive factors, Smith adds.

She emphasises the need to improve local manufacturing and reduce reliance on importing finished goods into Africa, as improvement in this regard would, consequently, require the training of local labour forces, a stable power supply, necessary finance to support and retain entrepreneurs, as well as effective intra-African trade.

Transition Metals

Smith states that Core Consultants is interested in topics that will be discussed at the Investing in African Mining Indaba – to be held at the Cape Town International Convention Centre from May 9 to 12 – particularly those focusing on the battery metals market and the Junior Mining Showcase event.

Core Consultants can, as commodity consultants, add value to the battery metals sector, particularly as much information is being distributed, she notes.

The company facilitates in trading key commodities, mainly from South Africa.

For example, Core Consultants arranged a joint venture (JV) last year with research company Hallgarten & Company to identify, acquire and develop critical metal projects.

The JV’s first asset is the West Gore antimony and gold asset in Canada, which will be listed on the Canadian Stock Exchange as Battery Elements in the next quarter.

Much of Core Consultants’ projects this year have entailed supporting investors in their decision to enter a particular metal market and help them to better understand the market dynamics. Most recently, Core Consultants assisted a major investor to understand the dynamics of the lithium market and assess potential investments. Smith is also searching for an investment opportunity in the African battery metals sector.

She

adds that most of the company’s client base are listed companies or offshore investors with projects in Africa. The company remains committed to seeing Africa develop.

“Given the last two years’ showing dismal economic growth, it is important for Africa to attract investment. “The Indaba is one of the only events where investors get the opportunity to meet with African mining projects and service providers. It is extremely important to leverage the opportunities that this brings.”

In-Demand Metals

While metals such as copper and cobalt will be crucial battery metals for Africa going forward, Smith points out that the battery sector and decarbonisation of the global economy is still in its infancy.

As a result, technological changes could make other metals and minerals – also in abundance in Africa – more relevant going forward.

The price of tin, for example, has risen from $12 000/t in 2019 to more than $40 000/t, while zinc has also climbed from $2 750/t in June last year to $4 300/t currently, she states.

“Antimony is hardly produced locally anymore, but South Africa used to be the second-largest producer, after China. The price of antimony has increased from $5 500/t to $13 500/t in the past two years. Once molten salt batteries become commercialised and there is more demand for solar and wind power to be harnessed, stored and connected to national grids globally, the price should rise further.”

She also points out that the price for nickel, found in South Africa, Botswana and Zimbabwe, climbed so high that the LME suspended trading in nickel last month.

The metal is also set to remain key for nickel-manganese-cobalt, and lithium nickel-cobalt-aluminium-oxide batteries.