Despite the challenges of continued decline in commodity prices and the lack of return on investment, there remains a great opportunity on the continent for mining to grow, professional services firm KPMG South Africa CEO Moses Skosana said recently.
Sharing his insights ahead of the 2015 Investing in African Mining Indaba, to be held between 9 and 12 February, in Cape Town, KPMG head of markets for energy and natural resources Carel Smit says we need to be positive about mining in Africa in order to garner investor confidence in the sector as mining supports industrialisation globally.
“We need all of the stakeholders working together to make a success out of the African mining industry for the benefit of the entire continent;” he says.
Smit believes the important theme of how to attract investment will be up for discussion at the Indaba.
He believes that when looking to invest, investors look at mining companies with a good mineral deposit in a good location with sufficient infrastructure and a skilled labour force to mine the deposit safely.
This will ensure that investors get a good return on their investment. However, fundamental to this all is certainty, as “investors want certainty when investing in mining projects,” says Smit.
Meanwhile, KPMG head of mining for Southern Africa Jacques Erasmus believes that the investor investing in Africa has changed and looks forward to exploring who the investors are actually investing in.
While there are still investors with substantial mining portfolios, there is now a fundamental mismatch between the short-term demands of shareholders and the long-term requirements of the stakeholders in the mining industry including government and labour.
He believes that investors have moved away from focusing solely on getting great returns but instead focus on what the mining house or explorer is doing, both in terms of equipping itself, as well as the broader community with infrastructure, skills and services, besides others.
While Erasmus believes there will be further impairments owing to the current low commodity price, he notes that mining companies are preparing themselves to ride out the current commodity price cycle, while ensuring that they are in a position to capitalise on their assets when the when the market improves.
Also of interest to Erasmus at the Indaba will be the labour discussions and interactions between organised labour, unions, government and mining companies over the next four months in the run up to strike season and on the back of the severe labour unrest experienced in the mining industry in 2013.
Erasmus believes the topics of discussions at the indaba will focus a lot more on core investors, labour, power and what investors are after, other than certainty