In February, research by Standard Bank found that much of the potential in the African mining industry remains untapped. Research reports that more than 30% of the world’s mining reserves are in Africa. Yet in 2013 mineral exploration in Africa accounted for only 17% of the world’s exploration budget.
Despite the immense reserves and development potential, Africa’s political instability as well as security continue to pose barriers for investors. According to the Fraser Institute’s 2014 Annual Survey of Mining Companies, of the 30 African jurisdictions surveyed, under the political stability category, an average of 23% of survey respondents indicated that they did not perceive political stability as a deterrent to investment while an average of 11% perceived political stability in Africa actually encourages investment. Major contributors to the 11% are African countries such as Botswana and Namibia, of which 48% and 50% respectively indicated that political stability encouraged investment in either region.
The mining community is conscious of this, and is working together to improve the investment attractiveness of Africa’s mining industry. Meetings such as Mining on Top Africa Summit, held in London in 2015, will work towards bringing the key players of the African mining industry together and connect investors with opportunities across the continent. The theme included discussions on improving political certainty in Africa. According to a spokesperson from SNL Metals and Mining, political certainty is an issue that can be resolved and could be a turning point for investment in Africa’s mining sector.
It is unclear whether or not the efforts of these African mining summits will help alleviate the barriers currently deterring investment into Africa. However, improving the political and security situation can prove to be a winning formula for African companies seeking to attract global mining investment.