Mining in Africa: Is it Worth the Investment?

The African continent, over the past few years, has been identified as largely untapped especially in the mining industry. In 2019, Ghana has rated the highest gold-producing country in Africa with the potential of exceeding its production in the coming years. 

This is just one of the many successes recorded in the mining sector in Africa. Another of such is South Africa; despite the covid 19 pandemic, as in the first half of 2020, South Africa recorded a 35% revenue increase with 4% coming from gold with other mining products either increasing or holding their prices. 

Investment experts, Africa Global funds record that Africa’s mining industry attracts and still attracts investors which makes it a worthy investment location for both foreign and local investors.

Products Mined in Africa

Products mined in Africa can be classified into four major parts which include Metals, Industrial minerals and mineral fuels. 

The following texts include classified mined products, based on their use, in Africa that would provide a basic understanding of each classification and the countries that produce them. 

This classification will give a simple insight that should be considered for anyone interested in investing in the Africa mining sector either as a national or a foreigner.

Metal

• Aluminium, Bauxite and Alumina – these metals are sourced from bauxite (which is also a mined metal), they are found mainly in Guinea (which produces the largest metal production in Africa), Ghana and Mozambique.
• Copper: Copper is one of the first metals that were extracted and used by humans. It is one of the world’s important industrial minerals and it can be found in many African countries. Presently, most of these countries have untapped copper resources but countries such as Zambia, Congo, South Africa, and Egypt(accounts for most of Africa’s production) have steady copper mining companies. Mineral report experts Geology News and Information recorded that copper has antimicrobial properties that can be responsible for reducing the risk of infectious diseases when used to clean surfaces. So if you choose to invest in copper, you know the country to target.
• Gold: Formerly dominated by South Africa, Gold mining in Africa is now fully active in Ghana, Sudan, Burkina Faso, Zimbabwe, Tanzania, Mali, Botswana, Guinea, Congo, Cote d’Ivoire and Niger among others. With Ghana topping the list.
• Iron ore: Iron ore is one of the mineral resources possessed in Africa that is yet to be mined in some major countries in Africa. Most of the deposits are being mined majorly in South Africa, Mauritania and Algeria. Interested in investing in iron ore and would want to try out other countries with not so tapped iron ore resources, then you might need to look to one or more of the following countries; Angola, Cameroon, Central African Republic, Congo, Côte d’Ivoire, Egypt, Gabon, Ghana, Guinea, Liberia, Libya, Mali, Mauritania, Nigeria, Senegal, Sierra Leone, South Africa, Tunisia, Uganda or Zimbabwe.
• Lead: South Africa is the highest lead producing African country. Other lead producing countries in Africa include; Morocco, Tunisia, Namibia, Kenya, Algeria, and Nigeria
• Nickel: This is used in making stainless steel and other metals that are more durable and can withstand extreme conditions during use. South Africa is the highest increasing nickel producing country in Africa. Other countries with nickel include; Botswana, Zimbabwe, Morocco, Madagascar and Zambia. Although there has been a decline in the discovery of nickel, the United Nations have implemented plans towards refining metals and measures to ensure the availability of this mined mineral for future use.
• Zinc: Zinc has relatively low boiling and melting points. At first discovery, zinc was used for medical purposes and in making brass. Zinc is usually added in making vehicles due to its highly corrosive nature. It is one expensive mineral as it is also important for the proper development of humans, animals and plants. the following countries are the top zinc producing countries in Africa; Morocco, South Africa, Tunisia, Algeria, Namibia, Congo, 
• Titanium: Titanium, one of the most abundant metals in the earth’s crust is useful to different industries due to its formation making it more costly when compared to aluminium and steel. It is mined mainly in Kenya, Mozambique, Sierra Leone and South Africa. Although widely spread  with South Africa having some of the largest titanium bearing minerals

Industrial minerals

• Diamond: diamond is from the Greek word “Adamas” which means unconquerable. The most famous diamond found in Africa is the Cullinan diamond and found in South Africa.  Botswana (hosts the world’s largest diamond mines), South Africa, Angola Namibia and the Democratic republic of congo. Aside from being used in jewellery production, because of it being the hardest natural substance in the world, it is also in use in the drilling industry and for medical equipment.
• Phosphate rock: most of the world supply of phosphate rock comes from Africa especially Morocco and South Africa. Morocco, according to the United States Geological Survey study, having more than 72% of all phosphate-rock reserves in the world.

Mining in Africa: Mineral fuels

• Coal: it is mostly valued for its ability to generate electricity for industries and its domestic use. South Africa produces over 90% of the coal consumed in Africa, and its biggest deposits are found in the Ecca deposits. Other countries reported to have coal deposits include Mauritania, Senegal, Mali, Niger, Benin, Nigeria, Cameroon, Central African Republic, Sudan, Ethiopia, and Somalia but only Niger and Nigeria presently mine coal as a source for power plants and domestic use in Subsaharan Africa.
• Uranium: Presently, Uranium is majorly used for fueling nuclear power plants. It is mined by the extraction of uranium oil from the soil. Although not stably radioactive, it is a toxic metal that can affect the normal functioning of the human reproductive system when exposed. Before the Fukushima nuclear disaster in 2011, Uranium which is majorly used for nuclear plants thrived but ever since March 2011, profitability reduced with over 50% reduction in price and decline in share value. In Africa, uranium can be found in South Africa, Niger, and Namibia.

Other resources that can be focused on include oil, iron, steel, and Platinum-group metals such as platinum and palladium which are available in South Africa and Zimbabwe. It is also necessary to keep the mind open in case of more minable mineral discoveries that may happen in subsequent years as efforts are being made to discover more mineral resources to prevent a shortage in coming years.

Mining in Africa: Brief on Africa

Africa is second to Asia in size and population and has a wide range of mineral resources. These resources include but are not limited to; oil, gold, diamond, timber, copper among others. 

It is home to the world’s youngest population and has been identified as significant in the global economic market. Although it hosts numerous mineral resources and is identified as an important economic market, Africa is still the least wealthy and developed continent in the world. 

Some of the reasons have been said to be due to their failed political arrangements and pernicious policies. Despite these reasons investing in Africa regardless of the sector, have been concluded to be profitable, sustainable and future centric.

Note

Looking to invest in the mining sector in Africa? Then the mining sector of South Africa should be a stopping point. Why? South Africa has abundant and highly marketable natural resources. 

They also have the necessary manpower and better-developed facilities in Africa.

Although the mining sector has brought some problems such as air and water pollution due to the use of mercury by gold miners, deforestation caused by the production of gemstones, lime sand and gravel, regulatory policies by the government have been able to monitor such problems. 

There have also been interventions put in place by the international community to alleviate these problems. 

It is good to pay attention to the policies guarding investments in the mining sector in each country because although most of them are similar, the slight changes can make all the difference if not properly considered.

Conclusion

The continent has extensive natural and highly marketable resources in almost all of its countries. These countries are highly populated by a young and increasingly educated workforce. 

Over the past few years, the continent has been able to experience more stability in terms of governance, and as a result, increased its prospects for economic growth. This is because stable governance can be equal to a decline in corruption which would lead to reasonable policies that favour both foreign and local investments. 

Matters concerning the security of nations in the continent have also raised concerns in past years. Terrorism and Militancy being the top of such concerns. 

Natural disasters are beyond man’s control but how frequently it occurs in the nation you want to invest in should also be considered to prevent saddening reports.

There is no nation without its perks, with proper planning and consideration, Africa’s resources can also be maximized like other developed countries. So if you will ask me, considering government policies, nature, and security, Mining in Africa is definitely worth the investment.

Are you looking to invest in Africa? Shikana group is a legal and investment advisory firm that provides both legal and investment advisory support to aid foreign investments in east Africa.

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