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Canada shows interest in mining investment

Regulatory uncertainty, lack of policy cohesion, infrastructural constraints and, in some instances, politics across Africa are clearly seen as deterrents, but there is great potential to attract investment if these issues can be addressed.
Image source: Getty/Gallo
Image source: Getty/Gallo

The recent Prospectors and Developers Association of Canada (PDAC) Convention held in Toronto attracted more than 25,000 delegates, either offering or seeking opportunities to invest around the world in the most prospective mining assets and projects. The highlight of this year’s convention was evidence of considerable potential for investment from Canada into Africa, if investors can be assured of a mining-friendly environment.

Milking the cow

Resource nationalism in South Africa, as well as in other African countries, came in for some criticism. Continuous changes to mining legislation over the years have evidently made investors very nervous.

Although investors agreed it was important that countries legislate to address socioeconomic inequalities, it was felt that the pendulum had swung too far away from the needs of mining investors. In their efforts to milk the cow, African governments have squeezed it dry. It appeared that many African governments perceived only the direct benefits of mining, rather than the indirect benefits such as growth in subsidiary industries, skills transfer, infrastructural development, downstream and upstream industries and the general multiplier effect which follows in the wake of the resources industry.

Land expropriation, power shortages and labour

Disquiet was also evident over South Africa's move to cancel bilateral investment treaties. There were questions to the South African delegation, headed by the Deputy Director-General of Mineral Resources Buyisiwe Faith Ntokozo Ngcwabe, about the implications for mining of land expropriation without compensation, the country’s current power shortages and militant labour. Delegates sought reassurance on contradictory political messaging and lack of cohesion among the country's government departments.

Battery minerals

The level of available investment at PDAC showed that if perceptions of a hostile mining environment in Africa and South Africa could be turned around, there was considerable potential for funding for African mining projects from Canada, even supplanting London as a source of finance.

At present, most of Canada’s mining investment is being directed towards South American operations and assets, but that is likely to be temporary. The continent appeals to Canadian investors partly owing to geography but partly also because South American governments are showing greater awareness than African governments of what investors need.

The convention showed investors were currently interested in battery minerals, which South Africa largely lacks, rather than the precious and base metals that the government has long argued are irresistible to investors. The last decade of declining investment in South African mining has proven that mineral endowment is not enough in itself to create a mining industry.

Read more: labour, Power shortages

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