Africa’s need to find new metals to support the energy transition has increased the risk appetite of major miners. There are few other options for Africa’s resource-rich continent.
Investors and companies are now looking at projects that they might not have considered before. Governments are also looking to Africa to make sure their countries can obtain enough metals to sustain an ever-increasing net-zero.
The Investing In African Mining Indaba conference, May 9-12, Cape Town, will feature the highest-ranking U.S. government official in years. It will also include representatives from Japan Oil, Gas and Metals Corporations (JOGMEC), as a sign that rich countries are increasingly concerned about securing their supply.
Steven Fox, executive chairman at Veracity Worldwide, a New York-based political risk consultancy Veracity Worldwide, stated that “the reality is that most of the resources the world needs are often located in difficult places.”
He stated that the U.S. government wants to be seen as a strong supporter of battery metals projects in sub-Saharan Africa.
While Africa has its challenges, they are not more difficult than those in Canada. He said that it may be easier in Africa to bring a project to fruition than in Canada or the U.S.
Although the United States supports new domestic mines and has expressed support, projects have been stalled.
The risks associated with mining in sub-Saharan Africa are still high. Last month, Russia’s Nordgold evacuated its Taparko gold mine in Burkina Faso due to a growing threat from militants. This highlighted the security challenges facing gold-rich Sahel mines.
Even in South Africa’s most industrialized economy, some coal producers are forced to use trucking to transport their products to ports.
With Russia holding 7% of the global nickel supply, 10% world’s platinum and 25%-30% world’s palladium, Africa’s rich metal deposits start to look a lot more appealing.
“As a mining firm, there aren’t many opportunities, and if your company is going to grow,” said George Cheveley (portfolio manager at Ninety One).
He said, “Clearly, people after Russia-Ukraine are more sensitive to geopolitical risks and you cannot predict what projects will work out or not.”
Kabanga Nickel is a project in Tanzania that was funded by BHP (BHP.AX.) in January. CEO Chris Showalter stated that it is experiencing increased demand from potential off-takers.
Showalter stated that Russia’s invasion of Ukraine has prompted Western sanctions to be placed on Russia.
“Not everyone will be able to get clean battery metals in a friendly jurisdiction. I think that some difficult decisions will be made and it will force people to make new decisions about where to source them.”
