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Mining Indaba upbeat on Africa's future

mining indaba largeFor more than two decades, the world's most influential stakeholders in African mining - financiers, investors, mining professionals, government officials, and others - have gathered in Cape Town for four days of sharing, learning, networking and deal-making at the world's largest mining investment event, the Investing in African Mining Indaba.

Billions of US dollars of foreign investment have been channelled into the African mining value chain through the 21 years of the Indaba. In the eight years from 2006 to 2014, the Western Cape economy has benefited from the event to the tune of R552-million, while 4 500 direct and indirect jobs have been created.

The 21st Mining Indaba took place at the Cape Town International Convention Centre from 9 to 12 February. It was preceded by the two-day Investment Discovery Forum, an in-depth executive-level meeting with a lot of extra horsepower on deal-discovery, where 300 accredited investors got detailed briefings on untapped investment opportunities in Africa.

Welcoming delegates on the opening day of the Indaba, event managing director Jonathan Moore said they had gathered "in challenging times", with the commodity market in a deep bear cycle. Bloomberg tracking showed that commodities markets had fallen 17% in the past year, Moore noted, with sluggish growth in China, and the European Union and US also taking strain.

Work with us to make a difference: IDC's Geoffrey Qhena

That evening, the Industrial Development Corporation hosted partners and stakeholders. The topic of the moment was building the economy whilst tackling the triple challenges of unemployment, poverty and inequality.

With mining the backbone of the economy, the Corporation would begin looking at the entire industry value chain, while expanding its footprint further into the continent, chief executive Geoffrey Qhena noted.

Regarding the energy constraints South Africa currently faced, Qhena said the IDC was looking for partners in the coal sector to service Eskom's need for the fuel.

Also speaking at the event, IDC mining and manufacturing divisional executive Abel Malinga reiterated the fact that South Africa was the world's richest country in terms of in situ mineral resources - Citibank places the value of its resources at US$2.5-trillion. He pointed out that the country was particularly rich in platinum, vanadium, chrome and manganese.

In total more than 7 000 delegates attended the 2015 Investing in African Mining Indaba, including business leaders from more than 110 countries, more than 45 delegations of national mining ministers, government leaders and regulators, and over 2 300 international companies with interests running right through the African mining value chain.

Reasons for Afro-optimism: Tony Blair

As the founder of the Africa Governance Initiative, former UK prime minister Tony Blair, who delivered the keynote address, was well-placed to analyse the challenges of change in Africa, and to indicate the vast opportunities on the continent.

"I am an optimist on Africa for both objective and emotional reasons," Blair said, noting that 10 of the 15 top growing economies in the world were in Africa; that the middle class was set to double in five years; and that African growth should come in at around 5% this year, while the composition of the continent's economy was changing in terms of both gross domestic product and foreign direct investment.

Change was at the core of Blair's presentation. The relationship between the North and South was moving from one of dependence to one of partnership, he said. African governments were also changing their approach to investments in extractives. "The outside world is looking at Africa differently; African countries are wanting to take their destiny into their own hands, and to build partnerships."

Africa was going to change enormously over the next decade. "Those of you who know a long-term bet over a short-term bet, I think Africa is a great place to come to and a great place to invest in for the future."

And to companies already invested in Africa, he added: "I know you face challenges that are very difficult to overcome, but personally I think you made the right choice."

Graça Machel, president of the Foundation for Community Development, gave the keynote address at the sustainable development programme. The half-day session is a cornerstone of the Indaba, with stakeholders tackling key issues around sustainability, including corporate governance and environmental legislation.

New minerals 'national champion' on the cards: Ngoako Ramathlodi

Officially opening the Indaba, South African Mineral Resources Minister Ngoako Ramathlodi said the government and the mining industry were currently in talks aimed at turning adversity into advantage. Together, they were looking at ways to create a new South African minerals-based "national champion".

This champion, Ramathlodi said, would be community-based, with strong worker participation; would be anchored in and run on business principles; and would be shepherded by a leadership that was prepared to stay in place for a very long time. "That leadership should not leave the flock in the veld and run for greener pastures." The underlying principle would be broad-based participation.

Given the centrality of mining to the economy, the government was leaving no stone unturned in its efforts to provide a stable environment for the industry to grow, the minister said.

He also sought to reassure investors that there was policy stability in South Africa, noting that the Mining and Petroleum Resources Development Amendment Bill had been referred back to Parliament as it was felt it would not pass constitutional muster in its present form.

The blockbuster line-up of speakers at this year's Indaba included the industry's most pervasive deal-maker, Robert Friedland of Ivanhoe Mines; global economist Dr Dambisa Moyo; creator of the acronym "Bric", Jim O'Neill; and the World Bank's group emerging regions expert, Anita Marangoly George.

Bear cycle bottoming out: investors

There were more than 50 corporate presentations from and industry thought leaders, executives representing approximately 40 of Africa's top and emerging mining players, and 20 of the continent's most progressive mining ministers.

These included Mike Schmidt, chief executive of African Rainbow Minerals, who discussed the current commodity cycle, and Harmony Gold's chief executive Graham Briggs, who talked about re-positioning the group's South African assets while growing the value of its Papua New Guinea assets.

Wu Daohong, chief executive of Beijing Shenwu Environment and Technology Corporation, gave a presentation on the use of various technologies and alternative fuel sources to bypass traditional, high-energy consuming steel-making processes, as well as to minimise reliance on petrochemicals and natural gas.

Another hot Indaba topic was the $500-billion "peace dividend" from the low oil prices, with many analysts speaking of the "big benefit" of lower energy prices for African mining.

While global interest in African mining tripled from the early 1990s to 2011, and gold's safe haven status initially cushioned the industry from the impact of the 2008-09 global financial crisis, the sector has experienced serious challenges over the past year-and-a-half as corrections to this curve brought commodity prices down and impacted on value.

However, the general feeling from investors across the board at the Indaba was that the sector was close to the bottom of this bear cycle. There was a sense of optimism from foreign investors, whose general forecast was for the markets to start picking up from the middle towards the end of the year.

Jonathan Moore summed the mood up as follows: "Looking ahead, we see a bright outlook for the resources produced by the mining industry, as all indicators show vital world economies - Europe, the USA and China - will rebound in 2015."

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