Mining Indaba: Growing population to boost Africa’s mineral development

 

Speaking at the 2014 Mining Indaba, Minerals Resources Minister Susan Shabangu said a growing world population was a good sign for Africa’s development; Red Door Research’s Jim Lennon echoed this, saying China’s development needs would mean strong demand for the continent’s resources.

It is fitting that the Mining Indaba is celebrating its 20th year as South Africans reflect on the country’s achievements since becoming a democracy 20 years ago. The Indaba has transformed dramatically in the past two decades, much the same as South Africa has as it found its feet after apartheid.

The Mining Indaba started out as a modest conference, with only a handful of delegates, promoting Africa’s mining potential at Cape Town’s Cape Sun Hotel just before the country’s first democratic election. It has since become the largest mining investment conference in the world and is now held at the substantially larger Cape Town International Convention Centre.

“The significance of a 20th Mining Indaba is a direct example of 20 years of post-apartheid in SA. Mining Indaba represents a benefit of what a country can do when it tears down its walls and allows the world to experience all the riches it has to its offer,” said Mining Indaba managing director, Jonathan Moore.

This year’s event will host more than 7800 delegates, representing 2100 companies and 45 African and non-African governments, from more than 100 countries, making it the largest to date.

A softening market for base minerals

Though there is much to celebrate this year, the Mining Indaba is taking place just as prices for base metal commodities are starting to soften, and weakening demand for some commodities in China has the industry and African governments concerned over how this will affect the sector and the region.

These concerns are somewhat justified, as China has been the major driver in commodity prices over the last decade. A recent International Monetary Fund working paper on China’s impact on commodity prices found that “China has become the dominant importer of base metals”.

This dominance however, comes as China’s manufacturing activity is starting to slow down. There are also worries that China might have overstimulated its economy by investing in infrastructure projects to offset falling demand in developed countries. This overstimulation followed the start of the financial crisis in late 2008.

Even with these concerns, there are still reasons to feel confident about the African mining sector’s prospects. Minerals Resources Minister Susan Shabangu says, “The outlook for growth in the medium to long term is extremely positive.”

She pointed to the planet’s demographics – the global population is expected to grow from 7 billion people to 9.6 billion by 2050 – favouring sustained demand for base metals, saying, “The huge impact of the increased demand on Earth’s shrinking resource base, as a result of unprecedented population explosion of recent years, will be even more important for Africa’s mineral development.”

Red Door Research managing director, Jim Lennon, said that over the shorter term, despite the difficulty in China, the demand for commodities in the Far East would not be diminishing anytime soon.

He pointed out that as China was still a developing country its developmental needs were likely to maintain strong demand for some base metals. This would likely see a slight deficit in some metals from 2016.