March 2, 2024

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The Changing Landscape of Africa’s Mining Industry: Western Miners Lag Behind as Oil Powers Dive In

Risk aversion is likely to keep major Western miners behind in the race to tap Africa’s reserves of critical raw materials, which has accelerated as Middle Eastern oil powers have begun to emulate China’s years of investment on the continent.

Attracting the capital required to advance copper, cobalt, nickel, and lithium projects in Africa will be top of the agenda when executives, bankers, and government officials gather in Cape Town, South Africa, for the annual African Mining Indaba, which begins on Monday.

For the big listed miners, the problem is convincing board members who are eager to keep shareholders happy, which China and Middle Eastern state-backed funds with a mandate to diversify away from oil and gas do not face.

Major mining companies’ mergers and acquisitions teams have been busy negotiating in countries like the Democratic Republic of Congo, the world’s top cobalt supplier and third largest source of copper.

The reserves of a country like Congo, while necessary for the transition to cleaner energy, must be balanced against political unrest, the threat of corruption, and a lack of critical infrastructure.

Rising costs; the costs of acquiring a stake are being driven up by an increased demand for critical minerals required for the transition to a greener economy, of which Africa’s copperbelt, which stretches from southern Congo and Zambia to Botswana, is abundant.

Oil powers Saudi Arabia and the United Arab Emirates are among the most willing to take risks.

Emerging challenges in previously thought-to-be safer jurisdictions complicate the hunt for assets for Western companies.

Copper and lithium mining projects in Latin America, for example, are jeopardized by factors such as adverse weather, a lack of water, low ore grades, and regulatory challenges, which have forced existing mines to close.

Meanwhile, Chinese miners have strengthened their position in Congo and are expanding their investments across Africa.

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