Mining in South Africa will regain its shine

_Absa Insights is a portal where the bank’s sector experts share essential learnings and new developments with its clients and other businesses. The world is changing; so in 2019 Absa has introduced a series of discussions featuring high-level thinking around Consumer Goods and Services, Agriculture, Telecommunications, Mining and Energy and Infrastructure. Bookmark Absa Insights, where the bank shares insights from discussions designed to help you navigate the ever-shifting trends that are shaping the economy._Listen to the audio below (or scroll down for a summary of it).

South Africa has platinum. It has diamonds. It has gold, iron ore, copper… a seemingly endless list of commodities.

Yet, the industry has lost its shine of late.

We need to ensure the political environment is stable enough for investment. We need a stable labour environment.

Shirley Webber, Head of Coverage, Natural Resources, Absa Corporate and Investment Banking

Having a mining charter, ensuring everyone's objectives are met will lead to success.

Shirley Webber, Head of Coverage, Natural Resources, Absa Corporate and Investment Banking

In South Africa, a shortage of electricity and the rising cost thereof are threatening the sustainability of the industry. All the companies Absa has a relationship with are looking into balancing existing energy options with investments into other sources such as solar, wind and gas-to-power.

“Mining companies have to ensure the prices they pay for the various options fit into their financial strategies,” says Webber. “It doesn't help they have the commodities, but the cost to extract them is astronomical. Sanity must prevail in terms of electricity costs. Alternatives will become even more important to the mining entities.”

Many countries on the Continent follow South Africa's lead in terms of environmental legislation.

We are seeing countries putting in guarantees and rehabilitation requirements for large mining projects.

Tawanda Madondo, Natural Resources, Absa Corporate and Investment Banking

Absa is positive about the future of mining in Africa. “It's our ambition to help African economies grow. We're looking forward to 2020,” says Webber.

“The year ahead is going to have its challenges. Our industry is very cyclical. In good times; let's bank what we can and prepare for uncertain times. The ultimate responsibility for boards is free cashflow protection.”

For more detail, watch the video below. Shirley Webber (Head of Coverage, Natural Resources, Absa Corporate and Investment Banking) in discussion with Tawanda Madondo (Natural Resources, Absa Corporate and Investment Banking) about the future of mining in Africa and Australia's interests in African mining and energy.