Energy minerals spearheading the region’s growth

The biggest current area of opportunity on the continent is in energy minerals, says Whitehouse & Associates’ Duncan Bonnett – and that includes oil and gas. “In terms of coal, outside of South Africa you’re looking at Botswana, Zimbabwe and Mozambique where there’s an incredible amount of exploration going on at the moment and driving huge infrastructure development in Mozambique and eventually through into the rest of the region. “In the next five years coal exports are likely to increase from virtually zero to 20 million tons or more exiting Mozambique. Those ports and that infrastructure is undergoing a fundamental realignment and upgrade and that bodes well for countries like Malawi, Zambia, the Congolese Copperbelt and Zimbabwe.” Uranium is another area of significant potential. “There are probably at least 60 exploration and developments projects under way at the moment in Niger, Congo, Central African Republic – and we’re now starting to see Namibia, Botswana, Malawi and further afield coming on stream. “This is based on the premise that nuclear power will be built in the next few years that will require uranium. Much of this will be in Asia, but also in Europe as nuclear becomes more attractive again. We are also looking at nuclear power plants in Africa so there will be a regional component.” In terms of oil and gas, Ghana is now coming on line. “Twenty years ago the country had very little to offer but it’s now a major gold producer and that has underpinned a lot of confidence in the economy. “Once the oil kicks in next year it will reduce the country’s dependence on the import of oil, promoting downstream beneficiation.” But the most exciting potential, in Bonnett’s view, is the Great Lakes region. “The Ugandans are trying to set themselves up as the energy and oil hub of East Africa. “And that requires the building of new towns, new power infrastructure, roads and pipelines.” One of the downstream impacts of that is the cement industry. “At the moment there are over 30 different cement projects in southern Africa at different stages of development. A number are not related to the mining industry but rather to the availability of disposable income, with people moving from mud houses to concrete breeze blocks and steel sheeting to build their accommodation.” According to Bonnett, one of the biggest handbrakes on the development of infrastructure in Africa previously has been the lack of readily available cheap cement – an issue that is now being addressed. And when you’re talking mining and minerals, copper is always a key component. “When the global crisis kicked in a lot of expansion projects in the Copperbelt were put on hold or cancelled. That has turned around and despite the worst financial crisis prices are still relatively speaking robust, underpinning a lot of confidence going forward.” Emerging market economies – like China and Brazil – are growing at a pace that creates demand for African commodities. And infrastructure development appears to be making gradual progress. “It’s an incremental process. President Jacob Zuma is driving the north-south corridor – a critical corridor from Dar es Salaam through the Copperbelt and down to the Port of Durban. “The UK development agency has spearheaded the donor drive to find funding for projects on this corridor. But with eight or nine countries involved the biggest issue is getting the political alignment correct.” As always, the challenges are monumental but the rewards are even greater.