Mining Mirror June 2019 | Page 33

Mining in focus The costs of starting new mining operations, coupled with regulatory and social hurdles, dictate that only extremely attractive prospects stand any chance of attracting investors. over the past few years — not only locally, but across the continent. A total of 188 M&A deals were concluded across all industry sectors in Africa last year, worth USD17-billion, including five deals worth at least USD1-billion. This was the lowest value of M&A activity registered on the continent since 2009, when 179 deals, worth USD14.5-billion, were recorded. The energy, mining, and utilities sector was the most active across the continent last year, with a total of 41 M&A deals, worth USD5.5-billion, announced. Of this total, 19 were African mining deals, falling well short of the post-economic-crisis high of 37 seen a year prior. Lack of exploration expenditure The South African mining industry is not nearly as robust as it was 20 years ago and only a handful of local companies with large market capitalisation remain operational today. Much of this can be attributed to the historical characteristics of the local mining sector, which for many years saw South Africa hold the top spot among the world’s gold and platinum producers. However, the known precious metal resources are dwindling and many of the country’s gold and platinum mines are reaching the end of their lives, as deep-level mining is generally not financially sustainable. At the same time, there has been a lack of the exploration expenditure necessary to identify the new mines of tomorrow. It, however, was heartening to note in the minister’s speech at the Mining Indaba recently that he has instructed the Council for Geosciences to enhance the mapping of South Africa’s ore bodies. In addition, the costs of starting new mining operations, coupled with regulatory and social hurdles, dictate that only extremely attractive prospects stand any chance of attracting investors. Internationally, investors have left the mining sector for new, more lucrative opportunities, and raising capital has become extremely difficult. Uncertainty hits hard Numerous factors have contributed to the decrease in mining M&A in South Africa last year. First is the uncertainty around the Mining Charter, which was published by government in June 2017, without any consultation with the industry players. This took the industry by surprise and did a lot to damage investor confidence. While a new Mining Charter has since been published, the Dymot Engineering Company (PTY) LTD Specialist Designers & Manufacturers of Winching Systems WORLD OF WINCHES www.miningmirror.co.za Market leaders in conveyor tensioning equipment Take up winches with Overload Protection Gravity Counterweight Handling Braked Capstans Screw Take Ups Hand & Motorised Winches Electrical Control Panels & Systems Sheaves 11 DERRICK ROAD, SPARTAN, KEMPTON PARK SOUTH AFRICA [phone] [email protected] www.dymot.co.za JUNE 2019 MINING MIRROR [31]