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  • Optimism in the Mining Sector Mounts

Optimism in the Mining Sector Mounts

09 February 2017

Mining Indaba 2017 saw an overall mood of positivity and enthusiasm for the future of mining, with Africa in particular, looking set to see a large upturn within the sector in the coming months.

This is according to BDO South Africa who attended the Mining Indaba in Cape Town over the three days from the 6th to the 8th of February.

Resources and Commodities up

“With Resource prices having picked up, and with Commodities improving substantially – for example the price of iron ore has more than doubled in the last 12 months – we are seeing renewed optimism for the mining sector,” says Bert Lopes, National Head of Advisory and Managing Partner of BDO’s Johannesburg office.

“This has led to renewed interest in the re-opening of several projects that had been previously mothballed. These renewed projects, and subsequent impairment reversals on balance sheets, will provide further opportunity for new investments and financing deals within the mining industry in Africa.”

Incentive to innovate

Owen Murphy, Africa Desk Leader for BDO says that there are investments taking place into brownfield operations and this is a trend that is set to continue. Murphy further advises that an additional noticeable trend which emerged at Mining Indaba 2017 is that of high-tech applications being used by mining operators.

“Cost pressures that were experienced during the recent tough economic times incentivised operators to look for innovative ways to cut costs and high-tech solutions met this requirement. This is a trend that looks set to continue in good times, with applications being applied in mainly the exploration and processing side of operations.”

According to Sherif Andrawes, Natural Resources National Practice Leader for BDO in Perth, Australia has been seeing positive green shoots in the mining sector for the last five months, with a sharp increase in IPO (Initial Public Offering) activities amongst mining companies and those offering related mining services.

“Resources have improved and so it is driving everything up. This has led to an increased availability of money from the capital markets for smaller mining enterprises - money which is used for exploration, staffing, drilling etc. and this has a knock-on effect through the entire economy,” says Andrawes.

“Australia has also seen mines that have not been spending on care and maintenance start to come back on stream and the latent capacity that has been sitting idle is being soaked up.”

“The next 12 months will present good opportunities to invest in mining in South Africa and Africa – covering new, established and re-opened operations. Because of this renewed optimism we anticipate seeing clients start to move funds into the mining industry,” concludes mining audit specialist Servaas Kranhold, Audit Partner at BDO Johannesburg. “Our BDO Africa Desk is perfectly positioned to assist those wanting to take advantage of this reinvigorated sector and we look forward to this next positive cycle for mining.”

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