Exploration activity is fundamental to the future success of the mining industry. For mining companies, it is similar to research and development expenditure - searching for business opportunities to develop in the future, but is southern Africa attracting enough exploration investment? By Munesu Shaka.
Globally, greenfield exploration has experienced a significant dip, with the majority of efforts centred around existing projects. With this trend echoed across southern Africa, the region’s reputation on the global stage is that of a mature mining sector with limited exploration potential.
Tycho Moncks, MD and Partner at Boston Consulting Group (BCG), Johannesburg, says southern Africa has endowment and potential endowment, but there is uncertainty in terms of the quantity. quality and how accessible the endowment is. This lack of visibility and transparency with regards to ground exploration is hindering investment from early stage exploration companies and diversified miners willing to spend capital to drill, explore and turn potential endowment into resources, reserves and ultimately launch mining operations.
“Without good geological data, there is no investment, and without reasonable certainty around investment it is not that easy to argue for base level exploration by government. However, the first step for government is to enhance the quality of geological information and accessible mapping that is provided to early stage exploration companies and mining companies so that they can make assessments and decide where to conduct exploration,” says Moncks.
As with the industry at large, however, speculative investment in exploration is increasing into 2021 - at least in some commodities such as gold and those seen as critical metals, says James Gilbertson, MD, SRK Exploration Services.
