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African Business 2020 edition

  • Text
  • Agenda
  • Business
  • Invest
  • Union
  • Industry
  • Sustainable
  • Development
  • Regions
  • Trends
  • Sectors
  • Afcfta
  • Trade
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  • Africa
  • Global
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  • Projects
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A unique guide to business and investment in Africa. Global Africa Network is proud to launch this inaugural edition of African Business 2020 at a time of energetic planning for a prosperous future for the continent. The African Union’s Agenda 2063 is much more than a document about a hoped-for future, it contains concrete goals and deliverables. The Programme for Infrastructure Development in Africa (PIDA) and the development finance institution, the African Development Bank (AfDB) are already rolling out valuable projects that are changing the reality on the ground in vital areas of the African economy. Perhaps the most significant event of recent times is the signing by African leaders of the African Continental Free Trade Area agreement (AfCFTA) which will bring together all 55 member states of the African Union and cover a market of more than 1.2-billion people. African Business 2020 has articles on all of these recent trends, plus overviews of the key economic sectors and regional and country profiles. In 2019 Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize for peace-making efforts in his region. The economic dividends of peace are beginning to be felt. In 2020 South African President Cyril Ramaphosa assumed the mantle of AU Chairperson. He brings to the role considerable experience in conflict management, constitution-writing and seeking consensus. Global Africa Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform


OVERVIEW Mining The global economy is demanding new minerals, and Africa has them. Sector Insight Africa’s first lithium-ion factory has been launched. Africa features prominently on most lists of global mineral resources. One Botswana diamond mine produces about quarter of the world’s annual diamond supply by value and the continent has recently moved close to 75% of global production of diamonds. Mining and quarrying is the largest contributor to GDP in Africa. The richness of Africa’s mineral resource is extraordinary. In several categories, Africa is either the global leader or it has the second-biggest reserve. These include cobalt, phosphate rocks, bauxite, industrial diamonds, platinum-group metals (PGMs), zirconium and vermiculite. Iron ore, copper, nickel, zinc, uranium, manganese, vanadium, ilmenite and gold, the continent’s biggest resource, are also found in large quantities. The mining sector is responsible for 90% of the exports of the Democratic Republic of Congo (DRC) and the figure is about 80% for countries such as Botswana (which has gold, nickel, copper and soda ash in addition to its rich diamond resource), Guinea (gold, diamonds, alumina and bauxite), Senegal (phosphate and diamonds) and Sierra Leone (diamonds). Ghana exported gold to the value of .3-billion in 2017, which was just less than half of the total value of exports, including crude petroleum. South Africa’s top three exports (out of a total of 8-billion) were gold (.9-billion), diamonds (.8-billion) and platinum (-billion) (OEC). Foreign interest in African mining is intense. Chinese companies are active in every part of the continent, including Ghana, in support of bauxite exploration and Zambia, as a partner in copper companies. More than 150 Australian companies operate in Africa and Japan is active through the Japan Oil, Gas and Metals National Corporation (JOGMEC) and several other companies such as Toyota Tshusho Corp, which is a minority partner in a Moroccan tin project. The merger of Randgold and Barrack in 2018 created a gold mining company with a market capitalisation of .4-billion. The new company is likely to increase its activity in West Africa where Gold Fields Ltd, Newmont Mining Company and AngloGold Ashanti have operations. Reliance on a single mineral creates an exposure AFRICAN BUSINESS 2020 36

OVERVIEW to price fluctuations that can trigger recessions. Other problems include political instability (although the outlook has improved recently), poor logistics, unreliable power supply and unpredictable regulatory regimes. This can include demands that local companies be included in transactions and variable tax and royalty conditions. The African Development Bank (AfDB) reports that mining royalties as applied in 2016 in Africa’s 21 gold-mining countries, ranged from 2% to 12%. The Economic Community of West African States (ECOWAS) stated in 2000 that it intended to align countries’ tax and customs regimes and to create mining codes that did not differ sharply from one another. The code was not implemented but there is an increasing awareness of the importance of regional (and continental) consistency on this score. Another aspect that needs the attention for African mining to reach its full potential is geodata. There are very few places that have good systems in place to assist exploration efforts with reliable and detailed data. Minerals for the new age New finds of “old” minerals are happening across Africa: gold miners are very bullish in West Africa and Vedanta Zinc International is developing a huge mine in South Africa, but the big story is in minerals relevant to the new economy. The announcement by the AfDB that it was “getting out of coal” in 2019 was a clear signal that the move away from fossil fuels is gathering speed. The bank has created a 0-million green baseload scheme to assist African countries to transition from coal-fired power plants to renewable sources. The bank expects the fund to yield up to -billion in investments. The most important minerals in the age of computers and electric vehicles are cobalt, platinum, lithium, graphite, vanadium and manganese. Africa is a global leader in these minerals too. The DRC has more than 60% of the world’s cobalt resource. The critical metals in new battery production are lithium, graphite, cobalt and nickel. A research body estimates that the global lithium-ion battery market could be worth as much as -billion by 2024 (Transparency Market Research). Beyond the DRC, countries such as Madagascar, Morocco, Mozambique, Namibia, Zambia and Zimbabwe stand to benefit from this boom. The Global Battery Alliance claims that lithium-ion batteries can significantly reduce emissions in the power and transport sectors. At the 2019 Batteries and Electric Vehicle Conference, the MegaMillion Energy Company launched Africa’s first lithium-ion factory. The company will operate out of the Coega Industrial Development Zone in Port Elizabeth, South Africa. Also in South Africa, Thakadu Battery Materials is building a plant to beneficiate impure nickel to produce high-purity battery-grade nickel sulphate for the lithium-ion battery market. Copper and copper alloys are also important for electric vehicles, smartphones and computers. The Central African Copperbelt (encompassing parts of the DRC and Zambia) increased mined volumes to 2.2-million tons in 2018, more than twice the 800 000 tons mined in 2008. Platinum’s role in the creation of hydrogen makes it a vital component for the fuel cell industry. South Africa, which produces more platinum than all the other countries in the world combined, is investing in research into new uses of platinum. Zimbabwe also produces platinum. ■ Online Resources Africa Mining Vision: Ecowas Federation of Chambers of Mines: Global Battery Alliance: International Association for Engineering Geology and the Environment: Investing in African Mining Indaba: Mining Industries Association of Southern Africa: 37 AFRICAN BUSINESS 2020

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