An increasing number of mining investors are entering African markets, signalling a shift in global capital flows as geopolitics and commodity cycles reshape funding strategies across the continent. According to Richard Lilleike, executive head of strategy and business development at Exxaro Resources, the investment environment has changed markedly over the past few years, with capital becoming more strategic, selective and equity driven. We have just completed our first manganese transaction in South Africa through pure equity funding. It complements our existing portfolio and builds cash in our South African business, he said. We are a well-capitalised entity with a fundamental outlook on battery minerals and looking at projects across the continent. He said the company had been looking at acquiring producing assets in Africa for some time, but found that tier-one and tier-two assets were dominated by major mining houses. The company has since pivoted towards project finance, operating below the majors traditional playfield and entering projects with equity capital. The standard way of approaching opportunities is old and banked, he said. Majors are no longer waiting to hit the million-tonne mark. They are investing quicker, faster and in smaller projects. While copper remains a major focus for global capital, particularly in Africa, he said competition, especially from Chinese-backed funding, had intensified. Over the past six months, additional capital flows from the US have also entered the market. There is a lot of capital to deploy in copper, he said, although he indicated that some investors were now shifting focus towards gold and industrial commodities such as nickel, uranium, phosphate and graphite. Closer to home, despite its infrastructure challenges, South Africa remained open for investment, said Mpho Mofokeng, director of resources and project finance at Absa. South Africa has a lot going for it. It is a well-known mining jurisdiction, he said, acknowledging that electricity supply and logistics had weighed heavily on investor confidence in recent years. However, improvements were becoming evident. Load-shedding has decreased significantly. Throughput on the Richards Bay line is up, and Transnet and industry are recovering volumes on iron ore and manganese. He said most investors were, however, still, looking elsewhere on the continent rather than at South Africa for new projects. We have three new mining projects currently under development locally, but most of my work is still north of the border. While we know that South Africa is a solid mining destination, international finance capital does not see it that way. Zambia and the Democratic Republic of the Congo DRC, despite arguably carrying greater political and operational risk than South Africa, were, however, attracting significant investor interest. Lilleike said this was because risk was often subjective. Companies that have been mining in these jurisdictions for years, with relatively little upheaval, have no issue operating there. They understand the risk and commit the necessary capital to manage it. To a certain degree, they no longer see it as risk in the same way outsiders do. LV
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