The mining industry is undergoing significant change worldwide, including high volatility of commodity prices and rising exploration costs, while investment flows are constrained by a confidence crisis. However, the current dip in long-term investment will set the scene, within a few years, for the next round of fears over supply shortages, and West Africa presents unparalleled opportunities in this regard for both local and international investors and businesses seeking to expand their activities across these markets.
Despite challenges which are common to all African mining investment destinations, including low levels of industrialisation which limit potential value addition to extracted minerals, and a rapidly-evolving regulatory environment as host governments seek to increase fiscal revenue and lay the basis for sustainable economic development, investment opportunities at all levels of exploration and production continue to attract new and confirmed industry players to West Africa.
Asian and Indian investment continues to flow into African mining and infrastructure projects, as these investors seek opportunities to fill structural shortfall in a range of minerals, particularly iron ore in West Africa, and demonstrate significant tolerance for political risk. Australian, Canadian and UK juniors and mid-size gold producers are continuing to show sustained interest in the region, with a series of well-publicised acquisitions recently. Investors are supporting such growth, with a number of West African ventures raising funds, both via capital markets and through more innovative funding mechanisms, including streaming and royalty deals.
As investors search for better opportunities, the African continent with its vast mineral potential offers such attractive investments: investors and businesses with sound local knowledge will be able to address the associated risks in order to seize them.