Commodities Buzz: Investment in Africas mining sector to rise

Despite the fact that, through the enactment of new laws and regulations, local governments in Sub-Saharan Africa are starting to claim a larger share of their countries mineral resource wealth,as per a report from BMI Research. The investments in the region will continue to rise in Q3-2018. In an industry overview published today, BMI presents the recent changes to the Democratic Republic of Congos mining code as an example of a situation that challenges all the parties involved, but that is very unlikely to cloud miners interest in venturing in the country. According to the market research firm, the DRC and others will benefit from mining mergers and acquisitions taking place thanks to improved balance sheets following a surge in prices for key commodities over 2017. A noteworthy case -the document states- is Glencores purchase of the remaining stakes in the Mutanda and Katanga copper-cobalt mines in the DRC for $ 922 million and $ 38 million, respectively.

The firm foresees other major African players such as AngloGold, Randgold and Impala Platinum improving their profit margins in 2018, something that benefits hosts countries as well. BMI says that this would be the highest free cash flow in six years, which would support a return to growth strategies, probably with a focus on brownfield projects and partnerships.According to the firm, asset sales and reconsiderations of planned investments are in the forecast due to John Pombe Magufuli governments recent decision to restrict foreign banks, insurance companies and law firms working or financing the mining sector.