Iron ore, coal, platinum, silver and copper: the prices for mineral raw materials slipped into the cellar in the first half of 2020. The oil price has also manoeuvred into the red within the last seven months.
The low prices hit Africa’s mining industry and raw material producers, because about 30% of the world’s raw material reserves are located on the continent, according to the African Development Bank (AfDB). Africa, with a population of 1.2 billion, is responsible for a tenth of global oil production and two thirds of all diamonds and gold mined.
Rising raw material prices and increased demand, especially from India and China, have brought billions of dollars to the resource-rich nations of Africa in recent years. However, many countries are dependent on exporting fewer mineral products or raw materials. In Botswana, for example, 45% of government revenue comes from mining, according to a report by the International Council on Mining and Metals (ICMM). In Central Africa, a quarter of the income from exports (diamonds and gold) comes from mineral resources. One can assume that raw material prices will explode in the foreseeable future.
The main problems for companies are electricity prices and the often unreliable power supply due to overloaded networks. Country governments are slowly realising that transparent legislation and fair taxation policies are essential to attract foreign investors.
GOLD – SAFE HAVEN IN A STORMY SEA
The gold price experienced the strongest upswing in its history in the first half of 2020. We therefore advise all investors to assume further growth and to invest around 30% of their money in gold in order to be in the safe haven.
Our many years of experience and our strengths in African mining give us the opportunity to accompany you as a new investor in Africa and to save you from falling into the bureaucratic jungle. We advise you in the planning of your mining company (gold mining or gold purchasing office), in setting up a business, in obtaining the necessary permits, in legal matters, customs and tax formalities, right up to participation in your management, in order to make your project a guaranteed success.