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Trumpism could boost Africa mining - analysts

Feb 07 2017 10:35

Cape Town – Global uncertainty following Brexit and the election of US President Donald Trump could have favourable spin-offs for mining in Africa, says Morné van der Merwe of global law firm Baker McKenzie Corporate. 

The conflicting views of the West (Trump’s protectionist utterances) and the East (China’s plea for economic globalisation) could well present an opportunity for Africa.

“Although there is continued insecurity in the South African mining industry as a result of persistent regulatory insecurity, labour unrest and inadequate infrastructure, the different global headwinds could potentially drive foreign direct investment in the mining sector in Africa and the development of infrastructure in particular,” he says.

Janine Howard, associate at Baker McKenzie's Corporate adds that China is currently one of the largest trading partners with Africa - a relationship that is largely fuelled by the China’s “insatiable appetite for energy and minerals”. 

“South Africa, in particular, is China's largest trading partner in Africa and has solidified this position with significant encouragement for Chinese investment into various industries, including mining, beneficiation and manufacturing,” says Howard.
 
In a stark and surprising contrast with the UK and US nationalist agendas, China has opted to take a strong stance in favour of globalisation and in particular, economic globalisation. 

READ: China cites 'The art of war' as Trump signals trade battle 

Trump's pro-America policies have included a strong stance against China and the import of Chinese goods into the United States. The controversial new president has even gone so far as to call China “Public Enemy Number One”, sparking fears of a trade war in that tariffs would be introduced for Chinese imports.
 
While it is still early days in the Trump regime and a tumultuous period in global economic activity, China's strong supportive stance on economic globalisation and it’s clearly articulated and executed intentions to invest in Africa and, in particular, South Africa bode well for the future of the local mining industry, says Van der Merwe.  

Increased investment into the mining sector, beneficiation and manufacturing industries will only improve South Africa's economy in the years to come, provided South Africa is able to create an environment agreeable to such investment. 

READ: Four areas where mining does a lot for South Africa 

“We are on the brink of the next commodity boom and if timed right there are huge benefits to gain. 

“However, we must first fix the current state of affairs within the industry. In fact, it may be the fruits won from international instability that aid South Africa to fix certain domestic factors and ensure prosperity and longevity of the mining industry.” 

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