Still recovering from the post-pandemic slump, 2022 proved to be a turbulent year for the mining industry. However, the sector is primed for growth in 2023 on the back of several positive headwinds.
This according to Johann de Bruin, founder and CEO of Erudite, an engineering, procurement, and construction management (EPCM) company with operations across Africa.
“The mining industry has seen its fair share of incredible highs and lows over the past decade, 2022 being no exception. South Africa faced prolonged strikes early in 2022, as well as continued energy woes, higher than usual rainfall, global supply chain disruptions, and a volatile commodities market. The picture was no brighter for other African nations either,” says de Bruin.
He adds, “Provided that the commodity prices stay high and the rand remains relatively weak, encouraging exports, the mining industry should stabilise in 2023 and begin its slow return to pre-pandemic levels.”
De Bruin believes that calmer winds lay ahead, offering four predictions for the mining sector in 2023:
1. Exchange rate slump
The rand was 8.47%[JH1] weaker year-on-year against the US dollar in December 2022. De Bruin notes that, simply looking at the steady decline in value of the rand in recent years, it’s safe to assume that the trend will continue.
“While a weaker rand is less than ideal for the average consumer, it is beneficial for exporters. Local goods and commodities become less expensive for our international trading partners to acquire in comparison to competing markets, while the rand value for exporters is higher, which means that producers receive more for the same goods.”
2. Supply chain recovery
As the world enters the final recovery stage from the post-pandemic slump, and countries adjust to and find workarounds for disruptions caused by the war in Ukraine, de Bruin adds that most all of the supply chain issues plaguing the industry should be resolved in 2023.
“South Africa, especially, has the opportunity to redefine its trading relationships in the coming year, finding partners with the ability to better supply us with essential project materials.”
3. A surge in new projects
As other issues are resolved globally, de Bruin believes that there will be a pronounced increase in industry investment for the exploration for new mineral deposits, the founding of new mining operations, and expansion of existing mines.
“The broader continent of Africa especially, has immense potential to quickly grow into a significant player in the battery commodities market. Demand for electric vehicles and other electronic devices is expected to see a sharp increase in the next few years, and many African nations with large deposits of key battery commodities have the potential to dominate this space.”
4. International opportunities
Extractive industries, de Bruin notes, are driving the global post-Covid economic resurgence, regularly revealing new opportunities in the market.
Additionally, as the war in Ukraine seems set to further fuel global shortages of many commodities in 2023, Africa and South Africa, particularly, are poised to help resolve growing global demand issues.
“As an example, China’s severe congestion issues at industrial ports may reach the point of collapse in the coming year. The global reliance on Chinese exports is being tested, with most countries looking for alternative suppliers.”
As China is the sixth [JH2] largest commodities producer in the world, de Bruin believes that Africa can easily gain market share if China’s issues continue.
As for Erudite, de Bruin states that the company is primed to help new and developing mining operations expand and become competitive on the international stage.
“We have been quietly building up strength this year and are ready to make a big impact on the industry in 2023. We have attracted some of the top technical talent in the world, which places our engineering and project delivery competencies at a level where we’re able to confidently compete with any of the other multinationals with offices in South Africa.
“Additionally, we were recently awarded an EPCM contract for the Makhado project in Limpopo, and nearly all of our existing projects across the continent have secondary phases in development.”
Erudite has further established local entities in Zimbabwe and Botswana, and expects a significant uptick in projects from those regions, he concludes.
[JH1](R17.4713 - R15.9921)
Source: https://uk.investing.com/currencies/usd-zar-historical-data?utm_source=google&utm_medium=cpc&utm_campaign=18999286202&utm_content=636632057474&utm_term=dsa-1546555491814_&GL_Ad_ID=636632057474&GL_Campaign_ID=18999286202&gclid=CjwKCAiAv9ucBhBXEiwA6N8nYI-mgORLc3MkUNlz5rGmjhV2iyOwHGOnxTNp9jF4Pd6ZZRC2OcGNPhoCInkQAvD_BwE
[JH2]Background source: https://www.investopedia.com/articles/markets-economy/090516/10-countries-most-natural-resources.asp
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