By Helen Lubamba: Stanbic Bank Zambia’s Head, Corporate & Investment Banking (CIB)
Recently, Stanbic Bank Zambia, in collaboration with the Standard Bank Group, participated at the 30th Investing in African Mining Indaba in Cape Town, South Africa, themed: “Embracing the power of positive disruption: A bold new future for African mining.” This year’s event was designed to encourage and support the change required to move the African mining industry forward.
With advancements in technology, health & safety, environment, and exploration, the mining industry now finds itself in the early onset of disruption. However, along with the disruption, there are new business opportunities that emerge within the mining sector.
A few pertinent questions coming out of this year’s Mining Indaba were: How are mining companies navigating the complex challenge of providing minerals for the energy transition, while simultaneously reducing greenhouse gas emissions? What progress is being made in Net-Zero initiatives? How are mining companies prioritizing Environmental Social & Governance (ESG) factors in response to increasing scrutiny, and which factors are facing the most attention from investors in 2024?
Mining poses a contradiction between an activity that is seen as environmentally destructive but also necessary for us to meet the green agenda for the planet. Mining companies also need to redeem themselves from the decades-old perception that mines are there just to extract and go; and shift the focus to their role in establishing infrastructure, building communities, and ensuring sustainable good long after the mining activity has finished.
The key industry trend that will shape the trajectory of Africa’s mining sector will be the ability for various industry players to implement sustainable mining practices that focus on not only the economic aspects of their operations but also the Social and Environmental (SEE) issues. The social aspect speaks to initiatives put in place to safeguard Licenses to Operate (LTO) and community buy-in. The economic aspect focuses on the cost of mining in relation to the returns, and the environmental aspect relates to measures being put in place to safeguard the environment. Protecting the environment will further mean implementing lower impact mining techniques and the use of cleaner and more efficient mining methods.
The other factor that will shape Africa’s mining industry will be the use of eco-friendly equipment for exploration and actual mining. Mitigating the effects of climate change will also play a key role. This can be achieved by being deliberate about reducing, reusing, and rethinking the handling of mining waste.
One of the major issues that came out of this year’s Indaba was identifying key investment opportunities across the continent’s mining sector. As the world navigates towards cleaner energy solutions, Africa’s mining industry has ascended to the forefront of the global energy transition. The International Energy Agency predicts that critical mineral demand will more than double by 2030 and quadruple by 2050, with revenues reaching US $400 billion annually. Africa stands to gain immensely; because the continent holds around 30% of the world’s mineral reserves, including cobalt, copper, bauxite, lithium, and rare earth metals, which remain in high demand for clean energy technologies.
Technological innovation and investments will assist Africa to leverage this opportunity. For instance, the investment from KoBold Metals, the US start-up company that uses Artificial Intelligence (AI) to identify battery metal deposits for the Electric Vehicle (EV) and renewable energy revolution, has shown that Zambia’s rich mineral endowment will attract even more investment in the Copperbelt Province. The Silicon Valley-based company has embarked on a focused exploration program of the Mingomba Deposit, which it hopes to subsequently develop into a world-class mine.
Significant infrastructure developments, such as the Lobito Corridor, will also assist. Angola, the Democratic Republic of Congo (DRC), and Zambia launched the concessioning of the Lobito Port and the rail line in 2023, which represents significant infrastructure that will be operated under a Special Purpose Vehicle (SPV). This marks a significant step in enhancing trade and investment opportunities within the region, as it is not only the shortest route to the sea but also serves as a vital logistics facilitator for the region’s imports and exports.
In Zambia’s energy sector, the Copperbelt Energy Corporation Plc (CEC) announced the registration of their US $200 million Green Bond with the Securities and Exchange Commission (SEC), structured as a program whose proceeds will accelerate the actualization of ambitions to generate at least 200 megawatts of renewable energy. Since the First Green Bond registration announcement in December, we were thrilled to learn that the first tranche subscription towards the US $200 million Green Bond program was oversubscribed by over 178%. These initial results demonstrate the high level of interest from investors to back an entirely new funding instrument to advance renewable energy development in our country.
Stanbic Bank Zambia is committed to delivering social, economic, and environmental value. This includes contributing to our country’s own just transition journey to a Net Zero future; and investing and building resilience across Africa for the benefit of our economies, people, and communities.
We believe that strategic partnerships with industry players will ultimately improve the profile of positive externalities from mining operations through supporting the value-chain. For example, in infrastructure development to supporting social initiatives with key social impact stakeholders and government.
Stanbic stands ready to provide ecosystem support across the value chain of key mining operators, providing comfort from an offtake perspective in the business case and credit evaluation process.
The 2024 Mining Indaba was a success, as evidenced by the renewed commitment by mining executives to ramp up production in an environmentall… (truncated)