Africa needs to attract more junior exploration companies
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Africa needs to attract more junior exploration companies
It is concerning that global exploration budgets for Africa decreased in 2024.
By Leon Louw founder of WhyAfrica and editor of the WhyAfrica magazine
Although African countries have enormous potential and hosts large deposits of critical minerals, the continent is falling behind in attracting junior exploration companies, with competing jurisdictions in especially Latin America attracting more attention in 2024.
We all know that Africa has massive reserves in the ground, but that is not enough to impress international investors and junior exploration companies.
Political stability, regulatory certainty, good infrastructure, reliable water and electricity supply, safety, and security of tenure is what seals the deal.
Avoiding high risk jurisdictions
Junior mining companies are trailblazers and although their appetite for risk is high, they need to feel secure before investing in extended exploration programmes.
If they do happen to stumble on viable deposits, they need to know that their investment will be safe for the next 20 years at least, even if a new government comes to power.
Sudden changes in policy, unnecessary bureaucracy and red tape, threats of renewed resource nationalisation, land expropriation or safety concerns will keep exploration companies away.
According to the S&P Global Exploration Insights report cash flow has become a persistent challenge particularly for junior explorers that depend heavily on the marketplace for funding.
Consequently, exploration companies will go to regions where they feel safe at the expense of high-risk jurisdiction.
Latin America attracts explorers
According to the S&P report Latin America continues to attract the largest share of the global exploration budget, a trend that has persisted over the last three years at least.
In contrast both Africa and the Pacific region have broken a three-year trend of increasing exploration budgets, reporting decreases of 1% and 12%, respectively in 2024.
“This shift underscores the challenges facing these regions, as they navigate the broader market dynamics that have led to a re-evaluation of priorities in exploration funding,” states the report.
Africa needs to attract more junior exploration companies