Fresh Optimism In Mining Sparks Opportunities For Moore Stephens

The upswing in the mining industry, which was reflected at the 2017 Investing in African Mining Indaba in Cape Town in February, has opened up exciting opportunities for Moore Stephens. 

Michael Simms, Moore Stephens Mining and Energy leader, based in London, was upbeat about projects which had survived the downturn cycle. Together with the more optimistic outlook for a number of commodities, he expects the expansion of Moore Stephens firms and increased presence in African countries to lead to wider opportunities.

“It is great to know that with new Moore Stephens Africa network firms in countries such as Nigeria, Ghana and Sierra Leone, our mining clients are being serviced by reputable firms that have been through a rigorous quality review process,” said Simms.

The improved outlook towards commodity prices, particularly iron ore, coal and base metals, has been a boost for the sector. 

“Improved commodity demand from China during 2016 has been a positive sign with the potential for increased spending on infrastructure in 2017 an important element driving this upturn in demand,” said Olivier Barbeau, Moore Stephens South Africa Mining Leader based in Johannesburg.

Barbeau, who has recently advised several Chinese mining operations entering the South African marketplace, has experienced first-hand the increased interest in the Southern African mining market sector.

Moore Stephens partners and staff from South Africa, the UK and Australia attended the 2017 Investing in African Mining Indaba, as well as side events.

David Tomasi, Mining Partner based at Moore Stephens Perth said it was clear clients that had tightened up on their costs over the past few years were in a stronger position.

“Small to mid-cap projects are finding it easier to be funded, as investors start to look for value. This is a real sweet spot for us.”

“Since the beginning of 2016 we have seen increased interest in potential Africa opportunities as well as South African clients of Moore Stephens seeking to enter the Australian mining market with innovative mining technologies,” said Tomasi.

Laura Pingree, Director of the Moore Stephens Mining and Energy Sector team based in London said the mood at the Mining Indaba this year was more positive than last year.

“We’ve been doing groundwork for the past couple of years, and working really hard. Now that the market has picked up, people are coming to us. Companies are interested in a more serious African footprint.”

Pingree said people were also interested in meeting up with Moore Stephens representatives through its growing spread of member firms of Moore Stephens International Limited. 

Given the increasing interest in mining opportunities across West Africa over the past two years, Moore Stephens is expanding its member firm network growth strategy to encompass the enrolment of quality firms in Mali, Senegal, Togo, Burkina Faso, Ivory Coast and Guinea Conakry during 2017.

“It is essential we have coverage in these key countries to support the Moore Stephens clients with local knowledge and expertise, said Moore Stephens Africa Strategy Advisor, Jeff Blackbeard.

Other developments have also prompted interest.

“We are currently working on a corporate finance transaction that will bring a world class product manufactured in South Africa to the world market,” said Hans Hillermann, Corporate Finance Partner for Moore Stephens Durban.

“This innovation provides mining operations cost-effective products in the period when the pressure is to reduce cost reduction.”

Simms, who attended the Mining Indaba for the 7th time this year, said despite the more positive outlook, he expected the recovery in the sector to be gradual, with political risk in some African countries and compliance pressures still causing some uncertainty.  He has noted an increasing trend towards opportunities in renewable projects.

Tomasi said copper, unconventional gas and renewables were definitely starting to generate interest, particularly in Africa where reliable power supply is such an issue.

“I expect nickel, platinum and lithium to have a bit of a run as the world craves better sustainable energy solutions, with power storage being a key component on this,” he added.

The observations by Moore Stephens were reflected in statistics for the 2017  Investing in African Mining Indaba. While overall attendance showed a modest increase, with a total of a total of 6,080 attendees, a resurgence in the sector attracted more investors.

The event had 71% more investors attending this year than in 2016, said Phillip LoFaso, director of marketing and media relations for the Investing in African Mining Indaba.

Most notable was the 50% increase in the number of small cap and small private mining companies attending the week-long gathering in Cape Town.

Besides its regular audit and advisory work with clients, Moore Stephens is also at the forefront of conducting country reconciliations for the Extractive Industries Transparency Initiative (EITI), having completed the process for countries ranging from Mali and Zambia to Burkina Faso, Ethiopia and Myanmar.

Fifty-one countries are either fully compliant or are going through the process to be part of the EITI, a global standard which promotes the open and accountable management of natural resources, mainly of oil, gas, metals and minerals. Moore Stephens has conducted the highest number of reconciliations for the EITI.