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Buoyant mood at Mining Indaba; regulatory uncertainties remain

For many bankers, government delegates and mining executives, this year's Mining Indaba in Cape Town, South Africa, might be the most enjoyable in many years. A rebound in commodity prices and earnings as well as a growing appetite for capital expenditure indicates that the sector is finally navigating toward better times.

While debt and financing issues dominated 2017's conference, this year's agenda points to a remarkably buoyant mood among industry participants. Exploration and junior miners take center stage, alongside sustainability and innovation themes.

"I think the mood of the conference will be upbeat," Altus Strategies Plc's CEO Steven Poulton told S&P Global Market Intelligence. "For the past six years, the mantra has been: don't you dare to buy anything new, we can't cope with what we got and we shouldn't have spent all that money anyway. That mantra is now rotating to: we haven't got [any assets] and the competition is getting them."

Deal-making activity has generally picked up in recent months, and Mining Indaba, as one of the biggest sector gatherings globally, is set to follow this beat.

"There's only a certain number of projects in the world, and there is only a certain number of companies [that can buy them]," Poulton stated. "The rotation [in deal-making] has already started and that will be reflected at the conference."

However, some topics, especially on the regulatory horizon, are unlikely to undergo a lot of progress.

"We are not expecting any news on the [South African] Mining Charter," Charmane Russell, a spokesman for the country's Chamber of Mines, told S&P Global Market Intelligence.

For nearly 12 months, South Africa's mining industry has experienced a roadblock on the back of a controversial reviewed mining charter that producers and investors alike have branded unworkable and value-destroying. A court hearing of the charter is scheduled for Feb. 19 to 21.

"The industry has been encouraged by recent changes within the [South African] ruling party, as well as the appointment and release of terms of reference of the inquiry into state capture," Russell elaborated. "How to bridge the trust deficit between governments, communities and mining companies is certainly going to be something that will occupy discussions. Pleasingly, we will be seeing a great deal more attendance and speaking by community representatives and NGOs."

Other African countries including the Democratic Republic of the Congo and Tanzania have also made changes in their law, and many more are mulling similar moves.

Questions around regulatory certainty and good governance were the subject of a Feb. 4 invite-only ministerial symposium that brought about 100 ministers and mining executives together.

Digitalization, or what is called the fourth industrial revolution, is equally topical at the event as the business strategies of producers are increasingly embracing aspects of innovation and digital processing.

"What is critical in an African context is to ensure that people are at the center of, and beneficiaries of, this revolution," Russell stated. "Most importantly, it will be about attracting investment into mining — and particularly in South Africa."

Commencing today, Mining Indaba will run until Feb. 8.