JOHANNESBURG (miningweekly.com) – It is an age old adage that, when the mining industry enters a slump, exploration budgets, particularly those designated for greenfield activities, are the first to be curtailed. This has certainly been reiterated over the last few years as the drastic slump in commodity prices and, consequently, mining company revenues have been mirrored by a noticeable reduction in prospecting expenditure on a global scale.

According to Canada-based think-tank the Fraser Institute, which interviews over 3 000 managers and executives involved in mineral exploration and development yearly as part of its Annual Survey of Mining Companies, the decline of commodity prices by almost 40% since the collapse of the commodity supercycle towards the end of 2011 has resulted in a decline in exploration expenditure from some $6.2-billion in 2012 to just $2.2-billion last year.

While exploration activities have been curtailed on a global scale, the jurisdiction that has been most profoundly impacted on by this trend over the last few years is sub-Saharan Africa, according to the latest figures released by SNL Metals & Mining, which indicate that nonferrous exploration spend in Africa declined from $3-billion in 2012 to $1.7-billion in 2014.

The decline in exploration activities has occurred in spite of the region being the most underexplored and highly prospective on earth. In fact, it is believed that, although most of the large, well-exposed and richly mineralised districts have been found and exploited, there is still much mineral wealth still to be discovered in Africa.

Speaking to Mining Weekly, former honorary professor at the University of the Witwatersrand and thirty-fifth International Geological Congress (IGC) co-president Richard Viljoen states that the main reason for this assertion is that, firstly, Africa has a number of favour- able geological terrains hosting varied types of minerals and, secondly, much of the mineral wealth yet to be discovered is contained in ancient rock buried deep under younger successions; thirdly, the most up-to-date mineral exploration techniques, which are yielding excellent results in other prospective jurisdictions, have not been applied in many parts of the continent. “There are still world-class deposits to be found, mainly as extensions to the larger known mineral fields,” says Viljoen, adding that an excellent example of this is the 2011 discovery of the Waterberg platinum deposit, which is a buried extension of the Bushveld Igneous Complex.

Mining specialist firm SRK Consulting South Africa partner Hennie Theart further elaborates that, because much of the mineral wealth yet to be discovered is probably buried deep within the earth, exploration for such deposits will be expensive, requiring large-scale sophisticated geophysical surveys, tectonic studies and deep drilling.

While the expense of this type of intensive geophysical exploration is no doubt inhibiting prospecting activities in the present economic climate, there is consensus among geoscientists and mining professionals that the factors that are proving to be even greater hindrances are the lack of infrastructure, political risk and the lack of and accessibility to African geodata.

Infrastructure Constraints

SRK’s principal engineering geologist, John Stiff, insists that the focus on exploring for and developing mineral resources is, in many respects, putting the cart before the horse. This is especially true given that the viability of mineral deposits is often judged by their distance from export terminals, particularly at the coast.

“The first step should be for governments to identify the geotechnical constraints to infrastructure development, especially in terms of rail, electricity and water, and have infrastructure development programmes in place that will support economic growth in general and mineral resource development in particular.”

Stiff adds that an indication of many countries’ limited prioritisation of infrastructure development is Africa’s dwindling involvement in the International Association for Engineering Geology and the Environment, with South Africa currently being the only active African participant in the organisation.

A prime example of how the lack of infrastructure is not only inhibiting exploration but also sterilising known mineral deposits is the Democratic Republic of Congo (DRC). Randgold Resources CEO Mark Bristow tells Mining Weekly that, as it has the world’s largest untapped natural resource, it should be a hive of prospect- ing and development activity. Yet, its mineral endowment is being sterilised by the lack of even the most basic of infrastructure. Randgold Resources, an exploration and mining company that is au fait with the challenges of operating in Africa, is one of the few organisations actively prospecting in the DRC.

Political Risk

The second and very significant factor inhibiting exploration is the issue of political risk. As mining is a long-term investment, exploration companies and their investors require not only a stable governing regime but also security of tenure. Unfortunately, a wave of mining policy adjustments is sweeping across the continent with many countries, from South Africa to Niger, opting to change legislation in the wake of the economic downturn.

“The impetus towards reforming mining legis- lation to attract investors has lost momentum. Instead, the concept of nationalising mineral assets is again gaining ground. This trend is likely to delay development in Africa’s mining sector, as finance for projects may be more difficult to find if mineral tenure is not considered to be secure,” says Theart.

Lack of Geodata

Because prospecting for minerals can be a laborious and often hit-and-miss affair, it is often the case that economically viable deposits will only be discovered or proven by the fourth or fifth company investigating a particular area. Consequently, the availability of and access to a country’s geoscientific data is absolutely funda- mental to the process of proving a mineral resource.

Unfortunately for companies prospecting in sub-Saharan Africa, both the quantity and quality of geodata available in many countries are significantly poor, especially when compared with other mining jurisdictions.

Until quite recently, states Viljoen, there has been a general lack of understanding among many African administrations of the benefits of creating geoscience databases for use in exploration and mining. “Many governments are only now beginning to realise what is required in the chain of events from exploration and acquisition of prospecting licenses to the granting of a mining licence and the establishment of a new mine.”

While many governments may now be alive to the importance of databases, the ability to collect and collate geodata is being constrained by a lack of both skills and funding. In fact, Viljoen states that, at a time when applied earth science research at African institutions is most desperately needed, funding is being cut rather than increased.

Moreover, a great deal of existing geological information has been lost as government organisations, universities and companies have, in the wake of the global economic recession, reduced funding allocated to archival activities, says Geological Society of South Africa (GSSA) MD Craig Smith.

He adds that, of all geological surveying being undertaken, the basic functions of those activities are not being implemented effectively. Besides the fundamental role of producing and updating geological maps at various scales, geological surveys should also be providing regional geochemical maps based on soil sampling, in addition to various geophysical maps generated from airborne and ground surveys, says Smith.

Such data should be collated into one repository and made readily available to exploration companies at reasonable prices, which is generally not the case currently.

GMIS Strategy

On the back of this growing awareness of the importance of geoscientific information, a continentwide strategy to compile, collate, process and store existing geodata in a single repository located in Africa has recently been initiated. This Geological and Minerals Informa- tion System (GMIS) strategy is being undertaken under the auspices of the Africa Mining Vision (AMV), an initiative of the United Nations Economic Commission for Africa, which aims to promote mining as a main driver of continental development.

In addition to the support required from all African governments and university and geoscience agencies for the GMIS strategy, the AMV has proposed to establish a mechanism to obligate all private exploration companies to lodge their geoinformation with the national geosurvey entity of the relevant country.

While Bristow argues that such an initiative is already dead in its tracks, as there is not a single African country with a comprehensive geodata platform on which to base a continentwide platform, others are more positive, believing that now is the best time to implement such a strategy.

“The minerals sector remains cyclical, so downturns provide the natural fit for reskilling, retooling and overall consolidation of data and resources. As price cycles improve, a shift to active exploration and production draws in these resources,” states GSSA president Jeannette McGill.

Smith concurs, adding that the best time to accelerate the initiative and invest in geosciences is when “blood is in the streets”.

A coordination meeting to discuss the strategy for implementing the GMIS is due to be held in Cape Town during the thirty-fifth IGC.