A decision to invest in a mine in Africa should be made only after assessing your own investment profile. The news is always full of African mining stories. But that is because African mining is a continuous tale of skulduggery and mayhem, not because there are good mining investment opportunities. Just think Zimbabwe.
At the SME meeting in Salt Lake City earlier this year, Douglas B. Silver, Chairman and CEO, International Royalty Corporation, Engelwood, Colorado in his keynote address said that he refuses to invest in African mines. He noted:
• We are in a mining Supercycle driven by Chinese demand and a world-wide growing middle class
• China is a friend to the mining industry right now in that it is soaking up materials and driving a supercycle from which we can all prosper.
• Purchase of the sub-Saharan mining industry by government-controlled Chinese mining companies could lead to their provision of political support to African governments–the kind of thing the British did at the height of Empire.
Right now it looks at those the Chinese are poised to take over the mines of the Congo.
Her are two investor profiles of potential investors in African mines. If you fit one of them, then go ahead and invest in African mines. If you do not, take Mr. Silver’s advice, and mine:
The Livingston-Stanley Investor. This is the good old British gentleman type. He is the lord of the manor and the empire builder. It is he who carries the white man’s burden and the prayer book, guns, and shares to the heart of darkness. As good an example of this investor is John Chadwick who runs and writes the mining magazine International Mining. You can easily access the electronic version of his magazine if you seek enthusiasm for investing in African mines.
The Canadian Idealist. This is the lady from Vancouver who voted NDP, believes her daughter should go to Cuba to study medicine, and is convinced that all people are good, if only they could all get equal access to goods and services. She believes that investing in mines in Africa is a moral obligation concomitant with wise placement of the money from her late husband who worked for the mines of Canada. She is well wined and dined by Vancouver junior miners.
I own up that I was born and brought up on the mines of South Africa. My rejection of those same mines as an investment opportunity may be branded heresy. But I left, and so did Anglo American. They are so eager to get out of South African mining that they have put a billion dollars into the Pebble Mine in Alaska, and that is not at the top of my buy list.
Thus my advice: read all the news you come across on African mines. But do not consider this part of your reading for investment advice. Rather consider this part of your reading for shear entertainment, and maybe even enlightenment into the deepest, darkest ways of human nature. Unless you can get in on the coat-tails of a Chinese mining company.