Which countries welcome mineral explorers and which are a geopolitical risk?
By Luke Holland
The mining and mineral exploration sectors have always been dynamic beasts, continually shifting track to meet the ever-growing demands of the global population. Whilst the concept of exploring and mining minerals is simple, the act of doing so is quite the opposite. Prior to any works commencing in a jurisdiction, one of the largest obstacles explorers and miners find themselves tackling is obtaining the necessary permits from the host jurisdiction. Whilst this might sound straight forward, it is anything but so, and of course obtaining them is one thing, holding on to them is another!
A jurisdictions stance on mining related activities is a critical factor in decision making for both any explorer or, indeed, an investor. Some nations go to significant lengths to showcase their receptiveness to the industry, whilst others vacillate, depending on which end of the political spectrum holds power. This geopolitical landscape is a key factor to consider prior to investing in any jurisdiction. As so often is the case, some of the most metal endowed jurisdictions lie within the borders of the developing world. This poses a risk to both explorers and investors alike, as governmental stability can be an issue.
This theme has recently reared its head in West Africa, with several mineral rich countries experiencing political instability.
Burkina Faso is one such nation struggling with geopolitical stability. In late 2022, a military coup headed by now Interim President Ibrahim Traore seized power, amid growing concerns over a sprawling Islamist insurgency. An increasing number of attacks on the mining industry in the area has caused gold production to drop by up to 15%. This instability poses a real threat to investors, as security risks halt exploration efforts and so prevent new mines coming on-line. Richard Hyde, executive chairman and CEO of West African Resources sees the gold industry in the country declining over the next five to ten years.
Burkina Faso’s military coup resulting in a vanishing gold boom Source: Africa News
Similar issues are at the forefront in neighboring countries. Mali too, has borne witness to two military coups in recent years. Again, an Islamist insurgency has been flagged as the main driver of these coups. In addition to the risks associated with military coups, Mali is seen to be tracking down a path of resource nationalism, which again casts risk for the investor. In 2022, Mali created a new state-owned mining company – Société de Recherche et d’Exploitation Minière du Mali (Sorem SA) – in effect to take a larger slice of the revenues from its natural resources. Whilst resource nationalism is not uncommon, it poses a significant threat to investors, as there is the potential for the state/government to assert control over their nation’s natural resources, often with no compensation or recourse for the present operators.
On the other side of the spectrum, some African nations are being proactive in highlighting their openness for investment. South Africa in 2022, released its strategy for the exploration and mining industry within its borders. As a nation boasting both critical and battery minerals, essential for the green transition, South Africa has significant investment potential.
Proactive initiatives such as increasing the nation’s geological mapped footprint (1:50,000) from 9% to 14% over the next 5 years and providing both technical and financial backing to selected junior explorers based on geological potential, are some of the key drivers South Africa is utilizing to attract exploration investment. Hoping to attract a 5% share of global exploration expenditure by 2025, this sector looks open for business and investment opportunities.
So, what’s happening in this space?
ZEB Nickel Corp. [TSX.V: ZBNI], recently released an updated 3D model of their project, encompassing both historical and inhouse drilling. Initial insights suggest higher grade nickel sulphide mineralization at depth and so poses an opportunity to grow their NI 43-101 historical resource.; an interesting prospect to keep an eye on.
Platinum Group Metal [TSX: PTM], is currently engaging in an infill drilling campaign at their Waterberg Project. CEO and President Frank Hallam states, results to date have met or exceeded expectations and are consistent with the modeled mineral resource. The program targeting near surface inferred and indicated resource blocks aims to boost confidence levels and reduce the overall time to mining; definitely a project to watch in the short term.
Stepping away from Africa and jumping across the Atlantic to South America, we see a contrasting image portrayed to the mining community, from some of the continent’s key extractive players. Peru, the world’s second largest copper producer is currently experiencing its highest levels of civil unrest in 20 years. Beginning in December of last year, the country is being rocked by anti-government protests, demanding the resignation of the current president Dina Boluarte. Protests have resulted in blockades of road infrastructure in the copper rich south, threatening production and transportation. Already significant producers, Glencore and MMG have had to temporarily suspend operations at their Antapaccay mine and Las Bambas, respectively. Further unrest and disruption is expected and so poses a significant threat to investment in the region.
In contrast, neighboring Chile, the single largest producer of copper globally, is relishing the mining spotlight. After a turbulent 2022, Chile is set to go on and provide exceptional opportunity for investors. Having recently launched the “Invest in Chile” plan, the government is set to boost the country’s economy by not only protecting but nurturing their prolific mining sector. The plan outlines improved access to financing and tax advantages for private investments; moreover, the Chilean Government will reopen foreign investment offices overseas to support its domestic industry. Additionally new copper mines will benefit from a five-year hiatus from a new tax geared at mine output. This highlights a key shift in the geopolitical landscape supportive of the Chilean extractive industry.
So, with all this positive news surrounding the Chilean mining industry, where does the value reside?
ATEX Resources INC. [TSXV: ATX], recently released exciting news from their Phase 3 drilling at the Valeriano Copper-Gold Project, in the Atacama region. ATEX have successfully confirmed the continuity of their high-grade copper porphyry trend to the northeast, by a further 200 metres, as well as extending mineralization along a new trend to the west. Encouraging news from this explorer, one to watch moving forward.
Hot chili Limited [ASX: HCH], another junior providing exceptional value, Hot Chili, have recently commenced drilling at the Cortadera copper-gold discovery. Having already more than doubled the prospective strike length from 2.3km to 5.2km, the company plans to further boost confidence, with a 10,000m budget testing four porphyry targets in the western area of the project. Additionally, Hot Chili is on track to deliver a prefeasibility study in 2024, for their Costa Fuego property, a project capable of producing 100ktpa Cu in the next five years. A hugely impressive portfolio which firmly has this author’s attention.
Last, but not least, CleanTech Lithium PLC [AIM: CTL], has recently been granted all exploration licenses for its Llamara project, covering a whopping 344 km2. Historical geophysics highlight a potential thick subsurface brine aquifer which the company plans to drill test in its upcoming program. Additionally, drilling aimed at increasing existing resource estimates at the company’s flagship projects, Laguna Verde and Francisco Basin is ongoing.
With the world making the green transition, projects like that of CleanTech lithium will become ever more important.
A jurisdictions geopolitical landscape is a crucial factor to consider when diving into the exploration and mining markets. This ever-changing landscape can so easily shift to the detriment of some and benefit of others. It pays to be vigilant. One final note for optimism is the demand for the world to go green. Jurisdictions rich in battery and critical metals will be sure to flaunt their importance for the green transition and so provide scope for investment as Governments grapple with the climate crisis and the drive for sustainability.