Regardless of the potential threat mining risks pose, Africa’s mineral industry has the power to attract across-the-board and long-standing international investment, offering ‘real’ economic development.
When we look at the mineral industry in Africa we notice the inevitable mining risks involved. Such mining risks include insufficient infrastructure, perception of corruption, unfair licensing practices, political risks and lastly, the high costs related to starting or further developing a mining operation in Africa.
Mining investors have to always be aware of threats that mining risks might have on an operation. With this said here are a few question investors should answer as a means to manage potential mining risks associated with Africa’s Mining Sector.
- Touching on mineral potential, investors should question if the country offers good geological prospects and if it offers good data to guide investors.
- Touching on policy stability ask the following questions – is policy driven by steady establishments or by political convenience? How strong is the governance framework?
- Touching on sector management find out what is the quality of the institutions responsible for managing Africa’s mining sector and if the legal and regulatory framework provides consistency and predictability.
- Looking at tax burden, investors need to ask the following – Is the effective tax rate a deterrent to new investment? Are there hidden taxes?
- Concerning infrastructure availability find out if there are any roads, railways, ports, energy and water systems which could be used for the mining operations?
- Touching on skilled labor supply investors needs to find out the availability of skilled technical and managerial workers.
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