Green shoots for junior miners

The mining and mineral resources sector has endured a prolonged downturn in recent years, but there are signs of a recovery on the horizon. The revival is fuelled by the rebound in commodity prices that commenced in 2016. Ellen Clegg, Chairman of Shumba Energy, shared insights on the industry's outlook in an exclusive interview with CNBC Africa. Clegg's four-decade experience in the sector provides a unique perspective on the cyclical nature of the business. Clegg exudes optimism about the future trajectory of the industry, citing historical parallels to the 1973-74 cycle. During that period, global debt was soaring, inflation rates were high, and governments resorted to money printing. The resource sector thrived in such an environment, with gold prices skyrocketing by 134% and junior miners enjoying a significant surge of 205%. Comparing the macroeconomic factors then to the present day, Clegg sees a similar landscape with massive global debts and an inflationary backdrop. Furthermore, Clegg spotlights the rebalancing of commodities within the sector, with infrastructure and building materials gaining prominence. He notes the shift in best and worst performing commodities between 2016 and 2017, illustrating the dynamic nature of the market. The current focus lies on energy-driven metals like cobalt, lithium, and copper, which are propelling the junior exploration sector forward. While the outlook seems promising for junior miners, particularly those adept at capitalizing on the green and energy drive, Clegg expresses concerns regarding the regulatory and political challenges faced by miners in South Africa. The impending launch of a new mining charter, coupled with ongoing policy uncertainties, poses potential obstacles to growth and investment in the sector. Clegg emphasizes the stark decline in mining employment and economic contribution since 1994, underscoring the urgent need for conducive policies to reinvigorate the industry. As stakeholders await the unveiling of the new mining charter, the industry remains cautiously optimistic about the future. The recovery in commodity prices, coupled with shifting market dynamics towards sustainable and energy-focused minerals, sets the stage for a gradual resurgence in the mining and mineral resources sector. Junior miners stand to benefit from these emerging opportunities, provided they navigate the regulatory landscape and leverage the green wave sweeping through the industry.