On 24th March, the 4th instalment of the South Africa Investment Conference (SAIC) took place at the Sandton Convention Centre.
The SAIC was launched in 2018 with the primary purpose of showcasing investment opportunities available in South Africa. Other goals which the conference boasts include positioning South Africa as a “globally relevant player and partner in trade and investment” – a partner which can compete in a global market – and highlighting South Africa’s strategic importance in the region.
Indeed, anyone wanting to build or expand their business in Africa would need to have an understanding of the region and its geopolitical issues.
The SAIC goal to attract R1.2 trillion investment over five years, which was set towards the beginning of President Ramaphosa’s incumbency, is now said to be within reach as South Africa has succeeded in attracting, all in all, a rather impressive R1.14 trillion, around 95% of the goal.
The sizeable investments pledged range across the following sectors: energy, automotive, mineral beneficiation, metal fabrication, healthcare and pharmaceutical, creative industries and fashion, infrastructure, property and logistics, food and beverage, development finance institutions, business process outsourcing, ICT and digital services, French businesses through the French Chamber of Commerce, government funding programs, other small business, and other manufacturing and SEZs.
Of all the industries listed, there are a few which would be capable of withstanding serious political or economic turmoil. Some of those are ICT and digital services, perhaps the pharmaceutical industry as we saw during the recent pandemic, and most notably mineral beneficiation and metal fabrication.
Regardless of what is happening around the globe from a geopolitical or economic perspective, platinum group metals and chromium will be in demand, as will other materials used for the manufacture of stainless steel.
South Africa and Zimbabwe have around 87% of the world resources in terms of chrome ores. This being the case, companies looking for a sustainable and scalable source of raw materials for the alloy industries, including for the manufacture of stainless steel, will need to look to Africa. Those looking to Africa will absolutely need to have reliable partners who know the continent and can provide a seamless global supply chain solution.
When it comes to platinum group metals (PGM) and specialty ore, commodity trading firm Pelagic Resources Pte Ltd (Pelagic) is one to look out for. The company has had strong and steady growth and its business model has been solid partnerships providing bespoke virtual supply chain solutions for clients around the world. They have built exceptionally strong relationships with suppliers, banks, state owned enterprises, traders and end-users. To do business within emerging markets, having a strong partner such as Pelagic is extremely important.
Pelagic has also grown through its own strategic investments. Last year, Pelagic secured a 22% shareholding in PGM and chrome producer Bauba Resources Ltd (Bauba), simultaneously entering into an evergreen agreement to market all of its chrome & PGM ore. Following that, infrastructure development and mining and materials company Raubex Group Ltd (Raubex) acquired a majority stake in Bauba, which gives Bauba the capability to accelerate the development of its own Kookfontein mine and associated infrastructure.
This in turn positions Pelagic as one of the larger chrome ore suppliers globally, establishing its firm position within the PGM market.
There has been reason for concern for South Africa’s economic situation, indeed the world’s economic situation following the last two years’ upheaval, however the incredible investments pledged at the SAIC do bring an element of hope and do stoke enthusiasm for what the country has to offer.
Within the mining and mineral beneficiation sector, African Rainbow Minerals committed to invest R11 billion, Anglo American is expanding their existing R100 billion investment by another R10 billion, Impala Platinum pledged R11.8 billion in new and expanded projects, Isondo Precious Metals is investing R140 million in the production of components for fuel cells, Canadian Ivanhoe Mines are investing R2.8 billion in mine expansion, Sedibelo Platinum Mines are investing an impressive R9.4 billion, Renergen are investing R14 billion in the construction of a helium and liquid natural gas plant in KZN.
South African Institute of Race Relations (IRR) project manager Terence Corrigan points out that “While the National Development Plan hoped to raise investment to 30% of GDP by 2030, it has not breached 20% since 2008. In fact, in 2019 – the year before that pandemic (and the first full year of President Ramaphosa’s incumbency) – it stood at 15.3%. In 2021, investment to GDP had fallen to 13%.
Impressive pledges and investments and speeches of course cannot guarantee a solid economy. Indeed, the world has now been shaken by the Russia-Ukraine war. Russia’s invasion into Ukraine has resulted in uncertainty, fears, high fuel prices and the expectation of supply shortages.
Incidentally, Russia is the world’s top producer of palladium and the second highest producer of platinum. South Africa is the top producer for platinum and the second highest producer of palladium. The current conflict is raising prices for these key commodities, albeit during times of great uncertainty.
No doubt the world will need to look more and more to jurisdictions like Africa for their metals and commodities and will need to do so with security of supply. This will not be the last time we see a conflict highlight how fragile global supply chains can be to disruption.
To manage uncertainty, partner your business with those companies, like Pelagic, who can manage and withstand global shifts and crises – those reliable companies who clearly have the capability to provide virtual supply chains and strong relationships with all stakeholders.
