Unlocking vast natural resources

The announcement by President Zuma during his State of the Nation address that the government will focus on infrastructure development was greeted with approval and enthusiasm and rightfully so. It is predicted that Southern Africa, especially South Africa and its neighbours Namibia, Botswana and Mozambique, are on the brink of enormous and unprecedented developments over the next few years in the energy and mining sectors.

For whatever reasons, the government over the last couple of years somehow neglected to properly maintain or improve the country’s transport, especially the railway system. But to stimulate much needed economic growth, foreign investment needs to be invited and jobs need to be created. In order for this to happen, infrastructure and all it entails, needs to be in place.

Bright future

Its potential could see Southern Africa become one of the most sought-after global regions and the economic prospects for the region and its people are exceptional.

For this potential to come to fruition, it is essential that the infrastructure needs to be able to handle the demands of large-scale mining activities and energy (gas and oil) exploration..

Presently Southern Africa’s transport networks of roads, railways and ports, are not only inadequate but in some instances, even non-existent. Without a proper transport infrastructure the mineral and energy potential of the region will remain untapped or under-utilised with limited dividends.

Southern Africa is globally renowned as a major producer of minerals, but recent reports of extraordinary large discoveries of oil, gas, coal and rare earth elements (REE’s) have once again focussed attention on the region.

Oil and Gas

Namibia: Had gone a bit quiet after initial excitement about petroleum production during the second half of last year. Namibian media reports claimed that the country could be rivalling continental petroleum powerhouses Angola and Nigeria by 2015 if the data released by the Namibian Government was anything to go by.

Namibia’s Mines and Energy Minister announced that Namibia could become an oil producer by 2015 with an estimated 11 billion barrels of oil reserve. If correct, this would place Namibia close behind Angola, currently Africa’s second biggest oil producer, with oil reserves estimated at 13 billion barrels.

In the Western Cape the local media speculated on the economic advantages this could hold for the province.

A senior executive in the South African petroleum industry responded that although the province does not yet have the required skills, the "lead time" of four years would give the industry time to expand its skills base, should funding be available.

Saldanha Bay, because of its available land, deep water port and established engineering community, has the potential to develop into a hub for the regional oil and gas activity.

Unlike oil and gas operations themselves, the supply industries serving these projects can be very labour intensive – the ship and rig-repair industry in particular would offer huge expansion potential to the service industry.

It is perhaps no coincidence that the Premier of the Western Cape in her state of the province address, last Friday, highlighted that the provincial government would launch a road network improvement project to support the Saldanha Industrial Development Zone initiative.

Mozambique: Has long been considered to be one of the world's poorest countries. This could all change soon as it is the home of one of the largest recent natural gas discoveries on the planet.

The Chairman and CEO of US based Anadarko Petroleum, co-responsible with Italian energy company ENI for the discoveries, said the find could be one of the most important worldwide natural gas fields discovered in the last decade.

The 30 trillion cubic feet find is massive and equivalent to 5 billion barrels of oil.

It could keep 22.5 plants like PetroSA’s gas-to-liquids (GTL) facility in Mossel Bay – which can deliver 45 000 barrels of fuel a day – going for about 20 years. It almost equals the total production capacity of all of South Africa's fuel refineries.

The discovery, estimated to be worth approximately US$ 800 billion, is worth 36 times the current Mozambican economy.

Politically relatively stable it is  geographically well positioned to service the already enormous, but still growing, gas appetites of China and India that many major oil companies are expected to enter in a new kind of "gold rush."

New infrastructure projects, especially for liquefied natural gas( LNG) facilities, will follow.

Malawi: Following on exploitable gas and oil reserves discovered the last few years in Uganda’s Lake Albert, and recent gas discoveries in offshore Tanzania, the Malawi government has just awarded oil exploration rights on Lake Malawi, Africa's third-largest lake.

Coal

Mozambique: Also home to one of the world's largest known untapped coal reserves, it is estimated that the coal reserves of Mozambique total 23 billion tons, exploitable for at least 40 to 50 years.

Tete province in north-west Mozambique, in particular the Moatize district, is fast turning out to be one of the world’s largest undeveloped coking coal regions. Miners from across the globe are rushing in to join the Brazilian, Australian and other foreign companies already involved in large mining activities.

It is estimated that newly discovered coal reserves in the Maniamba district in the Niassa province further north of Moatize, might rival Tete.

Botswana: Diamonds have always been the mainstay of the Botswanan economy. However, with coal reserves estimated at 212-billion tons – the largest in the world – Botswana is set to diversify and cash in on the financial benefits of tits vast coal resource.

The CEO of an international mining company operating in Botswana remarked recently: “If Botswana goes ahead and invests in the infrastructure of both gas and coal, it could really become the jewel of the Southern African Development Community (SADC).”

Rare Earth Elements/Metals (REE’s)

Due to their wide application and being essential to the manufacturing of hi-tech products, rare earth metals are a highly prized commodity. This is enhanced by the fact that China controls 97% of the world’s supply.

Although China disputes accusations of using their REE-dominance as a political or blackmailing tool, there has been a global search for alternative sources. In this regard South Africa and more recently Namibia, Botswana and Mozambique as alternative sources have proven to be promising with new discoveries regularly reported in the local media.

Good Start

Southern Africa holds vast quantities of some of the world’s most sought-after mineral and energy reserves, but lacks infrastructure to properly unlock the potential. As the region’s powerhouse, South Africa will have to take the lead, for its own sake and for that of the region. President Zuma’s State of the Nation address seemed a good start.