Bumper year ahead for junior miners - analyst

The year 2019 will be better for the mining sector, particularly junior miners, believes BDO Canada's Natural Resources Leader Bryndon Kydd.

In a circular seen by Fin24, Kydd wrote that while 2018 was unkind to the sector, the industry was due for a rebound in 2019.

Kidd's circular comes in time for the 25th Investing in African Mining Indaba, held in Cape Town from 4 – 7 February. SA showed signs of gravitating towards a junior mining industry, with junior miners exploring for mineral deposits.

Kydd wrote that China led the crowd in terms of countries affected by America’s inward-looking government and trade approach. 

He said, as a result, China would be stepping up efforts to secure resources and trade arrangements in resource-rich countries that have limited obligations to the United States.

·         For more Mining Indaba news read Fin24's Special Report 

"Given this dynamic, African nations will certainly continue to be beneficiaries of China’s ambitions, as will those BRICS (Brazil, Russia, India, China and South Africa) nations with resources to offer. 

"Some Western nations may not fare as well due to their arrangements with the US, which may limit their ability to engage with China. 

"However, their stable infrastructure will continue to be attractive to China," wrote Kydd.

Kydd said with South Africa being the most Western-friendly of these countries, the country may stand to benefit significantly from trends such as the rising demand for vanadium, used in efficient battery systems. 

"By no means will vanadium be the last flavour of the month, and we expect similar price volatility on other emerging battery minerals to occur," Kydd wrote.

Kydd said the impact of global warming may lead to new exploration target opportunities and expanded exploration seasons and potential shortages in water, leading to an increase in costs as miners turn to desalination or recycling to secure necessary water supplies. 

"Juniors will need to consider that the climate at their project today may not be the climate once they establish a resource, with diligent (or lucky) juniors engaging in currently less desirable properties from a climate perspective that will become more desirable over time," he wrote.

He said in a world of climate change and trade wars, victims of United States President Donald Trump’s trade policies will be keen to find new, resilient partners, an opportunity that junior miners in the emerging world cannot pass up.

ZAR/USD
17.69
(-0.14)
ZAR/GBP
23.12
(-0.28)
ZAR/EUR
20.76
(+0.24)
ZAR/AUD
12.65
(-0.05)
ZAR/JPY
0.17
(-0.04)
Gold
2025.89
(-0.05)
Silver
29.03
(+3.24)
Platinum
989.00
(+2.68)
Brent Crude
44.54
(0.00)
Palladium
2229.00
(+2.35)
All Share
56757.73
(-1.56)
Top 40
52435.65
(-1.72)
Financial 15
9897.96
(+0.10)
Industrial 25
74671.49
(-1.98)
Resource 10
58948.78
(-1.89)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 943 votes
It depends on how the funds are used.
74% - 6291 votes
No. We should have gotten the loan elsewhere.
15% - 1294 votes
Vote