Episode Transcript
[00:00:01] Speaker A: 2024 was a year marked with considerable challenges for the African mining and resource sector.
This includes changes to the political landscape on the continent as well as America. But what can we expect in 2025? Will we experience the same challenges? How do we overcome them? Also, what opportunities does this year bring? Hello and welcome to Deep Insights, brought to Mining Review Africa. In this episode, Editor in Chief Gerard Peter speaks to Warren Beech, CEO of Beech Feldman Incorporated, about the challenges and opportunities that lie ahead for Africa's mining sector in 2025.
Warren is a highly accomplished and recognised mining, natural resources and infrastructure specialist. He has been recognized by many leading directories and AW as a leading expert in his field. Renowned for his impactful contributions to the mining and natural resources sector, including collaborations with industry bodies linked to the Minerals Council South Africa, Warren has played a key role in legislative developments at the request of regulators.
Let's join the discussion.
[00:01:28] Speaker B: Warren, thank you for joining us on Deep Insights today.
Now, when it comes to Africa's mining and natural resources sector in 2025, what do you see as the most pressing challenges facing the continent and how should companies address these challenges?
[00:01:51] Speaker C: Many of the challenges that are going to continue in 2025 are not new. A lot of them have come from previous years and they're still there. And that in itself, I think sends a poor message that we haven't necessarily addressed many of the main challenges and some of them could have been addressed over the past couple of years, but they haven't. So they're going to flow through to 2025. And those are the very typical ones and everybody's heard these before. But as I said, they're significant because they haven't been addressed comprehensively. Number one, infrastructure. So we are still certainly focused on and experiencing significant infrastructure. Challeng port, roads, water, electricity, those are in the process of being addressed, but not completely addressed. Second is politics. In other words, the changes in governments and regimes throughout Africa. We've had over 50 or certainly well into the 50s, the number of elections within Africa and those are of course disruptive in many respects. We've had examples where transition has been smooth, Botswana, for example, being one of those where whereas others have not been smooth. So we have, for example, in Mozambique, where it hasn't been a smooth transition. So politics of the day and politics in government, always disruptive because you simply don't know where it's going after the elections. And there have been some surprises and the natural consequence of a new person coming into power is that they will put their own people into key Positions as we've seen with President Trump coming in and the change that are going there. The same principle applies in Africa. And then the third one is pol policies, procedures, legislation and uncertainty around that. So that's always leads to disruption and, and concern and uncertainty. Examples are, are Mali at the moment with the, with the government arresting senior executives. So you have an agreement, you have arbitration clauses and government simply says, well that's all good and well, you owe us X and whether you like it or not, you pay us or we arrest your CEO and the CEO language is in jail. So you know, that is the concern around legislation and changes and fickleness of governments around that. And then you know those are going to continue into 2025.
The uncertainty, the security and safety aspects, number four also going into 2025. But there are new elements and the new elements for 2025, certainly technology, it's going to be a big disruptor in 2025. I read an article the other day saying that in some company is now a technology company, no matter what you do. And every CEO is a manager of technology. And I think that's probably right. So if you, whether you're in mining or you've got a laundry service, at some point in time, technology is going to affect it and the manager, the CEO and the management team need to work around that. So technology is going to be another big mover and element in 2025. We've got challenges around that because the perception on technology is that it leads to a loss of jobs. And the moment that there is a percept perception, whether it's real or not, that jobs are going to be lost, then there is resistance. And every time there's resistance, obviously that means the technology may not be implemented. And we've had good technological advancements, we've got good technology for health and safety, we've got good technology for environmental and obviously for efficiency and production. But if there's resistance, then that is going to impact the rollout of that technology. And any technology that is implemented is going to first of all need the buying of the trade unions and the employees. And unfortunately not everybody can transition to the use of technology. And that then leaves a gap and leaves a situation where some people unfortunately will lose their jobs and that then also leads to resistance. So good technology is a challenge, but not in itself. There are the challenges around that or how it's going to be implemented and the resistance around that. So definitely technology, major implication this year and then still politics, probably even bigger than before war. And we're going to see the impacts of the USA and President Trump and what that is going to mean for Africa. I think it's good and bad. I think it's good in the sense that it is going to potentially open up opportunities, but it's also going to be bad in the sense if USAID is stopped, as we've already seen, then that's bad for the people that benefit from it. But it's a natural consequence of regime change in any country, whether it's in Africa or the rest of the world.
[00:06:37] Speaker B: Okay. Now Warren, I want to unpack technology and also the Trump administration a little later in this conversation, but you've mentioned all these various challenges. Amongst these challenges, are there any opportunities that you believe could arise?
[00:06:56] Speaker C: Absolutely. And there is always an opportunity. No matter how difficult and how chaotic things seem, there's always an opportunity. It's a question of being bold about those opportunities and identifying them and being very, very bold. Many companies have, have spent time thinking about where things are going. They've put together reserves and the old terms, the war chest, and they're able to take up the opportunities. And I think there are a number of companies that are going to do it. Obviously companies are going to have the Kodak moment. Unfortunately, there will be the Kodak moments or the Nokia moment where companies that have been around and I think Henry Ford's comment that what gets you to the top doesn't necessarily keep you at the top is becoming more and more important these days. Simply the pace of change is so frenetic. But it creates opportunities. But it means that decision makers need to be nimble. They need to have good advisors around them to understand what is happening and they need to have the backing of the boards and the investors and they need to have funds to take up those opportunities. But are there opportunities? Absolutely. It just needs boldness. It needs finances and it needs a bit of forward thinking. And that needs. And that's really where the chains are. You can't plan five years and 10 years. I mean, it's nice to sit and think about that. But the, you know, the horizon, the time horizon for decision making is short. It's, you know, six months, a year, two years. And companies that can do that and be nimble about the decision making will take, will make use of these opportunities and benefit from them.
[00:08:31] Speaker B: Okay. Now Warren, I want to turn our attention to, you know, something that's been making the news for the last few months, particularly in South Africa and that is illegal mining. Now, in a recent article for Mining Review, Africa you spoke about the impact of illegal mining, you know, the effects on the economy and communities. How can stakeholders address this growing crime? If you, if you know, if I can, if I can, if I can put it that way, what do we need to do to mitigate its adverse effects on the economy and communities?
[00:09:14] Speaker C: So obviously the Stolfontein saga, and that's probably the best way of describing it, has brought all of this very sharply into the spotlight and all the elements around illegal mining. But illegal mining has changed. So if you look at illegal mining over the last two decades, for example, it's always been there, but it's, it's been small scale. And it was, we've been pushing, myself and many other commentators have been pushing for regularization of small scale and artisanal mining. And logically at the time it made sense. So the, the people that were doing the mining without the licenses, etc. Were small scale. It was driven in many respects by socioeconomic conditions, communities growing up around the mines and then, or abandoned mines, current mines, and then being able to carry out mining. And it could have, at that stage it could have been managed a lot better by regularizing, going through a license process, managing it a little bit better. So our legislation hasn't changed. It does deal with small scale miners, but not artisanal and super small scale miners.
And I think we lost an opportunity there to deal with it. Why? Because had that been regulated 10, 15 years ago, the, the environment may not have been as it is today. In other words, because it's not regulated, because there are socio economic drivers, because communities, et cetera, are not regulated. It's facilitated an opportune moment for it to become criminalized and syndicated. And illegal mining is on an industrial scale, which is quite frightening in the sense it is just so big, it is so convoluted, it is so multilayered. And I think what we, we must never forget is that to, to conduct illegal mining on the scale that it is being conducted at the moment, you need almost the same complexity of systems in place that you would if you were mining lawfully. You need somebody to take the mineral out, you need somebody to process the mineral, you need somebody to transport it, you need somebody to sell it. And that's what you would do if you had a license. Now illegal mining has got all of that, but not in a good way. And it's bypassing the system, it deplete it. You know, there's no taxes, there's no royalties paid and it has a very negative effect as we've seen in stillfontein. So it brings into play a whole lot of complexities, which means that a whole host of stakeholders need to be involved in order to address it. Now obviously there's a range of commentators from, well, people go underground, they must look after themselves to it was the ex mine's fault and they didn't close it properly. So all of those debates are going to go on. But once that, you know, once we get over the blame game, the reality is it's a multi, multifaceted, multi stakeholder solution. Government has to be involved and regularise. But at the same token, there's a political element. Our government has to deal with Lesotho. If you look at the storefontein scenario and you look at the people involved and if we can believe what is reported, then our government needs, South African government needs to speak to Lesotho. And so there's a political element, there's a regularization element, there's a police element and of course the communities and the socioeconomic impacts. And we need to make it easier for people to be able to mine on a small and artisanal scale without having to go through the criminal process. So in other words, if, if they're licensed and they bring gold that must be bought through a structure, government led or not, and going to the market legally. So it's a multifaceted stakeholder involving all stakeholders that, that need to, to come to the party to address illegal mining. If we don't do it, it's going to come up over and over again. Our current system facilitates it, allows it and doesn't stop it.
[00:12:58] Speaker B: Okay, but Warren, in your opinion, do you think it is actually possible to regularize elite, I mean illegal mining and you know, make them into small scale or artisanal mining. And what role do mining companies have to play in this?
[00:13:16] Speaker C: If you'd asked me a question 10 years ago or 15 years ago, I would have said absolutely, yes, it can be done, let's change the law, let's start regulating it and creating the framework. In other words, where it's licensed and there is regulatory oversight creates the opportunity. Where for example, gold is sold into a central market and then sold, whether it's, whether it's, government or a consortium of the mines, you know, would have been categoric. I think it's more difficult now. You know, the parallel structure has taken hold. It's complex. There are a number of role players. So I think it's become more difficult, but I still think it's possible. It's just more difficult and there are three criteria for me that would make it work. One, the regularization. In other words, make it easy to get a license, make it easy to regularize in the sense that there's oversight from the Department of mineral resources, etc. But it's a lower level of compliance that is required. So you're not always stopping those mines and allowing the mines. Secondly, there must be a centralized buying company or mechanism where the mineral can be sold into and then put into the markets lawfully so it can be done. I just think it's going to be a lot more difficult at this stage because it has become such a pervasive large industrial scale parallel industry.
[00:14:44] Speaker B: Wow, that's very interesting to hear. Now, Warren, let's move on to the Trump administration.
And you know, he's already making waves. He's, he's sounding a number of new executive orders into place. I think he did 200 on his first day in office.
How do these recent political developments in Africa and the United States influence investment and operation in the continent's mining sector?
[00:15:16] Speaker C: If you look first of all at Africa, so the region, the changes within government that have happened here, where it's been peaceful, it's helped, it's stabilized, it's created from an investment point of view, a level of certainty which many investors still want. And there's a lot of investors who are quite happy to go into high risk environments. But the certainty that comes from a peaceful transition always helps. The concern, for example, is Mozambique. Mozambique always seems to be in trouble. It always seems to be in a situation where it doesn't benefit from changes in demand for critical minerals. It just doesn't seem to be able to take those opportunities and therefore it becomes more and more problematic. But there are still investors working in Mozambique. If you look at the total, if you look at Chevron on the oil and gas side, and it's still there, but there's less certainty when there's resume change, which is, you know, unpredictable in relation to President Trump. His actions now after being sworn in were completely predictable. You know, he made no, no bones about the fact of what he was going to do. But the first, first couple of months would focus obviously on, on America and the whole America first thing. And it is, you know, the critical term is isolationist. But it is going to create opportunities. He has to turn to Africa to, at the very least to counter because of the, the Chinese US Position at the moment. And he's going to have to reduce or try and reduce the, the actual and perceived Chinese influence in Africa. So which means that the US is going to presumably have to pay a larger role in Africa through investment and through locking up critical minerals. So I think that he's going to try and push back on, on the Chinese influence and that means that there'll be more USA attention in, in Africa over the next couple of months.
Yeah, you know, the aid side and the aid packages and Agoa. That's a separate question. It's a question.
Is there going to be an immediate effect? Well, you know, the Rand Dollar has, has, has already seen the effects of, of his, of him being sworn in. But on the mining side, my view is that it's going to increase investment simply to push back China to some extent.
[00:17:47] Speaker B: Okay, Warren, I want to ask you this. You know, at his inauguration speech, you know, he said drill baby, drill. And he also said, you know, Americans can buy the kind of cars that they want to drive. So my question is, do you envisage an increase in the demand for critical minerals in the usa?
[00:18:12] Speaker C: It's a difficult question because critical minerals, normally when people speak about critical minerals they talk about minerals with the battery technology and electric vehicles and the demands for that. I don't think that the demands for electric vehicles in general are going to drop in 2025, maybe beyond. As far as the US market is concerned, the electric vehicles have not performed, the sales haven't tracked what people were expecting to, you know, for them to track. And I think a lot of people believe that electric vehicle sales in the US would improve and increase year on year but that hasn't been the case. And I think it's because of the challenges around electric vehicles, the return to, to look at hydrogen technology and a lot of the bigger manufacturers simply not selling the electric vehicles. So I don't think that in that context of electrical vehicles the critical mineral demand is probably going to remain consistent. But again because the critical minerals are in hard to reach places, the mines are still, a lot of them are still in project phases and need to come online. I think that's going to continue because in due course the electric vehicles may still continue to play a big role. But I don't think it's going to change the critical minerals. I don't think it's going to change. It's a question of the US wants to be in control of that source. Again, the anti China scenario. So it's a question of we don't know how much we need. We know we need it, let's secure it. And I think that's really the approach that they're going to take on the critical minerals. And then bearing in mind that the critical minerals are not just for electric vehicles, it's for technology. And if you've got a boom or an increase in the demand for other technology, whether it's computers, etc. You're going to need copper, etc. So I think that market is probably where the increase is going to come from, which then again supports the idea of securing critical minerals, securing the source rare earth. You know, all of that is quite important, not just for electric vehicles, but well beyond that because of the technological changes and the demand for technology in the coming years.
[00:20:23] Speaker B: Okay, now Warren, you touched on technology earlier and I want to ask you because you know, the African mining sectors are very sort of labor intensive, intensive market.
So how do we introduce mechanization, automation, and now AI to drive efficiency and profitability and more importantly safety in the mining sector without the fear of people wondering if they're going to be out of a job?
[00:20:56] Speaker C: So the big issue with technology, as you've correctly mentioned, is that there is this perceived notion that any technology will result in a loss of jobs. And on a superficial level that is potentially true. In other words, if you introduce a new piece of technology and your current workforce have not been trained, their skill set has not transitioned to a skill set that is required for the technology, then those jobs are going to be lost because you immediately need a new set of skills to manage and maintain the technology. If you haven't trained your existing workforce, then obviously you need to replace and that then results in jobs lost of existing people, but new jobs for people that, that have the necessary skill set. So it's a delicate balance. And the trade unions are very, very focused on this concern that technology equals job losses. Whether it is new technology and, and whether it's mechanization or automation. Mechanization almost automatically means less people on the face at a mine. I mean, it's just, it's a natural consequence. But by the same token, it needs new people to manage that technology. It needs new people to maintain that technology. So you are swapping jobs and it, it doesn't necessarily automatically mean less jobs, but it means that some people will lose their job and that's a big hurdle to get over. And again, it's difficult to transition existing employees in some cases because of the education system, their exposure to the education system and what education they received historically and whether they're then capable of transitioning to the new technology and what is required. So it's very, very complex. Understandably there's resistance and the biggest resistance is in fact, not necessarily mechanization and automation, but the technology which is aimed at health and safety which you mentioned. In other words, any technology which has an eyes on technology, which is watching what people do and responding to it, or which provides real time data for a manager to come and say, hold on, this is what the data said. You are breaking this 200 million rand vehicle, you are braking too hard or you speeding, you mustn't that or you're going to get fired. So, you know, it's, it's a lot of resistance is around that oversight technology and that's where the big resistance is at the moment, which unfortunately undermines health and safety. At the end of the day, all of this technology, and particularly with our tractors, mobile machines, is aimed at taking preventative measures out the hands of the operator, putting it in technology and in the machine and stopping the machine before it bumps somebody. But there is resistance to that technology, there's workarounds to the technology. You know, operators put their hard hats over the lenses of the cameras and things like that. So that's a huge hurdle and a huge challenge that we need to get over before technology is properly optimized and properly part of the health and safety system and part of the commitment to zero harm. It's going to take time and it comes down at the end of the day to how it's managed by the mines and whether they take the trade unions and the employees on the journey. And it is genuinely a journey to overcome resistance and identifying who can transition to new skill sets and those that can't and then trying to, you know, accommodate people who can't transition in some way or another before a decision is made to retrench.
[00:24:32] Speaker B: Yeah, no, absolutely no. Warren, you've just mentioned, you know, all stakeholders and one, one of the most important stakeholders in the mining operation are mining communities. How do mining companies balance, you know, community expectations while at the same time remaining profitable? Because there's this expectation that when a mind starts that, you know, it's going to provide jobs, it's going to provide service delivery, all these sort of things. So how, how do minds get this balancing act right?
[00:25:10] Speaker C: It's incredibly challenging to get the balance right. The. For a couple of reasons. One, as you correctly pointed out, as soon as a new mine starts or a mine expands, there is an expectation that there will be jobs, there is an expectation that there will be work in all services, in other words, contracts to supply goods and services. And there's this natural Expectation. And sometimes that expectation is a genuine expectation. Sometimes it's an expectation that is driven for nefarious reasons.
You know, it becomes problematic. And then the underlying issue with that is obviously that services are not necessarily being delivered through government and through local municipalities. And then the mine is looked at as a natural service provider for water, roads and related services. So you've got this dual expectation. One, there's going to be money because the mine is there, we're going to get jobs, we're going to get contracts, and at the same time, there's an expectation that roads are going to be built, water is going to be there, electricity is going to be there. All of that costs a tremendous amount of money. And the structures in place are quite important. So the social and labor plans that are approved as part of the mining rights set out the structures on how that community engagement is going to take place, how much is going to be spent, how it's going to be spent, how the community is involved in the decision making. So the social and labor plans are absolutely vital, point number one. Point number two, constant engagement and understanding what's happening within the communities is equally vital. You know, you don't want to be surprised one day by a community protesting and putting rocks in the road. So the second most important one, social labor plan structures and do what you, you say you're going to do, deliver on your promises, and secondly, keeping in contact with the communities and understanding what changes, who's driving the changes, how they can be addressed, and then working it back to the social labor plan. All of that is quite important. I think that our history is unfortunately littered with, with mining companies or investors coming in, particularly overseas investors that don't understand the dynamics of, of local communities, make the decisions, think that they can, using the word very loosely, buy off the communities, and it just doesn't work at the end of the day. So transparency, engagement, working with the communities, absolutely vital.
[00:27:39] Speaker B: Absolutely. Now, Warren, last year at Mining in Darbo, you did a video interview with Mining Review Africa where you emphasize the importance of stronger partnerships. Tell me, how do these partnerships, especially along the supply chain and with stakeholders, enhance the resilience of Africa's mining sector?
[00:28:03] Speaker C: For this year, there's a couple of comments.
Firstly, when we talk about partnerships, it's a stakeholder partnership. And mining companies or mining just generally can't be successful and sustainable unless you're working with your partners. And that's all the stakeholders. And again, the communities, key stakeholders, trade unions, key stakeholders, government department, Department of Mineral Resources and the environmental departments. Are all partners in or all stakeholders and should be part of the partnership. But what has changed and it's been creeping along quite well for the last couple of years, but has accelerated. And because of the technological demands, the partnerships, original equipment manufacturers and designers is growing. So the, the suppliers, historically they'd be called suppliers, now they original equipment manufacturers, they are so key to the industry that they have to be partners. So they need to understand the mining requirements, they need to understand the challenges with operators, they need to understand the, the challenges of and resistance to technology. So the biggest partnership, the partnership that has been growing the most over the last year and will continue into the future is the partnership between the mining companies and the technology or equipment suppliers, manufacturers and designers. And it's an opportunity to develop in cooperation with one another equipment that can benefit the mining industry, including health and safety. The hydrogen project, for example, is a very good project projects, but there are many others. And that is again, it comes back to the health and safety. So the continuous miners that are used underground, their picks and the water sprays that are on the cutter drums, the technology around that in preventing the operators from being exposed to coal dust, for example, all of those aspects are important and can only be done properly in conjunction and in partnership with the designers and manufacturers of this equipment. So for me, that is going to be the biggest partnership that I think that the mining industry needs to focus on this year.
[00:30:11] Speaker B: Okay. And then finally, Warren, let's you know, fast forward to the end of 2025. What is your outlook for the African mining industry by the end of this year?
[00:30:25] Speaker C: If, I guess if we, we all had the crystal balls.
[00:30:29] Speaker B: Exactly.
[00:30:31] Speaker C: You and I wouldn't be talking today. We'd be, be, would be retired somewhere. No, it, it's, it's going to be, it's going to be a chaotic year. And I, for various reasons, I think politics, the just what South Africa is going through, what, what many of the African countries are going through. You look at Ghana, you look at Mali, you look at the drc, you look at Mozambique, I think that in general it's going to be a fairly chaotic year. But as I've mentioned, I think the chaos provides opportunities and I think we need to get through the next couple of months from the perspective of President Trump coming in to see how that all pans out. So I think it's a case of just watching the horizon for the next two to three months and then taking the opportunities as they arise. I think towards the end of the year there should be more stability, more certainty and a lot of the opportunities will have taken up. So I think we're in for a rough couple of months. But I think towards the end of the year things should settle down for the industry. And again, as long as people understand the chaos brings opportunities and can take those opportunities, then I think that it should be better by the end of 2025 in the sense that there would be more certainty, which brings stability, which brings jobs, brings socioeconomic benefits. So it's a case of settling down as quickly as possible after all of these some huge events in 2024 and early 2025.
[00:31:59] Speaker B: Warren Beach, CEO of Beech Feltman Incorporated, thank you for joining us on Deep Insights today and I'm sure the Mining Review Africa audience is going to value your insights, so thank you very much.
[00:32:12] Speaker C: Thank you very much for the opportunity. It's always great talking about these aspects and I can only wish the industry a really good 2025 life.
[00:32:22] Speaker B: Thank you very much, Warren.
[00:32:24] Speaker A: Thank you for listening. Remember to subscribe to Deep Insights on all popular podcast platforms. Also, for the latest mining news, analysis and more, visit mining review.com until next time. Goodbye.
