Opportunities for mergers, acquisitions, and partnerships in Africa’s mining sector are expanding, but ensuring long-term resilience is vital for companies involved in these transactions.

Jude Kearney of ASAFO & Co states that while consolidation can lead to improved efficiency, it may also leave gaps if acquired activities are not continued by the acquirer.

Zach Kauraisa from Eos Capital notes that a major driver of mining M&A activity is the potential for synergies through cost-cutting and revenue optimisation.

In high-risk regions, consolidation can enhance a company’s impact, making it a larger contributor to government revenue and a more significant economic player, thus improving negotiation power and social license to operate.

David Roney of Sidley Austin emphasises that consolidation can elevate environmental, social, and governance (ESG) standards, particularly when larger companies acquire smaller ones.

A strong social license to operate is crucial for risk mitigation.

Companies should also implement legal safeguards, such as investment treaties and host government agreements with stabilisation clauses, to navigate regulatory challenges.

Roney highlights growing regulatory scrutiny on foreign investments due to geopolitical changes, making M&A transactions more complex in Africa, especially given its rich mineral reserves.

Kauraisa points out tensions between governments and mining companies over local beneficiation.

While governments aim for increased local jobs and investment, companies are often reluctant due to low profit margins in these activities.

However, as governments push for more in-country beneficiation and invest in infrastructure, these initiatives become more appealing for mining firms.

Thus, while the potential for M&A in Africa’s mining sector is significant, navigating the associated complexities and ensuring long-term viability remains critical.