Opportunities for Mining Investment in Third World Africa

Many Third World African countries are well-endowed with minerals - especially gold and diamonds - while only a few have important base metal deposits. For decades since colonial rule, political and economic conditions discouraged interest by Western capital. Influence from Soviet Bloc countries, however, has declined with the move toward multi-party rule. And the left wing orientation, once widely favored by Third World African countries, has almost disappeared. With International Monetary Fund (IMF) encouragement, these Third World African countries now encourage representational government and solicit western finance to expand their industries. Mining is especially encouraged. The North American mining industry is following the same trail as other capital intensive industries and looking abroad for opportunities. The Prospectors and Developers Association of Canada released figures that show exploration expenditures in that country were halved between 1987 and 1990. Figures for the United States are not so easily found but every indication points to a downward trend. While total annual expenditures on US exploration by corporations as a group are either declining or remaining constant, expenditures away from North America is increasing. Gold exploration expenditures in 1991 by the major companies tracked by Minerals Economics Group were less in the United States than for Latin America and the Southwest Pacific combined. The same study showed as much was spent in the Republic of South Africa and "Other" areas combined as in the United States. Expenditures by major corporations in these "Other" areas amount to only 5.2% of their total budget. Third World Africa is a major component of these "Other" areas.