19 Nov | Investing in African Minerals on the London Stock Exchange
African Minerals as a source of wealth is nothing new. From the Romans to the British Empire, there have been major fortunes made from investing in African resources. Although the chances of making an Empire’s worth of money are slim, there is certainly the possibility for some smart investments into African minerals today.
A number of different African minerals companies are currently trading on the London Stock Exchange, and for the savvy investor, this sector represents a major opportunity.
Mining is one of the biggest industries throughout Africa, and the continent is rich in a number of minerals that are increasingly important in the developed world. Bauxite, zirconium and cobalt are all used in industrial processes and therefore are readily exported to manufacturing countries. In addition, Africa contains the world’s leading deposits of diamond, gold and platinum. What is truly remarkable about the African mining industry is that it remains relatively underdeveloped, highlighting its capacity to grow yet further.
Variety of Minerals
Although South Africa is commonly thought of as the mining capital of Africa, in reality, different minerals are spread throughout the continent. For example, bauxite, which is an instrumental element in the processing of aluminium, is found mainly in the West African state of Guinea. Three quarters of Africa’s copper comes from Zambia, and around half of Africa’s Uranium comes from Namibia. This not only highlights the range of minerals throughout the continent, but also the value of a diversified portfolio of mineral investments.
As well as a range of different minerals in Africa, there is also a wide range of different companies worth considering. The best option is to research the specifics of each company, taking into account not only the recent performance of the stock prices, but also what each company is involved with.
For example, West African Minerals (WAFM:LSE) focuses primarily on the minerals in a specific region of Africa and their portfolio deals mainly with iron ore in places such as Cameroon. African Minerals Limited (AMI) has assets in iron ore and also the rail and port infrastructure connected to this industry in Sierra Leone. Conversely, Premier African Minerals Ltd (PREM) occupies a diverse corner of the market, with interests across West and Southern Africa including phosphates, clays and tungsten. Therefore, it may be worth diversifying your investments between two or more companies to benefit from the region.
In general, however, the best advice for any investor is to do your research, and to understand that the stock market is often better seen as a long-term source of investment. Stocks and shares that can increase dramatically are often less stable. With the LSE a continuing force for good in terms of Africa’s economy, injecting money into a physical resource like African minerals is both a long-term investment for the individual and for the growth of the entire region.