Molebogeng Mazibuko, Associate Vice President of Metals & Mining at multilateral development financial institution Africa Finance Corporation, said the financing of mining projects on the continent must deliberately support local economic development in the countries in which the mining projects are located. “We invest in African countries where there is a sustainable economic development need despite the investment risk, Mazibuko said. “By helping to solve the infrastructure deficit we can foster industrial activity in these African countries with the aim of enhancing the economic impact in that particular country.”

Echoing the importance of using mining projects as a means to simultaneously fund economic development, Vusumuzi Dube, Business Development Manager at development finance institution the Industrial Development Corporation of South Africa (IDC), noted that in-country value addition and how projects integrate with local economies and communities is an important investment consideration for the IDC.

“The mining projects that we support must be set up in a manner that achieves local economic development,” he said.

Highlighting other factors that make mining projects more investable from a development financing perspective is the robust market demand and strong pricing of the commodity, Dube added. “These typically include the battery or critical minerals crucial to the energy transition, such as graphite, lithium, copper, manganese and chrome because these are the commodities the world requires for human progress.”

Moreover, Dube highlighted projects that are large enough in scale to support and absorb additional industrialization opportunities, such as associated rail or energy infrastructure development, provide an opportunity to further industrialize Africa through mining, such as the Lobito Corridor – a transformative infrastructure project for Africa.

Ope Osinubu, Senior Associate at global law firm Clifford Chance, who assists lenders with ensuring that projects are indeed bankable, pointed out the critical role of multilateral development finance institutions in plugging the equity gap needed during the initial, higher risk development stages. He also noted the important role played by commodity traders as production-linked financers of mineral projects. “Traders have been a critical source of financing in recent years by providing a critical financing bridge when the mining project is in development by acting as an intermediary for commercial banks to finance these projects which they would otherwise not directly invest into,” Osinubu said.

Unpacking the potential of future-focused financing for Africa’s mining sector development, Sebastian Wagner, Natural Resources Lead at discretionary investment firm Apeiron Investment Group, stated “there are too many of the same pools of capital chasing the same opportunities. He said next-generation financing instruments, such as stablecoin and mineral tokens can be used by mining companies to tokenise their unmined resources as a means of raising capital.”