Smaller mining firms, known as junior miners, are expected to continue to do well as more opportunities open up in South Africa due to the current trend that favors joint ventures and cooperation with larger companies, according to Business Live.
The news source reported that this type of collaboration has promoted growth in the holdings of junior miners. This consolidation of resources and thinking has helped to increase mine optimisation for many firms.
Wonder Nyanjowa, mining analyst at Frost & Sullivan, told Business Live that junior miners in the coal sector had merged their mining operations to realize synergies and economies of scale from increased production.
Some miners that do not have export quotas at the Richards Bay Coal Terminal have been leasing them from larger companies, a relationship that has been helping both businesses. According to the news source, junior miners have been exploiting their resources or pool-and-share operations with bigger firms in the platinum sector, helping to boost the productivity at sites for both companies.
Business Live reported that smaller companies who have failed to get funding for new projects from their investors have turned to larger miners. These bigger firms are able to provide the revenue, while reporting a positive return on investment.
According to the news source, demand for commodities from Asian, European and African countries have created a significant amount of stability in the South African mining sector, helping to promote more cooperation between large companies and junior miners.
The junior mining industry has grown to employ roughly 10 percent of the workers in the South African mining industry, and stability has increased for smaller companies due to the significant investments from the bigger firms.
Peter Major, mining specialist at Cadiz Corporate Solutions, expects junior miners to be present for next month’s Mining Indaba, as this will present an opportunity for them to find their “sugar daddy” mining firm, according to the news source.
Major noted that prior to the recent trend favoring cooperation between large and small mining firms, it had been difficult for junior miners to raise capital due to the international liquidity laws that are affecting banks.
Daily Markets reported that the recent trend has led to significant financial upside for junior miners, as the smaller companies are outperforming the mining giants in specific sectors like silver.
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