In the Materials & Natural Resources industry, what recent development will grow the most in the next 10 years?

©J.Lekavicius / Shutterstock.com

Hundreds of years back when people started to find out ways to live in a better and higher lifestyle, they started to check their natural resources and generally, most of regions globally tried to utilize these resources in order to build and strengthen their economies. Saudi Arabia and GCC (Gulf Countries Corporation) found the oil, while many in Africa decided to make use of wood, Ghana utilized the Cocoa and Gold as well, Ethiopia was surprised they have the best coffee… and so on, however many years after, it became clear that interaction between countries is mandatory and one country cannot only depend on its natural resources.

Natural resources are either renewable or finite and one day there might be no more oil. Even today it is not a great benefit that you have oil; GCC had built their 2016 budgets on the basis of, a barrel of oil will be sold at 100 USD, however nowadays it is sold at around 30 USD. This made a huge loss and caused frustration to both governments and people. Not only that, but there are a number of industries which are either directly or indirectly linked to the oil and all had been negatively affected by the current situation. Especially when the Asian tigers are enjoying less overheads and plenty of manpower, plus less expenditures, they became more aggressive in all markets and almost in all industries.

When monitoring all this, try to analyze the performance of each region with regard to the current situation. It will become clear that investment diversity is key to come out from this difficult situation and utilizing other energy sources is an unavoidable decision if you want to keep running.

We saw multinational companies become less impacted by the current scenario. The reason is they are operating everywhere and gain the best benefit in each region they are investing. Not only that, many had gone to the Asian regions where they made joint ventures with local producers so they gain the benefits of investment facilities, less overheads and, of course, they already own the technology.
UAE is a good example of an Oil country that decided to only depend by 30% on its Oil and the other 70% on diversified resources like Tourism, Trade and Logistics.

Singapore is a great example for a country that has no Natural resources at all but they have a strategic location, in which they did utilize until they became a global logistic hub that take the goods from the east to the west and from the south to the north.

Nowadays Saudi Arabia and other GCC countries are working to diversify their resources, mining and mineral industry. Maaden-Alcoa had started the Aluminum, Phosphate and gold production, Saudi Aramco had bought the technology from multinational and global firms through joint ventures, with Dow (Sadara), with Sumitome (Petro-Rabigh) and with Total (Satorp). Other Petrochemical companies are in technology agreement with global leaders, Jana (Epoxy Resin) with Huntsman, Chemanol with Perstorp, SABIC is utilizing the Hydrocarbon availability in the Polymer industry and so on.

If you look global, you will find the multinational companies had almost checked everywhere on investment opportunities and they have done great work in Asia, Europe, US & Australia. Any missing? Yes, it’s Africa!
In my opinion, it’s time for Africa.

Africa has a large quantity of natural resources including diamonds, salt, gold, iron, cobalt, uranium, copper, bauxite, silver, petroleum and cocoa beans, but also woods and tropical fruits. Much of its natural resources are undiscovered or barely harnessed. Having a low human density, for a long period of time, Africa has been colonized by more dynamic groups, exploiting African resources. Some economists, have talked about the ‘scourge of raw materials’, large quantities of rare raw materials putting Africa under heavy pressures and tensions, leading to wars and slow development. Despite these abundance of natural resources, claims suggest that many Western nations like the United States, Canada, France and the United Kingdom, as well as emerging economic powerhouses like China often exploit Africa’s natural resources today, causing most of the value and money from the natural resources to go to the West and East Asia rather than Africa, further causing the poverty in Africa.

The mineral industry of Africa is the largest mineral industries in the world. Africa is the second biggest continent, with 30 million km² of land, which implies large quantities of resources. For many African countries, mineral exploration and production constitute significant parts of their economies and remain keys to economic growth. Africa is richly endowed with mineral reserves and ranks first or second in quantity of world reserves of bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals (PGM), vermiculite, and zirconium. Furthermore, gold mining is Africa’s main mining resource.

However, there are couple of issues that are considered to be barriers for any investments in Africa:

1- Lack of Energy
2- Lack of Foreign Currency
3- Governmental Rules and Policies

These barriers still can be overcome by selecting the right African region to start your investment, you may select oil producing countries like Nigeria, Libya, Algeria, Egypt and Angola, as well as other oil producing countries such as Gabon, Congo, Cameroon, Tunisia, Equatorial Guinea, the Democratic Republic of the Congo and Côte d’Ivoire. Foreign currencies will not be a problem in other countries, as well, similar to Ghana.

Many of the African regions are encouraging investment so you may select the more stable ones like North, East and West regions where plenty of investment opportunities will be there.



To view market insights, please register. If you have already registered, please enter your information below.