An increasing number of ASX-listed mining companies are falling victim to African sovereign risk.
In recent months, the phrase “This is Africa” has become a viral meme shared among retail investors as an increasing number of ASX-listed mining companies fall victim to African sovereign risk.and captioned with the phrase “This is Africa”, has come to describe all the risks and uncertainties of doing business in the untamed plains and jungles of the African continent.
Many retail investors have learnt that hard way that investing in mining companies in frontier markets such as Africa can be more risk than reward, with the most common disruptions to operations including revoked permits, disputes with unstable government regimes and coups or insurgent attacks. For investors caught in AVZ Minerals, a Malian lithium miner, watching Leo Lithium must feel like they’re watching a movie they’ve seen before. Infamously, shares in AVZ Minerals fell 20 per cent in May 2022 after the Democratic Republic of Congo government effectively sold from under them their mining rights to one of the world’s largest lithium deposits to a Chinese company.
Explorer Sarama Resources’ share price, for instance, has tumbled more than 60 per cent in since September after the Burkina Faso government unexpectedly withdrew its exploration permit for its flagship gold project. In February, the Tanzanian government unexpectedly withdrew two prospecting licences from Auking Mining’s planned uranium project in February, with shares down more than 20 per cent since.And for a year, Syrah Resources has faced multiple disruptions to its graphite mining operations in Mozambique due to illegal industrial action and the threat of insurgency.
Cassius alleges corrupt government officials redrew its licence boundaries to transfer its assets to a neighbouring illegal Chinese mining operation, which had been stealing tens of millions of dollars’ worth of their gold from under them.The dispute is now set to be determined by a three-member tribunal.
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