Johannesburg — AFRICA's mining sector continues to be active with new projects in the pipeline and investment interest from China, India and Brazil, despite the economic slowdown and collapse in commodities prices since last October.

Bankers and consultants at a Frontier Advisory-JSE Africa Board seminar discussing the effect of the global crisis on African mining projects agreed yesterday that although tough equity and debt market conditions had hit miners -- especially explorers and small companies -- projects in commodities such as gold, coal and iron ore continued to attract interest.

Nivaash Singh, of Nedbank Capital's mining and resources investment banking division, said the value of new listings in the mining and metals sector last year was half that of 2007's, and there was almost no activity in the final quarter. Nedbank Capital was seeing more merger and acquisition activity, consolidation and planned delistings in the prevailing conditions.

The value of project financing increased last year compared to 2007 , but this was due entirely to loans granted in the first few months of the year, Singh said. Banks' credit capacity had reduced, and internal approval processes were stricter and taking longer. It was extremely difficult for bankers to forecast metals prices when granting project finance, and the terms of that financing were shrinking to about five years from seven years previously.

Heinz Pley, global mining leader at McKinsey , said that of 90 mining projects in Africa tracked by McKinsey, half had been suspended indefinitely.

But Frontier Advisory senior consultant Paul Runge said even though projects had been mothballed they had not been cancelled because companies had gone to considerable effort to secure those mining concessions and were not ready to surrender them.

Runge said African mining companies were typically curtailing exploration, cutting costs and conserving cash. But there was still activity in projects to supply power to SA, new uranium projects in countries such as Namibia, Malawi and Gabon, and several new iron-ore concessions granted recently, some controversially. Indian investors were showing particular interest in iron-ore deposits.

Mining executives returning from Zimbabwe were taking a "better view" of conditions in the country as well, Runge said.

Pley said McKinsey expected commodities to recover strongly after a couple of years of depressed pricing as there was still a lot of potential growth in China. The purchasing power of Chinese consumers was well below that of Europeans and Japanese.

Beyond China, there was growth potential in India and Africa. When demand resumed, supply would be constrained by the large number of new projects that had stalled. With these trends in mind, stakeholders in the mining sector should take a long-term view on the significant amount of potential in Africa, Pley said.