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Cannabis Craze Pressures Metal Mining in Africa

Cannabis Craze Pressures Metal Mining in Africa

By CultureBanx Team

  • Cannabis investors are siphoning away capital from African mining companies

  • The top 3 listed cannabis companies have a combined market value of $30B

A boom in cannabis investment along with Canada’s legalization of the product is siphoning capital away from mining companies in Africa. Other jurisdictions are following suit or liberalizing their laws on medical or health use, creating an industry that has lured a breed of high-risk, high-return investors.

South Africa Cannabis.jpg

Why This Matters: In Africa cannabis companies are setting up projects in Lesotho, while other countries, including Zimbabwe and South Africa, plan to issue licenses. The rise of cannabis comes at a time when investors were already turning away from mining. The mining companies operating in Africa are already viewed by many investors as a particularly risky bet and have been doubly hit, according to Reuters.

Prospect Resources has a lithium project in Zimbabwe and is considering growing cannabis at their lithium site

There’s a lot of money to be made in the marijuana game and it may alleviate pressure on the continent’s heavily sought after natural resources. The world’s top three listed cannabis companies Canopy Growth, Tilray and Aurora Cannabis have a combined market value of around $30 billion. For smaller mining companies IPOs have slowed tremendously with cannabis stocks delivering better short-term returns, and its forced miners to heavily turn towards private equity.

Situational Awareness: It’s safe to assume that mining in Africa will never go away, considering it’s fundamentally material to our everyday lives, whereas you could easily argue that cannabis is not. The newest mining companies on the continent in the riskiest areas are trying to find ways to better compete. For example, Prospect Resources has a lithium project in Zimbabwe and is considering growing cannabis at their lithium site.

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