West Africa these days is an important part of current economic picture. A lot
of attention is devoted to its various economic problems, mining industry being
one of the crucial elements. Over the years the World Bank exercised a lot of
projects on West Africa. One such study notes the challenges for mining in the
area: - Not well-integrated mineral legislations across the countries lead to: -
Smuggling of gold and diamonds - Mining companies leveraging on differences in
legislations to negotiate more favorable terms - There is a need to capture and
promote synergies at regional level for mining-sector driven development (i.e.,
infrastructure and industrial service clusters) - Review of mining taxation
regimes in the new market situation - Overall mining sector governance needing
improvement Detailed analysis of the situation with mining is represented by The
West Africa Resource Watch (WARW) in its note: Natural Resource Management in
West Africa: The Role of the Public Sector: "Sierra Leone, Chad, Nigeria and
Côte d'Ivoire show clear symptoms of the natural resource-curse, especially
in terms of violent conflicts and underdevelopment, notably in the areas where
extraction is taking place. All the countries, especially those that depend on
solid minerals (Ghana and Sierra Leone) are 10 per cent sleeping partners and
act as rent collectors (royalties and taxes). Guinea Conakry is slightly better
with a minimum 20 per cent equity, with 49 per cent in CBG and 15 per cent in
SAG, and also has higher royalty rate than the other two countries. The Guinea
Conakry royalty is 10 per cent FOB (free on board) for bauxite, 5 per cent FOB
for aluminium, 7 per cent FOB for iron and 3.5 per cent for mineral concentrates
and 5 per cent for gold. The extractives sector is dominated by foreign
international companies. None of the solid mineral countries sampled (Ghana,
Guinea Bissau, Guinea Conakry and Sierra Leone) has a national company engaged
in mining, even though a number of them are holding licences for exploration.
Neither is there a viable local company capable of competing with international
companies." Mining industry in West Africa is supplying 9% of the world's
bauxite, 8% of the world's gold, and is expected to continue to grow with a
number of large gold, iron ore, and bauxite projects in advanced planning
stages. Furthermore, there are significant unexploited mineral resources across
the region, including uranium, copper and diamonds. This is the reason why a lot
of international players in the market come to the scene. Just a few recent news
reports: More than $36.2 billion in the 53 active mining related projects are
invested in West Africa by mining companies: Azumah Resources Limited,
ArcelorMittal, Vale SA, African Minerals Limited, Rio Tinto plc, Anglo American
plc, Vedanta Resources plc Although most parts of West Africa are still
unexplored, it seems that it may become one of the biggest sources of iron ore.
Total production of iron ore in West Africa could reach 500 million metric tons
per annum over the next four or five years almost a quarter of the current
global output China recently increased it efforts in investing in iron ore
mining projects in West Africa – starting a number of joint ventures and M&A
deals. These projects could produce up to nearly 250 million tons of ore
annually in the medium to long term. Just a few to mention: SUNDANCE
RESOURCES/HANLONG MBALAM PROJECT, CAMEROON; AFRICAN MINERALS/SHANDONG
TONKOLILI, SIERRA LEONE; RIO/CHINALCO SIMANDOU JOINT VENTURE PROJECT IN GUINEA;
BELLZONE/CHINA INVESTMENT FUND KALIA IN GUINEA; CMEC BELINGA PROJECT, GABON.
Brazilian diversified mining company Vale plans to invest more than $12-billion
over the next five years in African projects. Much attention is focused on
Mozambique, Guinea, Zambia, Malawi, Congo and Liberia. This article is
contributed by our guest blogger, Vladimir Kuznetsov. Check out Vladimirs blog .
http://buysellmines.blogspot.com/ The Asia Mining Congress 2012 recognises the
growing importance of Africa as a mining destination and has dedicated almost
half a day for mining experts to share their opinions on mining in Africa. Check
out the programme brochure here. Network and connect with mining professionals
and investors through Mining Nuggets on Facebook.
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