info.afrindex.com
China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
Image: Ahead of the herd
West Africa has long been known for its geological potential, and many investors believe that West Africa will continue to be the focus of the mining industry. In this region, the attractiveness of investment has gradually changed, and investors' attention has shifted from producing countries with a long history of exploration to countries with less exploration potential and greater discovery potential.
The most notable deal, however, is the announced Barrick Gold and Randgold merger – a share-for-share deal valued at US$6.5 billion, which will see the formation of a new company, new Barrick. Subject to approvals, this entity would be an industry leader in gold and listed on both the New York and Toronto exchanges.
While each country is characterized by its own policies and operating environment, the common vein among many attractive mining investment destinations in West Africa is their shared position along the Birimian Greenstone Belt. This geological formation underpins Ghana, Côte d’Ivoire,Guinea, Mali and Burkina Faso; a major source of gold, with approximately 52 million ounces of gold resources discovered to date. Geologically, Côte d’Ivoire is considered the most prospective country by many because, covering about 35% of the belt, it is home to the most significant portion.
In West Africa, Ghana has led the way in gold mining and still holds first place in the region for gold production – second on the continent only to South Africa. Ghana produced 101.7 tons of gold in 2017 versus South Africa's 139.9 tons. Among the country's producers are Newmont, Gold Fields, Kinross and AngloGold Ashanti. However, the country’s high tax burden has stalled many exploration projects and deterred new investors, leading to a lack of greenfield exploration. The country's skew towards large companies with underground mines and brownfield exploration focus goes hand-in-hand with a mining code that favors companies with larger investment power.
Also a center for gold production, Mali's 2017 figures came to 49.6 tons. Major investors supporting Mali's position amongst the continent's top gold performers include AngloGold Ashanti,Resolute Mining and IAMGOLD. Output last year was also boosted by the initiation of production at B2Gold's Fekola project.
Meanwhile, Burkina Faso has stolen fourth place on the continent, overtaking Tanzania, with 45.5 tons of production in 2017 and 2018 set to be a record year with a projection of 55 tons.
After geological potential, investment incentives and stability play a significant role in attracting investment, as demonstrated in Côte d'Ivoire. However, just as international investors seek solid ground, governments continue to find their footing when it comes to balancing investment incentives with ensuring economic benefit to their respective countries, several tipping the scales towards the latter. Countries with increasingly stable economic and political environments are garnering most investor attention, whilst security risks and uncertainty in others are causing companies to delicately tread the line as they enter "wait-and-see" mode.
