West Africa''s mining sector is set to grow rapidly as investment pours
into the region''s phenomenal mineral wealth. Much of this growth will
be focused on iron ore and gold as the region has untapped and
high-grade reserves of both metals. We expect the bulk of the growth in
the mining sector to be towards the end of the forecast period as many
of the projects are still in their early stages of development.
Iron Ore To Be Main Growth Driver Growth in West Africa''s mining sector will be focused on iron ore as the region contains some of the world''s largest untapped high-grade reserves. Guinea''s iron ore production is set for phenomenal expansion to over 115mntpa (mn tonnes per annum) by 2016, turning the country into one of the world''s largest iron ore producers. The Simandou iron ore project, which is majority-owned by Rio Tinto, will be the main driver of growth.
The Simandou iron ore mine is one of the largest iron deposits found in recent years and is all the more attractive given its high-grade reserves. Rio Tinto forecasts output to reach 95mntpa by 2015. In Sierra Leone, the largest project is African Minerals'' Tonkolili mine, which has estimated reserves of 12.8bnt (bn tonnes) and is expected to produce 40mntpa in 2014. Development of the mine has been abetted by the completion of the Bumbuna hydroelectric dam in close proximity to the project, thus overcoming the country''s perennial power shortages.
Aside from iron ore, Guinea''s bauxite sector is set to grow significantly over the coming years and we expect the country to become the world''s third-largest bauxite miner by 2015. In addition, Ghana''s gold production will receive a substantial boost from Newmont Mining, which is developing two large projects.
Regulatory Structure Over the past few years, Ghana, Sierra Leone and Guinea have announced plans to increase government involvement in mining projects. In Sierra Leone, the government is currently drafting legislation to ensure that the mining sector pays higher royalties at a time of elevated prices. Guinea is going for a bolder approach with the President recently stating that the government plans to increase the state''s ownership of mines from 15 to 33% while also increasing taxes. As with Ghana, we do not think these moves will deter investment into the country as the high returns from gold mining should outweigh the costs incurred through higher royalties. Indeed, in Sierra Leone and Guinea the promise of high-grade untapped reserves should ensure these projects remain competitive.
We see the potential for more taxes as other countries seek to raise capital. We highlight Liberia and Côte d''Ivoire as their mining sectors are set for rapid growth and governments could see it as a potential ''cash cow'' to extract greater revenues. Indeed, with governments in these countries facing demands for greater and faster development, as well as rising popular opposition to foreign mining companies benefitting from their resources, the temptation to increase tax revenues may be too much for politicians to ignore.
Key Players West Africa''s mining sector is fairly well consolidated at present, with only a few companies operating in the region. Iron ore and bauxite mining is dominated by Vale and Rio Tinto, which have the capital to develop mines and the appropriate infrastructure. Gold mining is fairly fragmented with large multinational miners AngloGold Ashanti and Newmont Mining, as well as smaller companies such as Cluff Gold. We expect West Africa''s mining sector to become more fragmented over the coming years as smaller companies seek to gain from the region''s high-grade riches. However, multinational companies will continue to dominate as their greater diversity will ensure they are not as exposed to risk in the region.
West Africa Mining Industry
Iron Ore To Be Main Growth Driver Growth in West Africa''s mining sector will be focused on iron ore as the region contains some of the world''s largest untapped high-grade reserves. Guinea''s iron ore production is set for phenomenal expansion to over 115mntpa (mn tonnes per annum) by 2016, turning the country into one of the world''s largest iron ore producers. The Simandou iron ore project, which is majority-owned by Rio Tinto, will be the main driver of growth.
The Simandou iron ore mine is one of the largest iron deposits found in recent years and is all the more attractive given its high-grade reserves. Rio Tinto forecasts output to reach 95mntpa by 2015. In Sierra Leone, the largest project is African Minerals'' Tonkolili mine, which has estimated reserves of 12.8bnt (bn tonnes) and is expected to produce 40mntpa in 2014. Development of the mine has been abetted by the completion of the Bumbuna hydroelectric dam in close proximity to the project, thus overcoming the country''s perennial power shortages.
Aside from iron ore, Guinea''s bauxite sector is set to grow significantly over the coming years and we expect the country to become the world''s third-largest bauxite miner by 2015. In addition, Ghana''s gold production will receive a substantial boost from Newmont Mining, which is developing two large projects.
Regulatory Structure Over the past few years, Ghana, Sierra Leone and Guinea have announced plans to increase government involvement in mining projects. In Sierra Leone, the government is currently drafting legislation to ensure that the mining sector pays higher royalties at a time of elevated prices. Guinea is going for a bolder approach with the President recently stating that the government plans to increase the state''s ownership of mines from 15 to 33% while also increasing taxes. As with Ghana, we do not think these moves will deter investment into the country as the high returns from gold mining should outweigh the costs incurred through higher royalties. Indeed, in Sierra Leone and Guinea the promise of high-grade untapped reserves should ensure these projects remain competitive.
We see the potential for more taxes as other countries seek to raise capital. We highlight Liberia and Côte d''Ivoire as their mining sectors are set for rapid growth and governments could see it as a potential ''cash cow'' to extract greater revenues. Indeed, with governments in these countries facing demands for greater and faster development, as well as rising popular opposition to foreign mining companies benefitting from their resources, the temptation to increase tax revenues may be too much for politicians to ignore.
Key Players West Africa''s mining sector is fairly well consolidated at present, with only a few companies operating in the region. Iron ore and bauxite mining is dominated by Vale and Rio Tinto, which have the capital to develop mines and the appropriate infrastructure. Gold mining is fairly fragmented with large multinational miners AngloGold Ashanti and Newmont Mining, as well as smaller companies such as Cluff Gold. We expect West Africa''s mining sector to become more fragmented over the coming years as smaller companies seek to gain from the region''s high-grade riches. However, multinational companies will continue to dominate as their greater diversity will ensure they are not as exposed to risk in the region.
West Africa Mining Industry
Published: August 2012 No. of Pages: 81 Price: US $ 1175
Table of Contents
Executive Summary . 5
SWOT Analysis 7
West Africa Mining Industry SWOT .. 7
Global Mining Outlook 8
Table: Recent Tax Increases 11
Table: Largest Coal Projects ... 13
Table: Major Frontier Mining Projects ... 13
West Africa Mining Sector Outlook . 15
Table: West Africa''s Main Projects .. 16
Table: West Africa''s Key Mining Production ... 17
Industry Trend Analysis 18
Table: Recent Government Intervention .. 19
Industry Forecasts . 23
Iron Ore: Export Boom Dependent On Infrastructure .. 23
Table: Sierra Leone''s Main Iron Ore Projects . 25
Bauxite: Guinea To Become Fourth Largest Producer In 2016 26
Table: Guinea''s Key Expansion Plans . 27
Table: Guinea''s Bauxite Production 28
Iron Ore: Mining Potential To Override Uncertain Business Environment .. 29
Table: Guinea''s Main Iron Ore Projects .. 31
Table: Guinea''s Iron Ore Production .. 31
Liberia Joining West Africa''s Iron Ore Surge ... 32
Table: Liberia - Main Iron Ore Projects .. 33
Gold: Huge Potential, Enormous Risks . 34
Table: Côte d''Ivoire''s Largest Gold Projects ... 36
Table: Côte d''Ivoire''s Gold Production ... 36
Mining Sector To Receive Boost, But Overshadowed By Neighbours ... 37
Table: Mauritania''s Key Mining Projects 38
Table: Mauritania Iron Ore & Gold Production.. 39
Strong Growth Outlook Despite Political Uncertainties ... 40
Table: Mali''s Largest Gold Projects 41
Table: Mali''s Gold Production 42
Bauxite Sector Feels Benefits Of Chinese Investment ... 42
Table: Ghana''s Bauxite Production . 43
Gold: Newmont Expansion To Drive Growth ... 43
Table: Ghana''s Key Gold Projects ... 45
Table: Ghana''s Gold Production . 45
Regulatory Development .. 46
Business Environment Ratings ... 48
African Government Intervention . 48
Table: Africa - Risk/Rewards Ratings .. 49
Competitive Landscape 53
Table: Financial Metrics . 54
Company Profiles .. 55
Vale .. 55
Company Data . 58
Table: Vale – Financial Data .. 58
Rio Tinto .. 59
Table: Rio Tinto''s Key Financial Data 62
AngloGold Ashanti ... 63
Table: AngloGold Ashanti - Key Financial Data . 65
African Minerals .. 66
Commodity Strategy .. 68
Monthly Metals Update . 68
Table: Select Commodities - Performance & BMI Forecasts .. 75
Business Environment Ratings Methodology 76
Table: Mining Business Environment Indicators . 77
Table: Weighting Of Components 78Table: Recent Tax Increases . 11
Table: Largest Coal Projects . 13
Table: Major Frontier Mining Projects . 13
Table: West Africa''s Main Projects . 16
Table: West Africa''s Key Mining Production . 17
Table: Recent Government Intervention . 19
Table: Sierra Leone''s Main Iron Ore Projects . 25
Table: Guinea''s Key Expansion Plans . 27
Table: Guinea''s Bauxite Production . 28
Table: Guinea''s Main Iron Ore Projects . 31
Table: Guinea''s Iron Ore Production . 31
Table: Liberia - Main Iron Ore Projects . 33
Table: Côte d''Ivoire''s Largest Gold Projects . 36
Table: Côte d''Ivoire''s Gold Production . 36
Table: Mauritania''s Key Mining Projects . 38
Table: Mauritania Iron Ore & Gold Production. 39
Table: Mali''s Largest Gold Projects . 41
Table: Mali''s Gold Production . 42
Table: Ghana''s Bauxite Production . 43
Table: Ghana''s Key Gold Projects . 45
Table: Ghana''s Gold Production . 45
Table: Africa - Risk/Rewards Ratings . 49
Table: Financial Metrics . 54
Table: Vale – Financial Data . 58
Table: Rio Tinto''s Key Financial Data . 62
Table: AngloGold Ashanti - Key Financial Data . 65
Table: Select Commodities - Performance & BMI Forecasts . 75
Table: Mining Business Environment Indicators . 77
Table: Weighting Of Components . 78
SWOT Analysis 7
West Africa Mining Industry SWOT .. 7
Global Mining Outlook 8
Table: Recent Tax Increases 11
Table: Largest Coal Projects ... 13
Table: Major Frontier Mining Projects ... 13
West Africa Mining Sector Outlook . 15
Table: West Africa''s Main Projects .. 16
Table: West Africa''s Key Mining Production ... 17
Industry Trend Analysis 18
Table: Recent Government Intervention .. 19
Industry Forecasts . 23
Iron Ore: Export Boom Dependent On Infrastructure .. 23
Table: Sierra Leone''s Main Iron Ore Projects . 25
Bauxite: Guinea To Become Fourth Largest Producer In 2016 26
Table: Guinea''s Key Expansion Plans . 27
Table: Guinea''s Bauxite Production 28
Iron Ore: Mining Potential To Override Uncertain Business Environment .. 29
Table: Guinea''s Main Iron Ore Projects .. 31
Table: Guinea''s Iron Ore Production .. 31
Liberia Joining West Africa''s Iron Ore Surge ... 32
Table: Liberia - Main Iron Ore Projects .. 33
Gold: Huge Potential, Enormous Risks . 34
Table: Côte d''Ivoire''s Largest Gold Projects ... 36
Table: Côte d''Ivoire''s Gold Production ... 36
Mining Sector To Receive Boost, But Overshadowed By Neighbours ... 37
Table: Mauritania''s Key Mining Projects 38
Table: Mauritania Iron Ore & Gold Production.. 39
Strong Growth Outlook Despite Political Uncertainties ... 40
Table: Mali''s Largest Gold Projects 41
Table: Mali''s Gold Production 42
Bauxite Sector Feels Benefits Of Chinese Investment ... 42
Table: Ghana''s Bauxite Production . 43
Gold: Newmont Expansion To Drive Growth ... 43
Table: Ghana''s Key Gold Projects ... 45
Table: Ghana''s Gold Production . 45
Regulatory Development .. 46
Business Environment Ratings ... 48
African Government Intervention . 48
Table: Africa - Risk/Rewards Ratings .. 49
Competitive Landscape 53
Table: Financial Metrics . 54
Company Profiles .. 55
Vale .. 55
Company Data . 58
Table: Vale – Financial Data .. 58
Rio Tinto .. 59
Table: Rio Tinto''s Key Financial Data 62
AngloGold Ashanti ... 63
Table: AngloGold Ashanti - Key Financial Data . 65
African Minerals .. 66
Commodity Strategy .. 68
Monthly Metals Update . 68
Table: Select Commodities - Performance & BMI Forecasts .. 75
Business Environment Ratings Methodology 76
Table: Mining Business Environment Indicators . 77
Table: Weighting Of Components 78Table: Recent Tax Increases . 11
Table: Largest Coal Projects . 13
Table: Major Frontier Mining Projects . 13
Table: West Africa''s Main Projects . 16
Table: West Africa''s Key Mining Production . 17
Table: Recent Government Intervention . 19
Table: Sierra Leone''s Main Iron Ore Projects . 25
Table: Guinea''s Key Expansion Plans . 27
Table: Guinea''s Bauxite Production . 28
Table: Guinea''s Main Iron Ore Projects . 31
Table: Guinea''s Iron Ore Production . 31
Table: Liberia - Main Iron Ore Projects . 33
Table: Côte d''Ivoire''s Largest Gold Projects . 36
Table: Côte d''Ivoire''s Gold Production . 36
Table: Mauritania''s Key Mining Projects . 38
Table: Mauritania Iron Ore & Gold Production. 39
Table: Mali''s Largest Gold Projects . 41
Table: Mali''s Gold Production . 42
Table: Ghana''s Bauxite Production . 43
Table: Ghana''s Key Gold Projects . 45
Table: Ghana''s Gold Production . 45
Table: Africa - Risk/Rewards Ratings . 49
Table: Financial Metrics . 54
Table: Vale – Financial Data . 58
Table: Rio Tinto''s Key Financial Data . 62
Table: AngloGold Ashanti - Key Financial Data . 65
Table: Select Commodities - Performance & BMI Forecasts . 75
Table: Mining Business Environment Indicators . 77
Table: Weighting Of Components . 78
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