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Mining in Africa : challenges & opportunities

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we present the place of Africa in the world mining industry and we discuss the challenges and opportunities for it's growth in this sector by 2030 – PowerPoint PPT presentation

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Title: Mining in Africa : challenges & opportunities


1
Mining Industry in Africa challenges and
opportunities
Dr. Belkacem Touahri Independant Senior
Consultant Geology mineral resources MICA
meeting, Algiers, october 2015
2
Global mining industry is booming since the 2000s
Between 2005 2008, the world mining production
doubled from 225 billion USD to 460 billion,
source Raw Material Group, 2012
3
World expenditures in exploration (source MEG,
2010)
At the same time, exploration expenditures rose
from nearly 5 billion USD (2005) to 13 billion
(2009). The price index has at the same time
tripled. Nota bene non ferrous metals include
all metals except iron
4
Africa in the world production for some products
(source USGS)
Product world FIRST AFRICAN PRODUCERS
Cobalt 57 DR Congo, Zambia, Morocco
Diamond 53 Botswana, DR Congo, South Africa, Angola, Namibia
Manganese 39 South Africa, Gabon, Ghana
Phosphate 31 Morocco, Tunisia, Egypt, South Africa, Senegal
Gold 21 South Africa, Ghana, Mali, Tanzania, Ethiopia
Bauxite 9 Guinea, Sierra Leone, Ghana
Nickel 7.5 South Africa, Botswana, Zimbabwe
Copper 5 Zambia, RD Congo, South Africa
5
Number of discoveries in the world (M. Stanley,
Y. Zhou, World Bank, 2014)
Compared to the 90s Stagnation CIS
countries, China, Canada, Eastern Europe, Africa
Decline South America, USA, SE Asia
Pacific, Australia No discoveries in Western
Europe.
6
Investments in mining industry
63 of all the investments in Africa are
concentrated in 5 countries only
12 only of the global investments are in
Africa
7
Since 2000s, global mining industry is booming
but African mining receives only 12 of the
global investments
The global mineral potential is considerable but remains unexplored and unexploited
Major and junior companies from North America, Australia Europe are more than ever present
China India, newcomers, express particular interest they put Africa in theire first priority
So far, one fact to be honest is that Africa does not profit from its wealth taxation is often too advantageous, the mining rent is often diverted what is causing conflicts the processing (refining, metallurgy) is largely outside the continent
the challenges come down to the question of how to put the mining sector at continent's development benefit
Considering the overall growth in demand for mining products, Africa which already produces some 60 mining products, has a growth potential due to the continent's strong exploration and production opportunities.
8
The factors of growth
Increase in global energy demand (it is estimated that coal demand will double by 2030)
The growing industrialization in Asia China and India in particular but without forgetting the own industrialization of Africa
Increasing demand from the mechanical sector (vehicles, machinery, industrial equipment)
The increasing human urbanization in the world and therefore in Africa ...
9
What products will participate in this growth ?
1/2
of world resources of world resources Main countries Main companies
Coal 6 South Africa, Mozambique, Botswana, Zimbabwe Rio Tinto, Morepule Collier, Hwange Colliery Ltd.
Platinum 77 South Africa, Zimbabwe Angola Platinum, Lonmin, Implats
Gold 17 South Africa, Ghana, Papouasie New Guinea, Mauritania, Tanzania, Mali Anglo Gold Ashanti, Goldfiels, Grest basin Gold, Newmont, Newcrest, Barrick
Iron 4 Zimbabwe, Mauritania, Algeria Kumba Resources, Sphere Investments, Zisco, SNIM, Ferphos
Copper 10 South Africa, Zambia, Egypt, Congo First Quantum, Glencore, Intern. Konkola Copper Mines, Rio Tinto, Equinox
10
What products will participate in this growth ?
2/2
of world resources of world resources Main countries Main companies
Nickel 4 South Africa, Botswana, Madagascar Anglo Platinum, Lonmin, Implats, Norlisk Nickel, Shemitt, Sumimoto, Korea Resources, SNC Lavalin
Aluminium 5 South Africa, Mozambique, Egypt BHP, Rio Tinto, Valoo
Zinc 2 Morocco, Namibia, Tunisia CMT, Vedana Resources, Rio Tinto, Kumba Resources, Anglo American, Breakwater resources
Phosphate Morocco, Tunisia, Senegal, Algeri OCP, CPG, Ferphos
Potash Ethiopia, Erythrea Yara International (Dalol area), ENAMCO (Colluli project)
All products combined, Africa holds 30 of world reserves and a higher share for diamond, manganese, platinum, gold, cobalt All products combined, Africa holds 30 of world reserves and a higher share for diamond, manganese, platinum, gold, cobalt All products combined, Africa holds 30 of world reserves and a higher share for diamond, manganese, platinum, gold, cobalt All products combined, Africa holds 30 of world reserves and a higher share for diamond, manganese, platinum, gold, cobalt
11
Main African Productions
12
Countries allready taking advantage of these
opportunities 1/2
Investments in Africa tripled between 2005 and 2011. 230 companies in 2011 were operating in Africa. The most active are Canadian and Australian.
In 2011, 160 Canadian companies were engaged in 39 African countries. the total invest of these companies was estimated at US 31 billion. They are most active in East Africa (12.7b in 2011), West Africa (9.9b) and Central Africa (3.4b). The most concerned countries are Zambia, Mauritania, South Africa, Madagascar, DR Congo, Ghana, Tanzania, Mali, Senegal, Erythrea.
For the years 2010 2011, Australian companies raised about US 4 billion for their projects in Africa Toga, Guinea, Mozambique, Tanzania, DR Congo, Namibia, South Africa, Zambia, Botswana, Madagascar.
13
Countries allready taking advantage of these
opportunities 2/2
China is particularly active in South Africa South Africa, Zambia, Tanzania, Mozambique. In 2011, Chinese companies initiated 7 projects for a total investment of 15 billion US Dollars. This level could pass at the end of 2015 to 50 billion. These projects mainly concern cobalt, platinum, copper and iron.

The most active among other countries are Brazil, Russia, India and Japan.
14
Canadian and Australian companies aim to African
countries that have resources for copper, iron,
platinum, gold, coal and uranium
15
Strong investment growth is expected by 2030,
some major projects
Eastern Africa Tanzania Gold Iron (6 billion
USD) Ethiopia et Erythrea potash (2,5 billion
USD)
The most important provider of growth is foreign
investment in the South-Saharan countries. The
most important part comes from China.
Southern Africa Mozambique increase of coal
production to 100mT / yearBotswana increase of
coal production to 100mT / yearIn DR Congo
Canadian companies increase their investments
West Africa Ivory Coast, Guinea, Liberia 6
billion tons high quality iron resources in
2012, 15 projects for about 40 billion USD total
invest.
For the South-Saharan countries, those of
southern africa benefit of the biggest investment
amounts 48 of the global, 23 billion USD
expected by 2030.
  • In North Africa, huge investments are announced
    in Algeria for a global amount of about 15
    billion USD. The most important projects are
  • Iron ore deposit of Gara Djebilet (3,5 billion
    tons resources),
  • Strong increase of the phosphate production
  • developement to production of manganese Guettara
    deposit,
  • developement to production of the zinc-lead
    deposit of Oues Amizour (about 150 000tons/y zinc
    concentrate).

16
However, this growth is highly dependent on many
challenges that are all risks for investors
  • Slowdown in project capital assets
  • Fight against corruption
  • Constraints from lack of infrastructures
  • Bureaucracy
  • Risk of nationalization
  • Lack of staffs
  • Security and environmental concerns
  • Rates of taxes
  • Mining and labour regulations
  • Political instability and the risks of armed
    conflicts
  • Access to financing
  • Increasing awareness on the part of communities
  • Merger and acquisition risks.
  • The most important challenges are
  • Access to financing
  • Lack of infrastructures
  • Corruption
  • Bureaucracy

The investments announced by 2030 remain well
below the continent's potential
17
The growth will not happen without the local
communities 1/2
It is established that foreign companies do not operate according to the practices to which they are subject in their countries.
African communities are increasingly aware of the need for their involvement
The stability and security of companies will increasingly depend on the level of trust they have created with the local communities. The companies will have to act to
create and maintain ongoing communication first the company will seek the implication of these communities by explaining in a simple language the process of the project, its benefits consequences, their role.
participate concretely in improving the standard of living of the local population through actions in the fields of health and education
enhance the local workforce, all qualifications combined
18
The growth will not happen without the local
communities 2/2
This conduct will avoid conflicts that are detrimental to the activity and that may lead to suspension or closure with all the consequences that will result for the company and for the country. The authority of the country that has previously approved the project should be actively involved in this communication.
It is established that the most successful companies are those with proactive CSR risk (Corporate Social Responsibility). These companies invest in improving strategies and activities to ensure positive and sustainable environmental and social outcomes
19
Each part looks for its interests
The African mining sector offers growth
opportunities for local international companies
in all fields financing, consulting,
exploration, engineering, mining , laboratory,
drilling, equipments logistic, etc
20
The major facts
The mining sector accounts for about 8-10 of
Africa's GDP
The potential is certainly important and for the
most part unexplored. However, major challenges
must be overcome for its valorization financing
constraints, corruption, bureaucracy, lack of
infrastructure and market uncertainties
The drivers of growth a maturation of the sector
to that of developed countries, lower production
costs compared to those of developed countries,
urbanization and fast industrialization of the
developing world,
Stimulated by these drivers, certain
opportunities exist for both local companies and
international companies that are convinced by the
African mining sector and its potential.
Dr. B. Touahri, Industrie minière Afrique, défis
opportunités, Août 2015
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