While SA toils with its past, miners move into Africa’s fields of gold

While new investment in the South African mining industry has practically dried up after a decade of uncertainty created by the ANC government over the country’s mining legislation, there is a gold mining boom going on in West Africa.

A host of Australian, Canadian and UK-listed exploration companies and junior miners have piled into the region backed by a number of majors, which typically get involved when a project gets to the “heavy-lifting” stage requiring serious financing.

That boom is spreading from countries such as Ghana and Mali – where the mining activity has been the most intense over the past 20 years or so – into neighbouring states like Côte d’Ivoire, Liberia and Sierra Leone which share the same host geology.

Juniors operating in the region include B2Gold Corporation (a Canadian firm working in Mali and Burkino Faso); Endeavour Mining (Canadian: Burkino Faso, Mali and Cote d’Ivoire);  Semafo (Canadian: Burkino Faso); Perseus Mining (Australian: Cote d’Ivoire); and Hummingbird Resources (UK: Mali and Liberia).

Majors active in West Africa include Gold Fields in Ghana, AngloGold Ashanti (Ghana, Democratic Republic of Congo (DRC)); Randgold Resources (Mali, Cote d’Ivoire, DRC), Newmont Mining (Ghana), and Kinross Gold (Ghana, Mauritania).

There are two major reasons for the boom – favourable geology and favourable mining dispensations offered by the host countries.

Former Gold Fields CEO, Ian Cockerill, who has been heavily involved in the region through positions held with Hummingbird Resources and Endeavour Mining, points out a number of the countries are “virgin territory”. Not that long ago they were closed to Western investment.

“The gold orebodies are generally shallow and easily accessible. These are not dripping roasts, but you can get a mine into production fairly quickly. From the time of discovery to the first gold pour can take between three to seven years compared with South Africa where it’s more like 20 years.

“It’s also easy to expand. One mine will leap frog into another and the governments are prepared to provide favourable tax regimes because they are benefitting hugely from the mining boom.

“Compare that to South Africa where the government now wants a 30% BEE participation plus a 10% free carry plus all the associated regulations on issues like procurement. Then add a huge and entitled workforce.

“The impact is to cut out every project except a dripping roast because of the higher rate of return required. It’s a no-brainer as to why investors are looking outside South Africa. The investment attitude of the City of London towards South Africa is one big yawn,” he says. Cockerill is currently lead independent director at Ivanhoe Mines which is building mines in the DRC and South Africa.

Cockerill’s assessment is backed up by Otsile Matlou, CEO of ENSafrica, which is Africa’s largest legal firm. Matlou comments that many West African nations have come from a “painful and unstable past”.

“They decided to come up with a set of rules aimed especially at stimulating exploration. These countries attract the lion’s share of exploration precisely because they have gone out of their way to make the environment conducive to small companies and risk capital so that you can go onto the ground and explore.”

It’s the opposite in South Africa where the industry has long been dominated by big mining operators focused on production because – up until now – they have been spoilt by easy access to the country’s vast orebodies which are tabular and extend on strike for up to hundreds of kilometres. But those orebodies are now being mined out, and getting deeper and harder to access.

The investment attitude of the City of London towards South Africa is one big yawn.

Exploration geologist John Bristow comments: “The South African mining industry is its own worst enemy. The last big discovery here was the Venetia diamond mine back in 1980. Nobody here understands junior miners including the Minerals Council (the former Chamber of Mines)”.

Gold Fields has been extremely successful in Ghana with its Tarkwa and Damang mines, but the group is now extending its activities into other, lesser-known regions of Ghana through new joint ventures with juniors Asanko Gold (Canada) and Cardinal Resources (Australia).

Said CEO Nick Holland: “The south-west [of Ghana] has certainly become well drilled out and opportunities there are not that great, but there are still opportunities further up.

“One of the things that appealed to us when we bought the interest in Asanko was that whole area is sandwiched between two belts on either side: Newmont [Mining] on one side and Kinross [Gold] on the other.

“The area we are in is under-explored and we have seen about 100 kilometres of similar strike as part of the due diligence. So that’s an area we thought it was strategically important for us to be.

“Secondly, we have taken a stake in exploration junior Cardinal Resources, which is on to a belt further north that is even more under-explored. We reckon there’s more gold there and we are going looking for it.”

Another company looking further afield is Endeavour which has sold its Ghanaian mine and focused its greenfields exploration efforts on Cote d’Ivoire after commissioning the Houndé mine in Burkino Faso. According to CEO, Sébastien de Montessus: “Mali and Ghana have been far more intensively explored because, until recently, it was not possible for exploration to take place in Cote d’Ivoire and Burkino Faso for political reasons such as civil war”.

But it’s evident that one man’s meat is another man’s poison when it comes to choosing countries in which to operate with the most glaring difference of opinion being between Randgold Resources and Gold Fields over Ghana.

Randgold Resources CEO, Mark Bristow far prefers Francophone Africa and walked away from a potential joint venture on the Obuasi mine with AngloGold Ashanti, a group with which it has successfully operated joint ventures in the DRC and Mali.

According to Bristow corruption is a big problem in Ghana, a concern he pointed out in 2016: “We have made many attempts to invest in Ghana and we have always been rattled by the intervention at the political level for big investments, which is quite aggressive. It’s a bit like South Africa”.

Mark Bristow has never operated in Ghana and I think it’s hard for him to draw conclusions on the country,” says Holland. “Newmont is there; AngloGold Ashanti is there; Kinross is there; we are there. Can five of the top gold companies be wrong and he’s right? I leave that question with you.

Holland disagrees, commenting: “Ghana has been stable and it’s one of the better countries to operate in. It runs on a British-linked system and is easier than Francophone Africa. There was a wobble at Obuasi, but we always believed that would be resolved.

“The education system in Ghana is second to none and the mining engineers and geologists we employ from the Ghanaian institutions are very good,” he says.

So why the radical difference in opinion?

“Mark Bristow has never operated in Ghana and I think it’s hard for him to draw conclusions on the country,” says Holland. “Newmont is there; AngloGold Ashanti is there; Kinross is there; we are there. Can five of the top gold companies be wrong and he’s right? I leave that question with you.”

Yet Bristow has operated very successfully in the DRC, a country which Holland says Gold Fields will not go near.

The bottom-line remains that gold exploration and mining in West Africa is thriving in sharp contrast to the sorry situation in South Africa where junior miners fear to tread.

8 COMMENTS

  1. I have known Ian for over 30 years and have the world of respect for him. His opinions are fair and well thought through. The main reason for South Africa’s demise, which Will accelerate and intensify very quickly now, is exactly the entitlement mentioned by Ian in relation to the workforce. This entitlement however stretches beyon the labour forcé and into all parts of the country, including government. People feel entitled, and they are being encouraged by government, to free education, free housing, guaranteed employment, free medical treatment etc etc… This is not realistic. I have operated in West Africa as well as South Africa and I guarantee you that the difference is that the best the West Africans ask and can hope for is to be kept safe by their government so that they can study, work progress and build their own houses. NO ONE asks for, or is given a house or farm for free… It is a futile bid to try and convince South Africans they are ignorant and arrogant in the extreme….They Will first have to destroy everything and go through civil war before they Will appreciate these undeniable facts… Maybe then we Will come back but then again, maybe not….

    • Well Goldminer, Go and leave amongst the like-minded people in West Africa!

      As Black South Africans, we will proudly and forcefully pursue our aspirations and racists like yourself will not deter us. During Apartheid, when yourselves were given everything including maid-allowances , you did not see that as dependency! Now , when its extend beyond whites it is! Your hypocrisy & Racism knows no bounds….

      • Goldminer is right.

        Goldspeculator, comments such as yours are an indication of ignorance and arrogance.
        Ignorance due to the fact that there is no indication or discussion on skin colour in Goldminers comments or do you actually believe that only black people are responsible for the failures in South Africa?
        Arrogance, in the fact that you find it appropriate to “group label” someone based on your own beliefs as you have no idea what theirs are and are resorting to name-calling.
        You are clearly an angry individual with an inflated ego, who is unable to accept the failings of the current dispensation in South Africa.
        This inability to see the shortcomings of the CURRENT situation is exactly what is preventing South Africa from moving to a path of sustainable growth.
        Blindly pursuing emotional aspirations that when examined by the international community are a dismal failure is acceptable? Perhaps you would like to clarify your forceful, aspirations?

        Your anger at the past is what is driving you to disaster.

        South Africans can create a positive future.
        The wealth pie is not fixed in size and can be grown. It is shrinking due to attitudes not aptitudes.

      • Excuse me, who is the racist here? I did not once mention race but you sir, cannot stop basing everything you say on race… By the way, I am black and therefore i cannot (according to the liberals) be a racist….

      • To all involved in this string,

        Can we please: “play the ball and not the man”, as the saying goes?

        Many publications have shut down their comment facilities because they haven’t the resources to keep monitoring them.
        I personally highly prize nearly all commentators who use this facility, but let’s talk about mining and when the subject extends to citizenry, ethics, values etc let’s keep it humane in tone, and on topic rather than taking one another down.

        Thanks again

        David

  2. Lets try again….

    Both Goldminer & Concerned Citizen are have made racist comments, and i proffer their comments herein as proof.

    There is abundant undertones of racism in his comments , as follows :
    1. ” entitlement mentioned by Ian in relation to the workforce”. You need to be an ignorant diaper ( akin to Concerned Citizen) to foolishly not read this as “entitlement by Black workers”. So for the likes of him, blacks must die by their thousands for peasant wages , like in Apartheid times for the sake of the industry. I wholly reject this, and there is nothing about entitlement about seeking better quality of life that he so enjoys, and has never seen or experienced anything close to hardship.
    2. He goes further and writes….” People feel entitled, and they are being encouraged by government, to free education, free housing, guaranteed employment, free medical treatment etc etc”. Well, I have news for him…..The government of RSA is government for all citizens , NOT the apartheid RSA which was only for whites , with blacks being subjugated..including their aspirations and hopes. According to his ilk, blacks are just good for servants hence he does not compare to other mining jurisdictions ( Peru, Chile or Indonesia) BUT to Wet Africa!

    3. “Group Label” is exactly what he started by his vacuous comment that ” entitlement however stretches beyon the labour forcé and into all parts of the country”. As for his beliefs, he has put them firmly in the open! And they are barbarous and reeks of prejudice founded on his racist upbringing and privilege that he seeks for his kind and the expense of others.

    4. Your allegation that “You are clearly an angry individual with an inflated ego, who is unable to accept the failings of the current dispensation in South Africa”….is downright laughable. The current dispensation is RSA has succeeded….your apartheid dispensation is DEAD. I am not angry and my ego is well in check! However, i will NOT abase myself in the face of blatant racism masquerading as fair commentary. I will challenge it to the gates of hell!

    5. Frankly, RSA will move ” to a path of sustainable growth” soonest the likes of you meet your makers! Then all of my efforts will be dedicated to improving the mining industry free of racists bigots.

    6. Since when do you care about international community? You never cared about that during apartheid! Our aspirations are justified and we will endeavour to fullfill them irrespective of your bigotry! Yes, We are justified at being angry with the past because it’s a lived experience of ours NOT yours. You have absolutely no right to advise or counsel us on how to respond to it. Apartheid , for which you are a beneficiary, was far the worst disaster we have faced, and we overcame it, and the wounds are still fresh & sore. We are more than prepared for other disasters as people that may befall us.

    7. You are correct that ALL ( unless you were referring to only your race) South Africans can create a positive future. Thats why some of us work so hard at it daily….

    As the “wealth pie not being fixed in size and can be grown” …..Well if it grows who gets what slice?

  3. I agree with David regarding his statement.

    The comments on this site generally reflect deep, cognitive thought that is sorely lacking on most other sites, which still allow open commentary.
    This is unusual and refreshing although at times, controversial.
    Reflection and debate on the facts is why this forum is appealing.

    Thank you to MiningMx for this opportunity.

    • I humbly apologize for my reaction to the race baiting, and I Will abstain from this kind of thing in future. I agree with concerned citizen in this regard. Rather than fight over who should be getting slices of the current cake, we should be working together and pooling our collective talents to grow the cake and make everyone´s lives better and more meaningful.
      I sincerely hope that we can get everyone to pull together in this regard. Hate destroys, whether justified or not…

Comments are closed.