Dominated by Ghana, Senegal, Guinea, Niger, Mali, Burkina Faso and Ivory Coast, the West African mining industry is fast gaining recognition in the resources world. Home to well-known deposits and an impressive history of producing mines, the region now is a preferred mining destination. In a series of articles we will discuss the growing importance of the region, some salient statistics and important aspects of the regulatory environment in different countries in the region. We will also highlight few interesting companies with attractive assets that warrant investor attention.
Industry sources such as Natural Resources Canada (NRC) estimate mining investments in Africa to reach $14 billion by 2010 from $7 billion in 2006. Much of the investment is expected to be in West Africa, Southern Africa and Central Africa. Amongst West African nations, Ghana, Mali, Guinea and Burkina Faso are expected to be at the fore front. In addition to majors such as Newmont (NYSE: NEM, Bullboard) and AngloGoldAshanti (NYSE: AU, Bullboard), relatively new entrants such as Midland Minerals are expected to help script the future of West African mining sector with their projects and investments. Successful discoveries or advanced stage projects by these companies may well become acquisition or joint venture targets by larger companies leading to capital gain opportunities.
Apart from geology, West Africa’s stable politics and the mining friendly regulatory environment has played an important role in attracting investments. From a governance perspective, some West African nations have made considerable progress and rank alongside South Africa, which has a developed mining environment. Mali, Ghana and Burkina Faso rank high on contract enforceability and property registration. The Fraser Institute ranks Ghana and Mali higher than South Africa and the mining friendly Peru on its policy potential index. The glut of investments to the region should therefore cause little surprise.
