Mali turmoil bad for Canadian mining ambitions in West Africa: analysts – by Mike Blanchfield, The Canadian Press/CTV News – February 8, 2013)

OTTAWA, Ont. — As Islamist rebels controlled a chunk of Mali the size of France late last month, Toronto-mining analyst Pawel Rajszel honed his advice to investors on a leading Canadian mining company in the country.

Rajszel had previously told investors to “take their money and run.” His note of Jan. 24 concluded with one word: “Sell.”
Even after French and African troops routed al Qaeda terrorists from major cities in Mali’s north this week — and after French President Francois Hollande basked in the euphoria of a liberated Timbuktu — Rajszel was still unmoved.

“We haven’t changed our opinion,” Rajszel, head of the precious metals team at Veritas Investment Research, told The Canadian Press.

The Mali crisis and its spillover into West Africa are a monkey wrench in the Harper government’s ambitions for Canadian firms, especially in the mining sector.

The government is actively promoting Canadian business opportunities in Africa, but has no stomach for contributing troops to the French-led military campaign to drive al Qaeda-linked extremists out of northern Mali. Industry analysts say headlines about terrorists gaining a foothold in West Africa are chilling investors, and casting a pall over future prospects.

“The rise of rebel activity in the Sahel region or Sahara region is concern for all Canadian mining companies and oil and gas companies operating in the region,” said Barry Allan, senior mining analyst with Mackie Research Capital Corp.

“It had been for a good, long period of time, a jurisdiction that was known for stability. You cannot say that any more.”
Leily Omoumi, a gold analyst with Scotiabank in Toronto, said that for investors who are “not too comfortable or too familiar with West Africa, I think headlines and news and what’s going on in Mali is definitely going to impact their level of interest in companies in West Africa.”

This uncertainty comes as Prime Minister Stephen Harper ramps up a strategy to give Canadian business an edge in Africa’s lucrative and expanding resource industry.

Canadians are already the world’s leading miners, and their interest in Africa’s untapped resource potential — including gold — has been growing rapidly.

In a study of global exploration by Natural Resources Canada, 298 of the world’s 618 large mining companies in 2010 were Canadian.

“From 2009 to 2010, the larger Canadian-based companies budgeted 106 per cent more for Africa. Most of the increases occurred in Burkina Faso, Zambia, Liberia, Niger, Botswana, Mauritania, Mali, Ivory Coast, and Ghana,” says the 2012 report.

At one of the grimmest moments of the Mali crisis last month, Harper rebuffed the visiting chair of the African Union, who made a public plea for Canada to prod its NATO allies into joining the fight with African soldiers against the Islamist rebels.

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