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Africa Mining

Insight: Congo’s neglected state miner hankers for past glory – by Clara Ferreira-Marques and Jonny Hogg (Reuters Canada – February 22, 2013)

http://ca.reuters.com/

KAMBOVE, Democratic Republic of Congo (Reuters) – At the heart of the Democratic Republic of Congo’s southern mining belt, Kambove once churned out tonne upon tonne of copper for Gecamines, a sprawling conglomerate that used to make up 60 percent and more of the country’s exports.

Now, inside the rust-streaked corrugated iron walls of the Kambove copper plant, the conveyor belts run erratically and the corroded walkways have holes so large that visitors can see through to the workers milling below.

Today, like much of state-owned Gecamines, the processing operations are working at a fraction of their capacity, slowly crumbling in the searing African heat. Kambove, however, is part of an ambitious government plan to put state-owned Gecamines back on the map as a miner and producer and reverse decades of underinvestment, war and kleptocracy presided over by the late dictator Mobutu Sese Seko.

Under technocrat managers appointed in 2010 and a plan laid out last year, Gecamines would no longer just hold minority shares in mines across Congo’s south, but aim to triple its own production by 2015, thanks to investment in new machinery and a push into exploration. The group last month took its first minority stake in an asset outside Congo – cobalt refinery assets in Finland – a move it says will help raise and improve its bruised international profile.

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China’s interest in Africa picking up as its economy recovers – by Keith Campbell (MiningWeekly.com – February 22, 2013)

http://www.miningweekly.com/page/americas-home

The year 2011 saw a staggering increase in Chinese mining investments in Africa. Whereas these had totalled some $1.5-billion at the end of 2010, by the conclusion of 2011 the figure had rocketed to $15.6-billion. Africa has become the site of almost 75% of Chinese foreign mining investment. The China Mining Association (CMA) reported that, worldwide, Chinese companies invested in 284 mining companies during 2011. These figures exclude the oil and gas sector.

Economic upturn

China needs minerals and metals to feed its economy. From 1999 to 2009 the country’s real gross domestic product (GDP) grew at an annual average rate of 10.3%. The Asian giant has become the second largest economy in the world, and, according to The Conference Board’s “Global Economic Outlook 2013” (January 2013 Update), accounted for 16.4% of global economic output last year. (The US contribution was 18.2%; in rather sharp contrast, India was responsible for 6.3%, the whole of Latin America for 7.7%, Russia and Central Asia and South East Europe 5.9%, Africa 3.3% and the Middle East 3.7%. As for Europe – defined as the European Union plus Iceland, Norway and Switzerland – that contributed 20.3%, while the figure for the Euro area was 13.8%.)

The world was, of course, hit by the Great Recession of 2008/2009, and the downturn is by no means over. And China was also affected. Economic growth for 2012 was 7.8%, the Chinese Academy of Sciences (CAS) has reported. But the second semester of the year saw faster than expected growth. The Chinese government’s growth target for the year was 7.5%. Nevertheless, this was the country’s slowest growth rate since 1999 – the rate for 2011 was 9.3% and for 2010, 10.4%.

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Negative sentiment on South Africa ‘significantly overblown’ – Cutifani – by Martin Creamer (MiningWeekly.com – February 20, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – The negative sentiment on South African had been “significantly overblown” at a time when the right things were being done, outgoing AngloGold Ashanti CEO Mark Cutifani said on Wednesday.

After delivering his last set of AngloGold Ashanti results for 2012 – the company’s second-highest ever yearly earnings of $924-million despite the negative impact of last year’s strikes, Cutifani said that AngloGold Ashanti’s share price should be trading at around $60 a share on the New York Stock Exchange based on earnings and cash-flow growth since 2008 rather than the current $27 a share.

The company was introducing the new ounces at half the price of the industry, which, he was confident, would eventually stand it in good stead. But in the meantime, its share price was being discounted as a result of negative sentiment towards South Africa, as was also the case with South Africa’s other gold majors.

“The great frustration is the share price,” said Cutifani, who takes up the position of CEO of Anglo American on April 3. He said he remained “immensely confident” about the future of South Africa and praised Minerals Minister Susan Shabangu for bringing the two conflicting mine unions together to sign an accord.

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Zambia: Safety Gaps Threaten Copper Miners – by Human Rights Watch (February 20, 2013)

http://www.hrw.org/home

Government, Chinese State-Owned Subsidiaries Make Uneven Progress

(Johannesburg) – Workers in the copper mining sector in Zambia remain vulnerable to abuse. New Human Rights Watch research found that the government of President Michael Sata, who promised to prioritize labor rights when he took office in September 2011, has made some improvements in supporting the oversight of the mines, but there remains inadequate enforcement of national labor laws designed to protect workers’ rights.

Human Rights Watch published a report in November 2011 documenting labor rights abuses at four Zambian subsidiaries of China Non-Ferrous Metal Mining Corporation (CNMC), a state-owned enterprise under the authority of China’s highest executive body, the State Council. In follow-up research in October 2012, Human Rights Watch found that CNMC’s subsidiaries made some notable improvements on reducing work hours and respecting freedom of association, but that miners continued to face poor health and safety conditions and threats by managers if they tried to assert their rights. The Zambian government has not adequately intervened to address these problems, Human Rights Watch found.

“President Sata ran on a populist campaign to protect workers, so the lack of meaningful progress in the mining sector is disappointing,” said Daniel Bekele, Africa director at Human Rights Watch. “Although CNMC’s subsidiaries have addressed some of the labor rights abuses documented by Human Rights Watch in 2011, the miners still face significant health and safety risks.”

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Is now the time to reinvest in mining majors – by Lawrence Williams (Mineweb.com – February 20,2013)

http://www.mineweb.com/

The almost universal change in the top management of major diversified and gold miners should indicate that a more cautious approach will see greater profits and dividends ahead.

LONDON (MINEWEB) – Over the years the world’s biggest mining companies have proved to be spectacular investments, but have very much underperformed over the past 4-5 years as corporate dealmaking, largely entered into when the companies’ boards took on CEOs who would embrace big merger deals and huge capital projects when the mining sector seemed to be headed onwards and upwards.

The first real halt to the upwards progression came with the Great Financial Crisis of 2007/8 which decimated the values of many mining sector companies. While the megaminers, because of their diverse holdings, and continuing strength in the bulk mining sectors like iron ore and coal, may not have suffered as much as most, they have since been caught in a position which does not exactly please their major shareholders and, as a result, we have seen an unprecedented series of major asset write downs and a virtually complete change in top management right across the sector.

In the diversified miners we have seen, or are seeing, new CEOs for BHP, Vale, Rio Tinto, Anglo American and Xstrata – in short the world’s top 5 mining companies by market capitalisation.

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Canadian miners wading into Africa – by Jessica McDiarmid (Toronto Star – February 19, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Africa is home to the latest mineral rush, with potential for great riches–and catastrophe.

When rebels in Mali launched a surprise push south toward the capital, Bamako, last month, the Canadian mining industry took notice.It’s got nearly $500 million in assets there.

As international forces landed in the West African nation to fend off the Islamist advance, Vancouver-based Nevsun Resources was hit with allegations that forced labour built its Bisha mine in Eritrea, a pariah state on the other side of the continent.

Just last week, Canadian gold giant Barrick Gold attributed $3.8 billion (U.S.) of its massive writedown to its struggling Zambian copper operation, in part due to the southern African country’s government doubling royalties. Kinross Gold took a $3.2 billion (U.S.) writedown, mostly due to its Tasiast mine in Mauritania.

The Canadian government has made no secret of its support for miners investing in the continent — 54 countries, each vastly different from the next — in what some have called the latest ‘scramble for Africa.’ But recent events — conflict, human rights complaints, regulatory changes — highlight that while the continent holds staggering mineral wealth, it can come at a price.

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Resource nationalism threatens Africa’s mining boom – by Oladiran Bello (New Age – February 1, 2013)

http://www.saiia.org.za/

On the eve of the 2013 Mining Indaba, resource nationalism remains a serious investment risk which threatens both foreign investors and resource-producing states alike. With growing attention devoted to the subject, it appears that assertive resource-exporting countries in Africa risk alienating international capital. In newly resource-rich states and older producers alike, some proposals ostensibly aimed at maximising society’s benefits from resource extraction have spooked investors. Much discussion at the Indaba this week will touch on the disparate experiences often termed resource nationalism, but it is worth reflecting on what the term really means.

At one level, it seems to be a misnomer used to describe just about any assertive stance taken by governments on extractive sector governance. At another level, it has been used to denote grassroots level activism, extending in some respect to the labour unrest which the rhetoric around the nationalisation of mines in South Africa may have exacerbated.

Actions regarded as resource nationalism have thus varied widely, from tax hikes, through demand for greater state equity and indigenous participation, to renegotiation of stability clauses in mining contracts. Also, so-called beneficiation strategies – pursued by South Africa, Brazil, Indonesia, Vietnam and others – involve demands for value-added processing before exporting.

The term has generally described initiatives by host governments to secure greater financial, regulatory, and sometimes operational control over extractive activities. Recently, Zambia and Mali have pushed for 25 to 35 percent state participation in mining projects.

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OPENING ADDRESS AT THE MINING INDABA 2013 bY Ms. SUSAN SHABANGU, MP, MINISTER OF MINERAL RESOURCES OF SOUTH AFRICA: CAPE TOWN INTERNATIONAL CONVENTION CENTRE.

4th FEBRUARY 2013

Programme Director, Mr Jonathan Moore, Honourable Ministers here present, Members of the Diplomatic Corps, Leaders of the mining industry, The investment community, International friends visiting our shores,Delegates and distinguished Guests:

I am pleased to be here, once again, to welcome you to this august gathering. It has come to epitomise an annual pilgrimage of the mining industry on the southern tip of the continent of Africa. It is crucial to the wellbeing and progress not only of our own country, but of the global mining community that we serve in various ways.

I am convinced that all of you, including our distinguished visitors, will continue to be treated to our particular version of African hospitality. This is characterised and driven in the main by the spirit of ubuntu currently on display throughout the country as we host the premier soccer tournament of our continent.

Last year following our gathering here, the country was engulfed by dark clouds, which seemed to be billowing all around us. There was serious unrest in some mines, and the blot of Marikana on the landscape which is uncharacteristic of a democratic dispensation. President Zuma established the Independent Commission of Inquiry on Marikana, headed by retired Judge Ian Farlam. The proceedings of the inquiry are well advanced and expected to conclude in the near future.

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Mining royalties regime to come under spotlight – Zuma – by Martin Creamer (MiningWeekly.com – February 14, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – South Africa’s current mining royalties regime would come under the spotlight as part of a tax study the Finance Minister would commission, President Jacob Zuma said in his yearly State of the Nation address to a joint sitting of Parliament on Thursday evening.

Zuma also revealed that he had held top-level talks with Anglo American chairperson Sir John Parker on the plans of Anglo American Platinum to restructure and retrench 14 000 employees.

Construction of the Majuba coal railway line, the President said, would begin soon in order to switch the transportation of coal from road to rail in Mpumalanga to protect that province’s roads, and additional rail capacity to improve the transportation of iron-ore had opened up South Africa’s West Coast.

On the imminent tax study, he said that Pravin Gordhan would be commissioning the review of South Africa’s current tax policies to make sure that the country had an appropriate revenue base to support public spending. “Part of this study will evaluate the current mining royalties regime, with regard to its ability to suitably serve our people,” Zuma added.

He revealed that his meeting with Parker had taken place in Pretoria two weeks ago.

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Kinross takes $3.2-billion hit on African mines – by Pav Jordan (Globe and Mail – February 14, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Kinross Gold Corp. is taking another massive charge on its African operations, slashing the value of its flagship growth properties to a fraction of the $7.1-billion it paid to acquire them just two years ago.

The Toronto-based miner said on Wednesday it would take an impairment charge of $3.206-billion (U.S.) on 2012 earnings, most of it attributable to the Tasiast project in Mauritania amid soaring capital and operating costs that have hit the entire mining industry.

That comes on top of a $2.49-billion charge on the assets a year ago. Altogether, Kinross has now cut nearly 80 per cent of the value of its takeover of Red Back Mining in 2011, which included Tasiast and Chirano, another mine in West Africa.

“It’s pretty darn sad that a company can be that wrong on an acquisition,” said George Topping, an analyst with Stifel Nicolaus in Toronto. “I think they’re pretty much telling you that they think it [the acquisition] is worth $1.5-billion, between Tasiast and Chirano, the two mines that they bought.”

Tasiast represents the company’s key growth driver.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

Canadian J. AUSTEN BANCROFT (1882-1957) Zambian copperbelt

The name of Joe Austen Bancroft, a Canadian born in North Sydney, Cape Breton, is synonymous with the exploration and development of what is now known as the Zambian copperbelt. The exploration programme that he oversaw in then Northern Rhodesia in the 1930s was probably the most extensive scientifically-based programme seen anywhere up to that time and from it was born one of the largest copper mining provinces in the world. Bancroft pioneered the science of economic geology in the first part of the 20th century; at the time such a term would have been considered an oxymoron but now it is the driving force behind most commercial geology.

He was born in 1882 one of eight children and his father was a Methodist minister. The early part of Bancroft’s adult life, after graduating first in his class from Acadia University, Nova Scotia in 1903 and being awarded a Yale fellowship, was spent studying and then teaching geology. He joined the faculty of McGill University in Montreal in 1905 and took post-graduate courses at Leipzig University, Georgius Agricola’s alma mater, and Bonn University between 1908 and 1910.

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Distressed PGMs sector’s ‘crisis’ can be resolved – analyst – by Nomvelo Buthelezi (MiningWeekly.com February 8, 2013)

http://www.miningweekly.com/page/americas-home

The South African platinum mining industry – which hosts about 80% of the world’s resources – is in some distress, with the challenges it is experiencing including sluggish demand and significant amounts of the precious metal being brought back onto the market through recycling, increasing operating costs, greater stakeholder expectations, inadequate funds for capital expenditure projects and the need to improve extraction efficiencies as deposits are becoming deeper and more complex to mine.

But Cadiz Corporate Solutions mining and resources division manager Peter Major is adamant that “the platinum industry crisis” is not that bad, averring that “it is not a meltdown and there are ways through which the platinum industry can recover”.

He believes that the industry “can survive at the current platinum price of $1 700/oz. “The crisis can be resolved. The state of the industry is the result of a very positive macro environment – the industry grew too fast and, with the money that was coming in, overexpenditure took place,” Major tells Mining Weekly.

But professional services firm Deloitte’s Ebrahim Takolia stresses that companies need to assess all aspects of their operating costs and capital expenditure and improve extracting efficiencies, wherever possible, without compromising on safety, the long-term viability of platinum reserves or the industry.

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The White Stuff: Mining Giant Rio Tinto Unearths Unrest in Madagascar – by Jessica Hatcher (Time World Magazine – February 8, 2013)

http://world.time.com/

Fort Dauphin – For five days in January, a few hundred protesters armed with slingshots in Fort Dauphin, Madagascar, blocked the road to one of the country’s largest economic assets, a $940 million mining operation run by the British-Australian company Rio Tinto. Their grievances were local: high unemployment, alleged political corruption and unsatisfactory reimbursement for relocating homes to make room for the mine. But the protest’s effects were global, and relate to anyone who wants to brush their teeth, put on sunscreen or whitewash their house.

Fort Dauphin could have supplied a tenth of the world’s ilmenite, a mineral used to make titanium dioxide, the white pigment commonly found in toothpaste, cosmetics and paint. The product is a staple of household goods in the west and global demand is growing, especially in India and China. But three weeks after the Fort Dauphin standoff, which ended when the Malagasy military dispersed the crowd with teargas, Rio Tinto announced a major scale-back in Madagascar. The company is shelving plans for a second – and larger –mine nearby in St. Luce, which leaves only one of three planned sites in operation.

The cuts mark a potential setback for Madagascar, where 70% of the population lives on less than $1 per day. The African nation has hydrocarbon deposits, gold, and half of the world’s sapphires, and the arrival of mining companies like Rio Tinto brought the prospect of improved economic conditions. But the protesters in Fort Dauphin say the mine exploited them, a charge the company denies.

Fort Dauphin is a small stretch of arable land bordered by mountains and sea in southeastern Madagascar. When Rio Tinto moved in to set up its mine, the only land it could offer in compensation to displaced locals had little agricultural value, so the company gave out cash.

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

http://www.ctvnews.ca/

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.

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Why Africa Will Rule The 21st Century – Anver Versi (African Business – January 7, 2013)

http://africanbusinessmagazine.com/main-articles/new-african

According to the authors of a new book, The Fastest Billion – the story behind Africa’ s Economic Revolution, Africa’ s current sustained growth level is set to not only continue but rise over the next four decades so that, come 2050, the continent’ s GDP will equal the combined GDPs of the US and the EU at current prices. There is a possibility that Africa’ s growth could outstrip that of Asia over this time span. Some have described this scenario as over-optimistic and an exercise in wishful thinking. But the authors of the book put forward sound arguments based on analyses of trends going back centuries to support their thesis. Editor Anver Versi talked to the book’ s lead author, economist Charles Robertson, to outline the case for a defence of the theory.

The one thing most economists and historians are agreed upon is that we have not yet discovered a magic formula that allows us to explain why civilizations rise and fall when they do. The best we can do is in retrospect and assign this or that cause to the rise of this power and the decline of that power but what triggers the change that turns a humdrum nation into a mighty empire, or what series of events bring about the collapse of a mighty power continues to baffle us. There are so many ifs and buts, so many accidental turns, so much good fortune or bad fortune involved in the destiny of nations that crystal ball gazing by crunching numbers has shown up many prophets of the future to be little more than educated idiots.

Take this passage quoted by Dr Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance and the former MD of the World Bank, in a foreword to The Fastest Billion: “Imagine a continent torn by multiple wars, beset by ethnic and religious warfare, malnutrition, disease and illiteracy – all of it complicated by poorly drawn borders, a still potent post-colonial stigma and the incessant meddling of outside powers.

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