BMI View: West Africa's growth outlook will be dented by c ontinued mineral price weakness, countries' inadequate infrastructure and the aftermath of the Ebola outbreak over the coming quarters . Miners operating within the region will suffer from declining profit margins and increasing difficulties in obtaining finance . However, the region's long-term growth outlook remains promising due to countries' vast untapped mineral reserves, positive foreign investment outlook and infrastructure developments.
Cote d'Ivoire - Cote d'Ivoire's gold production will experience solid growth due to new projects and low production cash costs. Cote d'Ivoire's main driver of gold output growth will be Endavour Mining's Agabou gold project. The mine produced 90koz in 2014, and we expect output to reach 400koz by 2019, accounting for roughly half of the country's gold output. However, growth could be significantly improved if the country's political instability and inadequate infrastructure is resolved.
Guinea - Guinea is home to one of the world's richest iron ore deposits. Nevertheless, we expect the country's iron ore production growth to slow due to weak iron ore prices, inadequate infrastructure, political instability and the aftermath of the Ebola outbreak. Besides iron ore, we expect solid bauxite production growth due to the country's incremental output from new projects coming online coupled with current operations.
|Subdued Growth Ahead|
|Select Countries - Iron Ore Production Growth y-o-y (%)|
Liberia - Although Liberia hold vast iron ore reserves and the country retains a relatively stable business environment, we expect production growth will slow over the coming quarters. Both the collapse in iron ore prices and the Ebola outbreak have radically changed Liberia's operating environment by slashing mining companies' revenue, limiting financing options, forcing the evacuation of workers and disrupting supply chains. Beforehand, projects owned by ArcelorMittal, Vedanta and Tawana Minerals, were set to significantly increase the country's iron ore output. However, we believe these projects will be significantly delayed or shelved altogether over the coming years.
Mali - Mali's gold production growth will contract over the coming years as weak gold prices will force miners to cut capital expenditure and limit new projects from coming online. We expect significant knock-on effects for the wider economy as the country's gold sector accounts for 70% of export revenue and 7% of real GDP. For instance, AngloGold Ashanti halted production permanently at the company's Yatela mine in Q314. AngloGold suspended excavation at Yatela last year, citing lower gold prices and higher operating costs.
|Growth To Recover Over The Long Term|
|Select Countries - Mining Industry Value Growth y-o-y (%)|
Mauritania - Mauritania's mining sector growth will be gradual as global iron ore price weakness will force miners to halt new projects from coming online. Additionally, the country's inadequate infrastructure will prevent the sector from reaching its full growth potential. Nonetheless, our outlook remains modestly positive as the government plans to invest USD6bn to boost the country's iron ore output over the coming years.
Sierra Leone - Sierra Leone's iron ore output growth will be constrained, as weak global iron ore prices and the aftermath of the Ebola outbreak will curb output over 2015. Although there will be disruption in the short term, the long-term growth outlook remains promising due to the country's vast untapped mineral reserves, positive foreign investment outlook and infrastructure development.
|e/f = BMI estimate/forecast. Source: BMI Calculation/USGS|
|Gold Mine Production, moz||0.63||0.75||0.82||0.87||0.90||0.93|
|Gold Mine Production Volumes, % y-o-y||16.13||18.00||10.00||5.50||4.00||2.50|
|Iron Ore Mine Production, mn tonnes||1.00||1.00||20.50||21.53||22.60||23.73|
|Iron Ore Mine Production Volumes, % y-o-y||0.00||0.00||1,950.00||5.00||5.00||5.00|
|Gold Mine Production, moz||0.50||0.51||0.53||0.54||0.55||0.56|
|Gold Mine Production Volumes, % y-o-y||2.80||3.10||2.40||2.20||2.00||1.80|
|Iron Ore Mine Production, mn tonnes||2.94||2.94||2.97||3.20||3.50||3.90|
|Iron Ore Mine Production Volumes, % y-o-y||45.32||0.00||1.00||7.67||9.38||11.43|
|Bauxite Mine Production, mn tonnes||19.30||19.34||21.20||25.12||27.50||29.65|
|Bauxite Mine Production Volumes, % y-o-y||2.66||0.20||9.60||18.50||9.50||7.80|
|Gold Mine Production, moz||0.02||0.02||0.02||0.02||0.02||0.02|
|Gold Mine Production Volumes, % y-o-y||0.00||0.00||0.00||0.00||0.00||0.00|
|Iron Ore Mine Production, mn tonnes||6.00||6.07||6.14||6.38||6.65||7.01|
|Iron Ore Mine Production Volumes, % y-o-y||33.33||1.20||1.20||3.80||4.20||5.50|
|Gold Mine Production, moz||1.59||1.55||1.51||1.46||1.48||1.57|
|Gold Mine Production Volumes, % y-o-y||-4.00||-2.30||-2.60||-3.40||1.30||6.00|
|Gold Mine Production, moz||0.27||0.27||0.28||0.28||0.29||0.29|
|Gold Mine Production Volumes, % y-o-y||0.60||1.20||1.10||1.50||1.90||2.30|
|Iron Ore Mine Production, mn tonnes||13.71||13.95||14.10||14.30||14.80||15.30|
|Iron Ore Mine Production Volumes, % y-o-y||9.50||1.69||1.11||1.42||3.50||3.38|
|Gold Mine Production, moz||0.01||0.01||0.01||0.01||0.01||0.01|
|Gold Mine Production Volumes, % y-o-y||4.00||4.00||4.00||4.00||4.00||4.00|
|Iron Ore Mine Production, mn tonnes||18.54||9.64||11.76||13.76||15.82||17.63|
|Iron Ore Mine Production Volumes, % y-o-y||15.00||-48.00||22.00||17.00||15.00||11.40|
|Bauxite Mine Production, mn tonnes||1.50||1.63||1.78||1.94||2.12||2.31|
|Bauxite Mine Production Volumes, % y-o-y||10.00||9.00||9.00||9.00||9.00||9.00|