BMI View: West Africa's growth outlook will remain weak due to both low mineral prices and countries' inadequate infrastructure over the coming quarters. T he region's long-term growth outlook remains promising due to countries' vast untapped mineral reserves, positive foreign investment outlook and infrastructure developments.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Ghana||Mining Industry Value, USDbn||3.77||3.85||3.83||3.83||3.84||3.93|
|Ghana||Mining Industry Value, USDbn, % y-o-y||1.90||2.00||-0.54||0.07||0.39||2.25|
|Guinea||Mining Industry Value, USDbn||1.40||1.40||1.50||1.70||1.80||2.00|
|Guinea||Mining Industry Value, USDbn, % y-o-y||-1.59||3.75||10.07||9.68||7.51||6.92|
|Liberia||Mining Industry Value, USDbn||0.20||0.20||0.10||0.20||0.20||0.20|
|Liberia||Mining Industry Value, USDbn, % y-o-y||-26.60||-20.50||-4.30||6.60||5.90||6.00|
|Mali||Mining Industry Value, USDbn||0.70||0.80||0.90||0.90||1.00||1.10|
|Mali||Mining Industry Value, USDbn, % y-o-y||-4.09||8.05||9.71||7.86||8.75||9.98|
|Mauritania||Mining Industry Value, USDbn||0.50||0.40||0.40||0.40||0.50||0.50|
|Mauritania||Mining Industry Value, USDbn, % y-o-y||-23.57||-16.17||-3.95||4.31||4.37||4.72|
|Sierra Leone||Mining Industry Value, USDbn||0.69||0.54||0.55||0.56||0.57||0.59|
|Sierra Leone||Mining Industry Value, USDbn, % y-o-y||-33.06||-21.55||1.90||2.00||2.10||2.20|
Latest Developments & Structural Trends
With ongoing bauxite production and export bans in Malaysia and Indonesia, respectively, Guinea will remain well-positioned to gain market share in China. In November 2015 Guinea began exporting bauxite to China, ramping up monthly shipments from 1.6mnt to 9.9mnt in May 2016.
Major aluminium producers such as Emirates Global Aluminium (EGA), Alcoa, Dadco and Rio Tinto Alcan (the latter three through joint-venture Compagnie des Bauxites de Guinee-CBG) will continue to invest in projects in the country. EGA will invest USD1.0bn to develop a bauxite mine expected to begin production in 2018. On June 19, CBG announced an agreement with lenders, including the International Finance Corp and the US government's Overseas Private Investment Corp, to finance a USD1.0bn expansion at the bauxite plant in Kamsar.
Rio Tinto's announcement in July that their flagship Simandou iron ore project - a massive USD20.0bn project - will be shelved will preclude significant growth prospect for Guinea. The sheer size of the investment, in relation to nominal GDP of USD6.4bn, would have doubled the size of Guinea's economy over the next decade according to government reports, but has been set aside due to low commodity prices and global oversupply of iron ore. Furthermore, investor sentiment towards Guinea will be hampered as tensions in the country rise. Indeed, we believe that indications that President Alpha Conde will attempt to run for a third term in 2020 will raise social instability in the years ahead. As a result, we have downgraded our production forecast out to 2020, and forecast iron ore production to average annual growth of 5.6% during 2016-2020, with output growing from 3.0mnt to 3.9mnt by 2020.
We have revised up our iron ore forecasts to 2020. We expect iron ore prices to average USD48.0/tonne during 2016 and USD43.0/tonne in 2017, up from our previous forecasts of USD38.0/tonne and USD40.0/tonne, respectively. Our upwards revision is predicated on the strong H116 iron ore price rally due to increasing demand from Chinese steel mills( see ' Iron Ore: Chinese Stimulus Only Short-Term Boost To Prices', May 5).
An USD46.4bn IMF disbursement, announced on November 17 2015, will enable Sierra Leone to honour its fiscal commitments and carry out its post-Ebola Recovery Plan in 2016. The disbursement will provide Sierra Leone much needed resources to implement its post-Ebola Recovery Strategy as well as enable the country to avoid fiscal meltdown in 2016. The release of funds under the watchful eye of the IMF will strengthen policy continuity and transparency in the policymaking process. However, risks to social stability will see short-term political risk remain a moderate concern ( see, 'IMF Loan Will Lend Support To Political St ability', November 25 2015).
We have raised our gold price forecasts for 2016 to USD1,275 per ounce (/oz) from USD1,150/oz. A recalibration of expectations for the global monetary policy trajectory by investors and equity market turmoil has combined to create a more positive environment for gold prices than we previously anticipated. Despite this, low gold prices, compared to the annual average of USD1,415/oz during 2011-2015, will continue to curb miners' profit margins, resulting in retrenchment and scaling back of operations over the coming quarters.
On July 13, Gulf Shores Resources announced the signing of a Letter of Intent with Goldplat for the right to earn 75% of Goldplat's interest in the Anumso gold project by expending USD3.0mn on exploration over 2.5 years.
On April 12, Cardinal Resources Ltd (Cardinal) added two more drill rigs at the firm's Namdini project ahead of a Q3, 2016 exploration target announcement. Currently, Cardinal has three projects in Ghana, namely the Namdini, Bolgatanga and Subranum mines.
We forecast Cote d'Ivoire's gold production will increase from 1.0moz in 2016 to 1.2moz by 2020, with annual production growth averaging 6.0% during 2016-2020.
The West Africa Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's West Africa Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Ghana, Cote d`Ivoire, Mauritania, Sierra Leone, Liberia, Mali, Guinea.
- Use BMI's independent industry forecasts on Ghana, Cote d`Ivoire, Mauritania, Sierra Leone, Liberia, Mali, Guinea to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in Ghana, Cote d`Ivoire, Mauritania, Sierra Leone, Liberia, Mali, Guinea's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Ghana, Cote d`Ivoire, Mauritania, Sierra Leone, Liberia, Mali, Guinea.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.