BMI View: West Africa's growth outlook will weaken on the back of c ontinued mineral price weakness, inadequate infrastructure and the aftermath of the Ebola outbreak 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|
|Mining Industry Value, USDbn||3.32||3.38||3.45||3.35||3.32||3.29|
|Mining Industry Value, USDbn, % y-o-y||1.30||1.90||2.00||-2.87||-1.07||-0.79|
|Mining Industry Value, USDbn||1.44||1.44||1.48||1.60||1.74||1.86|
|Mining Industry Value, USDbn, % y-o-y||-0.39||-0.07||3.09||8.15||8.51||6.64|
|Mining Industry Value, USDbn||0.26||0.22||0.20||0.21||0.23||0.24|
|Mining Industry Value, USDbn, % y-o-y||5.20||-15.47||-9.44||6.25||6.70||6.02|
|Mining Industry Value, USDbn||0.80||0.73||0.68||0.65||0.65||0.65|
|Mining Industry Value, USDbn, % y-o-y||-5.70||-9.24||-6.49||-4.46||-0.90||1.40|
|Mining Industry Value, USDbn||0.69||0.57||0.52||0.53||0.56||0.59|
|Mining Industry Value, USDbn, % y-o-y||-17.22||-17.04||-9.56||1.73||5.53||5.81|
|Mining Industry Value, USDbn||1.04||0.82||0.75||0.77||0.78||0.80|
|Mining Industry Value, USDbn, % y-o-y||6.35||-20.65||-8.33||1.90||2.00||2.10|
Latest Developments & Structural Trends
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. Recent violence in the Forest region illustrates how Guinea remains politically fragile, and politicians must refrain from campaigning along ethnic lines if they are to not throw a spark onto the tinderbox. We expect that widespread hostilities will be averted in the run-up to October 11 elections, and that incumbent Alpha Conde will be returned for a second presidential term.
We have revised down our Mauritania gold production forecast down from 1.2% to -3.5% and 1.1% to -1.0% for 2015 and 2016, respectively. Weak gold prices will continue to hurt miners' profit margins, resulting in retrenchment and scaling back of operations over the coming quarters. Furthermore, low iron ore prices 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.
On June 17, 2015, Ghana's Chamber of Mines announced that the country's gold mining revenue declined by 17.4% y-o-y in 2014 to USD3.8bn. This supports our view that continued gold price weakness will force major players to cut costs and scale back operations. We forecast gold prices to average USD1,120/oz during 2015-2019, significantly lower than USD1,427/oz average during 2010-2014.
Cote d'Ivoire's gold production will experience solid growth due to new projects and low production cash costs. We have revised our gold production growth forecast up from 18.0% to 30.0% and from 10.0% to 14.0% for 2015 and 2016, respectively. Cote d'Ivoire's gold production will grow from 630koz in 2014 to 830koz in 2015, totalling 940koz in 2016. This supports our view that the country's gold production growth will remain strong on the back of a strong project pipeline and low production costs.
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. Liberia appears on course to be declared Ebola free by the World Health Organization (WHO) once more. Despite the disease's retreat, Liberia's economic woes as a result of the outbreak are far from over. We forecast that Liberia will post real GDP growth of 1.2% in 2015, rising to 4.2% in 2016. This is a far cry from the 10-year average of 8.9% registered between 2004 and 2013 ( see: 'Post-Ebola Recovery Will Take Time' , August 28).
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.
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.