With a focus on infrastructure and legislation, this West African country is an investor-worthy destinationGovernment voice: Hon. Jean Claude Brou, Minister of Industry and mines
State of the mining sector
The president was re-elected for a second term in 2015 and will run his offi ce until 2020 – “this has given us political stability.” The mining sector has been growing steadily in the country and off ers gold, manganese, iron ore, nickel and bauxite. The gold sector is most vibrant and has doubled in the last six years from 12 t in 2011 to 25 t in 2016. This is anticipated to increase to 26 t in 2017 and 27 t in 2018. There are fi ve gold mines in production (Tongon, Agbaou, Ity, Bonikro and Hiré) and another two in construction.
Manganese production (from three operating mines and another in construction) is expected to increase from 125 000 t (sitting at a low base due to a drop in commodity price) in 2016 to 350 000 t in 2017 and 400 000 t in 2018. The mining sector accounts for approximately 7 000 jobs directly. We want to continue to ensure the sector continues to grow.
“We want a strong contribution from the mining sector moving forward (6% to GDP in 2016 including oil and gas) and to do this will focus on improving infrastructure and improving our regulatory framework.”
Solid infrastructure already
• There is a good road network – more than 7 000 km of paved road
• Two modern deep water ports available
• Energy available (the country is a net exporter of energy) with a strong programme in place to double capacity by 2020 in hydro, gas and coal
o High voltage electricity tariff = US$9.6 cents/kWh (third lowest tariff in West Africa)
o Low voltage electricity tariff = US$12.9 cents/kWh
• Existence of a railway in-country running from south to north
• Availability of water resources – rivers and lakes
New regulatory framework encourages investment
A new mining code was adopted in 2014 and is:
• Consensual – takes into account state, civil society, private sector, international and fi nancial institutions
o In line with international best practice
o Is transparent
o Promotes sustainable development
It is compliant with governance best practices – Kimberley Process, Extractive Industries Transparency Initiative (ETI), corporate social responsibility.
The mining convention encourages fiscal stability. The relationship between the mining sector and local communities is clear. The validity of exploration licences was increased from seven years to 10.
There are various tax incentives – income tax exemption increased from three years to fi ve, for example. Specifi c funds are allocated to local communities managed by all stakeholders to ensure they benefi t from mining activities.
“Since we have enacted the new legislation we’ve seen some positive developments and investments including an increase in exploration activity. The number of exploration licences has increased from 110 in 2014 to 160 in 2016,” the minister highlights.
COMMODITY ANALYSIS: GOLD ON THE RISE (SOURCE: BMI RESEARCH)
BMI Research, a unit of the Fitch Group, gives a positive growth outlook for Côte d’Ivoire, “bolstered by news of various discoveries and further exploration plans.” In September 2016, Endeavour Mining announced a signifi cant discovery at its Ity gold mine in the Birimian corridor of Côte d’Ivoire, which has the potential to extend the mine’s life by 10 years.
Furthermore, Randgold Resources and Newcrest Mining established a joint venture in November 2016 to explore and develop an area of interest in the south east of the country. Finally, Predictive Discovery and partner Toro Gold revealed in December 2016 that it had identifi ed a 17 km long zone of elevated gold-in-soil values reaching up to 59 8 ppb gold in the Ferkessedougou North permit.
The country’s strong project pipeline will be a key driver of gold production growth over the coming years. Endeavour Mining’s Agbaou gold project is one example – the mine produced between 150 000 oz and 155 000 oz in 2015, and expects to produce 400 000 oz, accounting for roughly half of the county’s gold output, at full production in 2019.
In addition to the sector’s solid project pipeline and low average cash costs, Côte d’Ivoire’s vast gold reserves will continue to attract investment, supporting the country’s long-term growth outlook.
Sanctions lifting a positive for investment
The removal of US sanctions against Côte d’Ivoire will send a positive signal to international investors that the country is cementing its recovery from its 2010/11 civil war. There remain salient risks to security in both the near and longer-term timeframes, but the overall picture is one of increasing stability.
In a major milestone in Côte d’Ivoire’s progression towards lasting political stability, in September 2016, then US President Barack Obama signed an executive order cancelling the national emergency under which the US had imposed sanctions against the country. This had been in place since declared by former President George W. Bush in 2006. The development sends a highly positive message to international investors.
“Our experience in Côte d’Ivoire has to date been fi rst class. The government agencies under the leadership of Monsieur Jean Claude Brou, the Minister of Industry and Mines, in particular has been proactive, helpful and very constructive to deal with. I have worked in a number of developing countries in Africa and in Asia/ Pacifi c and the experience that I have had in this country has been substantially better than any other prior experience in terms of government interaction,” says Jeff Quartermaine, CEO of Persus Mining, which is developing the Sissingué gold project in the country. MRA
CÔTE D’IVOIRE FACTS
• 24 million inhabitants
• West African CFA franc
• GDP: 18.7 billion (local currency)
• GDP growth rate – between 8 and 9% average over last fi ve years (2017 projection: 8.1%)
Featured image source: Randgold resources