Some of the biggest names in gold mining are now present in Cote d’Ivoire
Heading north out of Abidjan, the capital of Côte d’Ivoire, one thing that immediately strikes travellers from the West is the quality of the roads.
Not here your stereotypical third world dirt tracks.
Rather, a network of broad asphalt highways links all the major economic and political hubs in Côte d’Ivoire, an outward sign of the health of a country that’s laboured for years to overcome the effects of civil war, and which is now enjoying strong growth.
“Since 2012, the economy of Côte d’Ivoire has turned in a stellar performance, marked by a rapid increased in GDP,” states the World Bank. The roads are one indicator of that increase in GDP.
Another is the hustle and bustle of commerce evident in and around the streets of Abidjan themselves. And yet another is the revived interest of foreign investors.
The mainstay of Côte d’Ivoire has always been cocoa, and that remains a strong economic driver today. But new industries are developing too. In particular, the global mining industry is beginning to wake up to the full potential of Côte d’Ivoire, following the introduction of a modern and attractive mining code in 2014.
Major companies have committed significant capital to the development of mines in-country, such that Côte d’Ivoire now boasts several significant gold producing operations, including Tongon and Agbaou, owned by Randgold (LON:RRS) and Endeavour Mining (TSE:EDV) respectively.
What’s more, Randgold has now brought in Newcrest, one of the biggest gold miners in the world, in a joint venture, while the geology and potential are so attractive to Endeavour that in 2016 it made Côte d’Ivoire its centre of operations, moving its headquarters from Accra to Abidjan.
The geology in question is the famous Birimian greenstone belt which has played host to some of West Africa’s largest mines, in particular across the border to the east, in Ghana.
The same geology supported the creation of one of the world’s largest and longest-standing gold miners, AngloGold Ashanti, which stretches west into Côte d’Ivoire, uninterrupted.
Relative to Ghana though, Côte d’Ivoire remains underexplored and the number of discoveries that have been put into production remains low.
Partly that’s because the extent of the prospective ground is so large: Côte d’Ivoire holds the largest share of the Birimian out of any West African country.
But more than that, the troubles of the civil war in the early part of the century meant that when the biggest mining boom in recent memory got underway in around 2004 and 2005, Côte d’Ivoire missed out.
As a Francophone country it was also slower to appear on the radars of the largely Anglophone mining industry, which has been in Ghana for more than 100 years.
But that’s all changed now. Significant discoveries are becoming more frequent in Côte d’Ivoire, and with several large companies already up and running, government statistics show that mining sector turnover rose by 11.5% to just over US$1bn in 2017.
The metals produced are predominantly gold, manganese and nickel, a function of the Birimian geology that spawns the mines themselves.
Breaking it down, manganese output increased in 2017 by 146% to 510,000 tonnes, gold output rose 2.2% to 25.4 tonnes, while nickel output, starting from scratch in 2017 rang in at 379,766 tonnes.
These are strong numbers.
But there should be even better on the way. The government of Côte d’Ivoire is keen to attract further foreign investment. Its credibility has been enhanced lately by its prudent handling of the country’s deficit, which in 2017 came in lower than had been forecast.
The World Bank’s Lead Economist Jacques Morriset spoke of a “judicious debt policy” in a recent report.
But the 2014 mining code is also playing a key role.
The new code introduces greater transparency, including provisions to make it harder for government officials to take an active role in mining companies themselves. Other provisions include the extension of exploration permits to 10 years, up from seven previously, and the removal of the additional profit tax which used to be payable by permit holders at 7% of turnover.
These changes recently pushed Côte d’Ivoire up to third place in the Mining Risk/Reward Index compiled by BMI, a subsidiary of Fitch. Remarkably, Côte d’Ivoire now scores better on the BMI Index as a place to do business than South Africa, long the standard-bearer of African mining.
Separately, the Index of Economic Freedom, compiled by conservative US think-tank the Heritage Foundation, puts Côte d’Ivoire sixth out of 47 sub-Saharan African countries in terms of the attractiveness of its business environment.
Clearly, no country is ever perfect, but Côte d’Ivoire is rapidly rising up the ranks of investment destinations. Large companies like Endeavour Mining remain committed, with significant new investment ongoing at projects like Ity CIL, while a host of junior miners are prepared to deploy risk capital in exploration activities that aim to discover the next big opportunity.
All this activity has not gone un-noticed by the economic forecasters. According to a recent report by BMI Research, Côte d’Ivoire will show mining growth of 15.6% between 2017 and 2021.
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