Hotspots

Summary: Despite the slump in commodity prices, some countries on the African continent – particularly in the sub-Saharan area - have achieved prominence due to their rapidly rising mining revenues. This is primarily due to the new run on gold. The following report presents these hotspot countries and their most important mining companies.

1 Introduction

More than 430 mining companies are active in Africa. Among the most important mineral resources mined by these companies are gold, copper, diamonds, uranium ore, platinum group metals (PGM), nickel, and also coal, iron ore and bauxite [1]. According to the current state of knowledge, about a third of the global mineral resources are located on the African continent. In gold, diamonds, PGM, cobalt, vanadium, chromium and manganese, Africa holds first place in the global reserves ranking. It is therefore not surprising that the interest of global mining companies is focussed on Africa. However, in recent years, the relatively poor world market prices [2] for almost all metal ores, as well as the sometimes very considerable infrastructure problems have led to reduced investment in Africa.

Current figures from African Mining show the number of mining companies in the respective countries (Fig. 1). The list is headed by South Africa with 115 companies, followed by Tanzania with 48 and Namibia with 41. The established mining countries, including South Africa, Botswana, Democratic ­Republic of the Congo, Zambia and Zimbabwe, are marked in red, while the emerging mining countries like Tanzania, ­Namibia, Burkina Faso, Ghana and Mali are marked in blue. The list of these countries can certainly be extended to include ­Angola, the Ivory Coast, Kenya, Madagascar, Malawi, ­Mauritania, Mozambique, Senegal, Uganda and further countries. Overall, significant mineral resources are being mined in over 25 of the 54 countries of Africa.

Fig. 2 shows the gold production in selected African countries with a projection made by the USGS (US Geological Survey) up to 2020. In 2005, South Africa still had a gold production of about 295 t, corresponding to 56 % of African gold production in that year. In 2010, the figure fell to 188.7 t (38 %) and in 2015 to 144.5 t (25 %). Whether South African production can continue to grow up to 2020 can be brought into question. The countries showing especially significant growth are Burkina Faso, Ghana and Tanzania. A high rate of growth is also expected from the DR Congo, the Ivory Coast and Senegal. The prospects for Sudan are uncertain, and there is some very contradictory information on gold production in the country. Production in Mali and Namibia will only grow slightly in 2013 according to USGS forecasts. In the case of Mali, this may be a misjudgement.

Fig. 3 depicts the economic growth of South Africa and of the hotspot countries Burkina Faso, Ghana, Mali, Namibia and Tanzania. The data are from the current World Economy Outlook (WEO, October 2016) of the International Monetary Fund. ­According to this outlook, economic growth in South Africa has declined almost constantly from 3.3 % in 2011 to 0.1 % in 2016, while the other countries have shown a considerable economic development. However, Ghana has not been able to maintain its high rate of growth, although the forecast for 2017 indicates a renewed upturn. The remaining hotspot countries have largely shown robust economic growth over the period under review and are well above the average in sub-Saharan Africa.

2 Development of the established mining countries in Africa

2.1 South Africa

South Africa undoubtedly remains the country with the largest mining potential in Africa [3]. But companies active in the country have recently been making losses. In 2016, mining output fell by 4.9 % compared to the previous year, which had already brought financial losses for the mining industry. According to the South African Chamber of Mines (CoM), the mining industry shed nearly 60 000 jobs from 2012 to 2015. Currently the number of workers is around 0.46 million, of whom 180 000 are employed in the production of platinum group metals (PGM) and 90 000 in the gold mining sector. Despite the reduction in the number of employees, the PGM sector (for example) showed a drop in labour productivity of 49 % between 1999 and 2014, and real labour costs per kg rose by 309 %. A further issue is that energy costs have nearly doubled in the past seven years.

The Bushveld complex in South Africa accounts for almost 80 % of global PGM resources. It is planned that annual output there is to be increased from 275 t in 2015 to more than 320 t, even though the metal contents in the ore have been declining for years, prices are currently close to the 10-year minimum, and global consumption is growing at only 1 % per year. The main producers are Anglo American Platinum (Fig. 4), which is responsible for almost 40 % of the world’s production, Impala Platinum (Implats), Lonmin, Aquarius Platinum and Northam Platinum. In addition, there are more than 10 other producers, some of which operate their own mines or have shares in the larger mines. New projects have become rare. In 2016, Platinum Group Metals put the Maseve Mine into operation. The metal contents in the mined ore are comparatively high and the ore can be extracted at a relatively shallow depth of less than 1000 m.

Eight of the ten deepest goldmines are found in South Africa. Among the deepest is the TauTona Mine (Fig. 5) of AngloGold Ashanti in the West Witts mining area near Johannesburg. The temperatures in such a mine can reach 60 °C, which requires the use of new mining methods. The CoM concludes that up to 400 Mt (million tonnes) of low grade gold ore can be extracted by mechanized mining processes. If such methods are applied, the gold mine can still be operated beyond the year 2045, compared to the time horizon of 2033 if only conventional methods entailing the use of explosives are applied. With every gram per tonne less, the gold producers AngloGold Ashanti, Harmony, Sibanye and Goldfields are forced to extract 10 Mta (million tonnes per year) more gold ore for a production of 200 t of gold.

South Africa was once the leading country in the extraction of rough diamonds. In the meantime, with its production of 7.8 mct (million carat) in 2015, it is only 8th in the world ranking behind Russia, Botswana, DR Congo, Australia, Canada, Zimbabwe and Angola. In 2005, the output of rough diamonds was still 15.8 mct. To all intents and purposes, De Beers, Petra Diamonds and Trans Hex, are the only large companies in existence today, plus 5 other companies that either have shares in mines or operate their own small mines or exploit tailings. De Beers’ Venetia Mine will be operated as an underground mine in 2022. Petra Diamonds, who took over the Koffiefontein (Fig. 6), Finch and Cullinan mines from De Beers, is planning to expand the mines’ capacities, which will increase the company’s output from 3.2 mct in 2015 to 5.3 mct in 2019.

2.2 Botswana, DR Congo, Zambia and Zimbabwe

Besides South Africa, Botswana, the DR Congo, Zambia and Zimbabwe are without doubt among the established mining countries in Africa. However, the conditions in these countries could hardly be more different. While Botswana, after its independence in 1966, rose from being one of the poorest countries in Africa to become a country with an average per capita gross domestic product thanks to the discovery of diamonds in 1972, opinions about the other 3 countries are still divided. The DR Congo (Kinshasa) is now showing a high rate of economic growth, but the armed conflicts that are still taking place in the country are particularly impacting the mining industry [4]. For Zambia and Zimbabwe, the economic outlook is currently bleak, and Zimbabwe particularly is teetering at the edge of the abyss.

After Russia, Botswana is the world’s number 2 producer of diamonds. Its rise began with the opening of the Jwaneng Mine (Fig. 7), which became fully operational in 1982. Jwaneng, which belongs to the Debswana Diamond Company, is considered the richest diamond mine in the world. Debswana is a joint venture between De Beers and the State of Botswana. De Beers (Debswana) owns three more diamond mines and produced about 20.4 mct in 2016 after 20.3 mct in 2015. In 2016, these mines produced nearly 75 % of the rough diamonds mined by De Beers, with the Jwaneng mine making the biggest contribution. The planned eighth expansion of the mine should extend its diamond production until 2025. Besides Debswana, there are a number of smaller companies, such as Gem Diamonds and Botswana Diamonds. The other major mining products in the country include copper and nickel.

The DR Congo was comprehensively dealt with in a previous AT Minerals Processing article [4]. The country’s most important mineral resources include diamonds, gold, copper, cobalt and the 3-T minerals (tin, tantalum, tungsten). In the production of rough diamonds the country is ranked third with 17 % of the global production output, but these diamonds only take 10th place as regards value. Overall, the country’s diamond production rates have been falling for years. In the gold mining sector the situation is more positive, because production rates have been significantly increased in recent years. This is primarily due to companies such as Randgold Resources and Banro Corporation. Randgold operates the Kibali Mine (Fig. 8). In 2015, 18.2 t of gold were produced by opencast and underground mining there. The mine has been in operation since 2013. Banro owns two gold mines, Twangiza and Namoya, which produced about 6.2 t of gold in 2016.

Zambia was hit by a severe economic, ­financial and energy crisis in the summer of 2015. Inflation has risen to 21 % and the local currency, the Kwacha, has lost about 50 % against the dollar and the euro. This is largely due to the decline in revenue resulting from the fall in prices for copper and cobalt, the country’s most important mineral resources. The mining industry accounts for more than 70 % of the country’s export revenues. Zambia Consolidated Copper Mines (ZCCM), which is largely state-owned, First Quantum Minerals, Glencore, Vedanta ­Resources and Barrick Gold (Fig. 9) are among the most important copper mining companies. For 2017, the Ministry of Mines announced that it would double the extraction of copper ore, which analysts regard as very ambitious plan in view of the unresolved energy situation.

Zimbabwe is considered to be economically ruined. Already at the end of 2008, every sector of the economy had come almost to a standstill due to mismanagement, hyperinflation, lack of investment, import and export restrictions and the shortage of energy. At the height of that economic crisis, inflation in Zimbabwe reached an incredible 500 billion %. The central bank printed 100-trillion-dollar notes, which however became worthless when the country switched to the US dollar. The country still has not broken out of its downward spiral, which is also severely impacting the mining industry. And this is happening despite Zimbabwe’s rich resources of gold, copper, PGM, lithium and diamonds. Recently, Chinese companies have become involved in the country as investors and have entered into various projects together with the Zimbabwe State Mining Development Corporation (ZMDC).

3 Development of the most important hotspot countries

3.1 Burkina Faso

For 2017, the African Development Bank (AfDB) expects a real economic growth of 5.9 % for Burkina Faso. This is based, among other things, on the development of the mining industry and the return to democratic institutions. The country has been Africa’s fastest growing gold producer in the last few years and now occupies fifth place among the African countries, with nearly 36 t. In the past 6 years, 8 new gold mines have been put into operation. In addition to gold production, manganese and zinc are mined in the country. According to the Mining Federation (Chambre des Mines du Burkina), the country’s infrastructure still hinders development, because supply of the mines with electricity, water and transport connections is still unsatisfactory.

Among the most important gold producers in the country are the Canadian Semafo Gold with its Mano mine, Nordgold with its Taparko (Fig. 10) and Bissa mines, Iamgold with its Essakane mine, Endeavour Mining with its Youga mine, Avocet Mining with its Inata mine, Komet Resources with its Guiro mine, Roxgold with its Yaramoko mine and Pinsapo Gold. Amara Mining discontinued its activities with the Kalsaka mine in 2014 due to financial problems. The largest production volumes in 2015 were achieved by Imagold, Nordgold and Semafo with 12.1 t, 9.0 t and 7.3 t respectively, representing more than 80 % of the country’s gold production. Significantly increasing output volumes are expected for the coming years, as sufficient exploration projects are being carried out in the country, for example by Acacia, Avocet, B2 Gold, Endeavour, Sarama ­Resources, Semafo and Teranga Gold.

3.2 Ghana

Ghana is now one of the middle-income countries in Africa, thanks to its oil fields and mineral deposits. However, after a period of strong economic growth since the beginning of the 2000s, the upswing has declined noticeably since 2014. For 2017, the AfDB expects a growth rate of 8.7 %. In terms of gold production, Ghana now holds second place among African countries with 95 t, behind South Africa. Gold production accounts for 97 % of the country’s revenue from its natural resources. In addition to gold production, diamonds, manganese and bauxite are mined in Ghana. However, it is noticeable that the country’s output of gold has fallen by 15 %, from 107 t in 2014 to 90.8 t in 2015. The number of employees in the mining industry has also fallen noticeably from 12 380 in 2014 to 9940 in 2015 (figures from the member companies of the Ghana Chamber of Mines).

Fig. 11 shows the most important gold mining companies with their production figures for 2015. The two largest companies are Goldfields and Newmont Mining, which each own 2 mines and have gold productions of 23.4 and 22.6 t respectively. The other producers Kinross Gold (Fig. 12), AngloGold Ashanti, Golden Star Resources (Fig. 13), Perseus Mining and Endeavour Mining together accounted for 29.4 t or 32.4 %. The remaining approximately 17 % are distributed among smaller companies and partners of the above mentioned companies. Confidence in the gold industry is increasing. There are currently numerous expansion and exploration projects in Ghana. One concerns Asanko Gold, which put a 190 000 oz mine into operation in January 2016 and plans to expand it to 410 000 oz in a second development phase.

3.3 Mali

The peace agreement signed in May and June 2015 has stabilized the political situation in Mali, but the security situation is still very tense, particularly in the north of the country. For 2017, the IFC expects an economic growth rate of 5.2 %, after 6 % in 2015 and 5.3 % in 2016. Mali is rich in mineral resources; there are rich gold deposits, especially in the south of the country, and deposits of copper, manganese, iron ore and bauxite have also been proven. Mali is the third ranking African country in industrial gold production, with 46.5 t. A further 4 t are produced by small operations (artisanal production). In 2016, the gold production rate is to be further increased by the start-up of the Wassoul’Or mine. The state owns 20 % of most gold mines.

Fig. 14 shows the most important gold producers in the country according to data from the Ministry of Mining for 2015. This shows that the Loulo Gounkoto mine (Fig. 15), owned by Randgold Resources, is by far the largest producer with 21.4 t, followed by Resolute Mining’s Syama mine with 7.8 t, AngloGold Ashanti’s Sadiola mine with 6,1 t, Endeavour Mining’s Tobacco/Segala mine with 5.4 t and the Morila mine owned by Randgold and AngloGold Ashanti with 4.7 t. Other important producers include the Yatela mine owned by AngloGold and Iamgold, Avnel Gold’s Kalana mine and Robex Gold’s Nampala mine. There are also numerous exploration projects including those of Acacia, Iamgold, B2Gold, Hummingbird Resources and Legend Gold.

3.4 Namibia

Since gaining its independence, Namibia has enjoyed an ­excellent reputation because of its economic and political stability. After the economic crisis in 2009, the country quickly returned to a healthy growth rate, which has generally been in excess of 5 %. In recent years, large investments have been made in the mining industry, particularly in uranium mining and offshore mining for the extraction of diamonds, zinc and copper. In the “Annual Survey of Mining Companies 2014” by the Canadian Fraser Institute, Namibia was voted the most attractive mining location in Africa, followed by Botswana. The state has acquired its own rights to market diamonds via the Namib Desert Diamonds company (NAMDIA) and to sell enriched uranium ore via the national mining company Epangelo Mining.

The uranium mining industry (Fig. 16) in Namibia has particularly attracted the attention of China. In 2012, the China General Nuclear Power Corporation (CGN), a state-owned Chinese company, took over the Swakop Uranium Company from Australian Extract Resources. CGN owns the Husab mine, which commenced operations in 2016 and is to reach its full capacity in 2017, thereby catapulting Namibia to second place in uranium enrichment behind Australia. Further development projects in the uranium ore sector are being pursued by Paladin Energy, Rio Tinto (Rössing mine), Forsys Metals (Norasa mine) and Bannerman Resources with its Etango project. By comparison, the expansion plans of Nameb Resources, a joint venture between Namibia and De Beers for the extraction of offshore diamonds (Fig. 17), appear almost modest.

3.5 Tanzania

The Tanzanian mining industry is currently experiencing a boom that coincides with the country’s continued positive economic development and political stability. The economy has been growing by 7 % or more since 2013, and growth of this magnitude is also expected for this year. The country is rich in mineral resources. Among the most important are gold, copper, nickel, zinc, rare earths, uranium ore, coal, diamonds and graphite. So far, less than 10 % of the existing deposits have been extracted. In the gold mining sector, the country’s annual production of 41 t has made it the fourth largest producer in Africa, after South Africa, Ghana and Mali. Some statistics even show Tanzania to be in 3rd place with more than 50 t of gold, but these are lacking fundamental backup data.

In 2015, Acacia Mining extracted the largest quantities of gold, totalling 20.6 t. Acacia owns the North Mara (Fig. 18), Bulyanhulu and Buzwagi mines, and in 2016 further expanded its production to 23.5 t. AngloGold Ashanti with its Geita mine as flagship occupies second place in the ranking with a gold production of 14.9 t. Geita is considered a “low-cost” open-cast mine (Fig. 19). In the future, gold will also be extracted at Geita by underground mining. Other gold producers include Shanta Gold, which increased its production from the New Luika mine from 2.3 to 2.5 t in 2016, as well as several operations of the state mining company STAMICO (State Mining Corporation). STAMICO is also active in a joint venture with TanzaniteOne for the extraction of rare blue gemstones. The only diamond mining company is Petra Diamonds with its Williamson mine and a production of 0.21 mct in 2015.

4 Development of other emerging countries

Which countries are currently regarded as being at the forefront of Africa’s mining industry depends, of course, on the viewer’s standpoint and, especially, on which mineral resources are being considered. If one takes the countries which have also shown a promising development in gold production, then the only countries to name are Ethiopia, the Ivory Coast, Guinea (Fig. 20), Kenya, Liberia, Malawi, Mauritania, Nigeria, Senegal, Sierra Leone, Sudan and Togo. In the case of iron ore, the countries are Guinea, Liberia, Mauritania and Sierra Leone, for diamond production they are Angola and Sierra Leone, while a different spectrum of countries show promise in the coal, zinc, copper, nickel and PGM mining sectors. If one takes all these aspects together, there are certainly 2 to 3 other countries that can be counted as hotspot candidates.

5 Outlook

For many mining countries in Africa, the wealth of natural resources has proved not to be a blessing, but rather a curse. As examples, Zambia and Zimbabwe spring to mind, where over 60 % of the population live below the poverty line, or other countries where the gap between rich and poor has increased enormously. Critics of industrial mining argue that modern mining does not create jobs, but destroys them in the small-scale mining sector. However, particularly in recent years there have been many positive examples, where governments have assumed responsibility and where the rising tax revenues from industrial mining have flowed into meaningful infrastructure measures, the development of education and improvement of the income and living conditions of the population. These examples should serve as an incentive for further countries.