Interview: Mark Bristow

How has the decrease in the price of gold affected the investment outlook in Côte d’Ivoire?

MARK BRISTOW: It certainly has had a negative impact, which has been compounded by the indecision around the new Mining Code. However, the response by the government certainly has been very positive in working with industry and bringing in the World Bank and non-governmental organisations. Adama Toungara, the minister of petroleum and energy, had a lot to manage, so the allocation of the mining portfolio to Prime Minister Daniel Kablan Duncan and Jean-Claude Brou, the minister of industry, has been a positive signal. Tongon has been an engine of investment in the northern part of the country, with its power grid funded by Randgold in a public-private partnership. More broadly, the drop in the price of gold has tightened the industry, which gets rid of weaker players and opens up opportunities. The situation is similar to that of the 1990s, when a lot of companies cut costs like exploration, which is an investment in the future, but we have actually increased exploration, bringing in teams from Mali and Burkina Faso to Côte d’Ivoire. It is an environment where there is not much readily available information, meaning that investment is necessary to prove or find resources.

How does the timeframe to earn a return on investment weigh up against realities elsewhere?

BRISTOW: The timeframe of gaining a return on investment is linked to the quality of the ore bodies found. However, Côte d’Ivoire does offer good infrastructure, port facilities, a sophisticated services industry and low-cost power. Immediately the hurdle rate is lower, and, for instance, Tongon would not be viable in Mali, as power must be generated with diesel, which costs $0.27 per KWh as opposed to $0.12 per KWh for Côte d’Ivoire. As such, the cost profile is completely different in Côte d’Ivoire, and this is very attractive for the mining industry and prospective investors.

The most successful gold mining country in West Africa is Mali, which comes with the highest risk and the most costly infrastructure. As such, changes in the gold price are not an impediment to our strategy, and we invested in Tongon with lower prices than the current ones. The problem is Côte d’Ivoire has become more expensive because of the crisis. As the country’s economy recovers, however,, it becomes easier to operate and it is an enabling environment.

How specifically have mining companies been involved in shaping the new Mining Code?

BRISTOW: Mining companies were involved very little initially, but the industry itself collectively reacted and engaged with the government. The government was very receptive to that engagement, and that debate has become quite animated. The willingness of the senior executives within government to listen and engage is very real, and we are expecting the next draft of the code to be released to the industry.

We have already seen a few drafts. The World Bank is involved and some external advisors have been retained, and the intention is to have a collective workshop to debate the pros and cons of the latest draft.

What can be done to promote the competitiveness of Côte d’Ivoire’s mining sector?

BRISTOW: The legislation of the Mining Code is sophisticated, and we have engaged with this government in putting in proper stability clauses. The corporate tax is 25%, which is attractive, and we have a five-year tax holiday in Tongon, along with a royalty of 3% that is applied during the holiday. It really is a complete code, but it is rather the environment in which the country has found itself over the past 10 years that has kept investors away. We should be marketing this country as a destination with a receptive government, good infrastructure and relatively highly-trained people. In Tongon, we have used more local service providers than we have in any other country where we have built mines. Côte d’Ivoire has also been very liberal in dealing with investment, with no foreign exchange controls.