What is Côte d'Ivoire doing to boost mining activity?

 

Although Côte d’Ivoire has long been recognised for its production and export of food crops, some of its other natural resources have been comparatively underexplored. To reverse this trend, the authorities are working to encourage the development of the mining industry and exploit known pockets of key mineral resources, such as gold, bauxite, diamonds and nickel.

Despite competition from several other West African countries looking to attract investment in their own mineral resources, an improved regulatory framework is helping to put Côte d’Ivoire firmly on the radar of international mining companies. In addition, market dynamics, such as an increase in international prices for base minerals such as manganese, are helping to accelerate mining activity. “West Africa and Latin America are two of the regions where mining potential has yet to be fully explored, so you have a lot of investors focusing on these geographic areas,” Christine Logbo-Kossi, executive director at the Chamber of Mines of Côte d’Ivoire, told OBG.

Sector Weight

This situation is changing, as evidenced by recent revenue statistics from the Professional Miners Association of Côte d’Ivoire. According to the group, mining activities brought in CFA94.6bn ($162.6m) in tax revenue in 2019, a 43% increase on the previous year. Overall, the sector generated CFA762bn ($1.3bn) in revenue in 2019, representing 30% growth on 2018. The sector accounts for roughly 3% of total GDP and provided 13,993 direct jobs and 41,885 indirect jobs in 2019, with both the latter figures representing an increase of 5% compared to the previous year. “Thanks to diversification strategies and clear intent to underline the importance of the sector as a key contributor to the economy, mining activity has grown significantly,” Jean-Jacques Koua, director for sub-Saharan Africa at EPC Group, told OBG.

However, the full potential of the domestic industry remains largely untapped. With significant areas of the Birimian Greenstone Belt within its territory, Côte d’Ivoire’s future as a regional mining player is geographically well founded. The belt, a geological formation that runs through a large part of West Africa, is rich with gold deposits. Ghana, which has 15% of the belt within its borders, produces as much as 100 tonnes of gold every year, making it Africa’s largest gold producer after South Africa. Côte d’Ivoire, however, has as much as one-third of the Birimian Greenstone Belt in its territory, but its yearly gold production currently is around a quarter of Ghana’s.

Sector Strategy

After the political crisis was resolved in 2011, the state began to look at industrial mining as a way of diversifying the economy away from agricultural exports. The first major step towards this was the promulgation of a new mining code in 2014. The legislation was aimed at striking a balance between generating state revenue and the interests of private investors and local communities. The new code made numerous changes to the regulations governing the sector, including extending of the duration of exploration licences from seven years to 10, and reducing the maximum size of exploration concessions from 1000 sq km to 400 sq km. To ease the licensing process, the code also set a maximum deadline of 60 days for decisions regarding exploration permits. Other measures sought to promote good governance and transparency, such as the introduction of the Kimberley Process – an initiative established in 2003 to prevent “conflict diamonds” entering the mainstream diamond market.

In November 2013 Côte d’Ivoire was declared compliant with the Kimberly Process Certification Scheme. This prompted the lifting in 2014 of an embargo on Ivorian diamonds, which had been in effect since 2005. The new regulations also established a fund to finance projects with a social and economic impact on local communities in mining territories.

Another important step was the creation of a dedicated ministry for the sector. This took place in July 2018, when the government established the Ministry of Mines and Geology, providing the foundation for more comprehensive strategies that are not tied to industrial or energy policies.

Gold

Gold remains one of Côte d’Ivoire’s most valuable mineral resources, and output rose significantly in the previous decade, from 12 tonnes in 2011 to more than 25 tonnes in 2017 and 32.5 tonnes in 2019. There are five industrial gold mines. One of these is Agbaou, which is 200 km north-west of Abidjan and was established by Canadian operator Endeavour Mining in June 2012. Endeavour Mining has an 85% stake in the mine and the government holds the remaining 15%. The first gold was poured in late 2013 and commercial operations began in the first quarter of 2014. The mine currently has an average annual production capacity of approximately 103,000 oz and is expected to operate until 2022, with potential expansions currently under consideration.

Endeavour Mining operates a second gold mine at Ity, where the company recently completed the construction of a carbon-in-leach plant to increase the mine’s operation life. The company has an 85% stake in the project, while the government holds 10% and state-owned mining operator Société pour le Dé veloppement Minier (SODEMI) is in control of the remaining 5%. During its 20 years of operation, Ity has already produced 1.2m oz of gold and is expected to produce 160,000-200,000 oz in 2019 at around $590 per oz.

Located roughly 680 km north of Abidjan and operated by Canada-based Barrick Gold, Tongon is one of the biggest domestic mining assets, registering output of 230,000 oz of gold in 2018. A 25% drop-off in production from the mine in the first four months of 2018 was one of the reasons national gold output decreased by 3.6% that year. This decline was caused by strike action taken by workforce, which demanded payment bonuses and guarantees of job security, with the latter being called into question by concerns about the longterm future of the mine. In August 2019, for example, it was reported in international media that Barrick Gold was looking to sell its 90% stake in the mine. The potential sale was seen as part of a broader move to unload key mining assets worth $1.5bn as part of a restructuring process following Barrick Gold’s merger with Jersey-headquarted Randgold Resources in an $18bn deal struck in early 2019.

The year 2019 also saw the Yaouré mine, which is 40 km from the capital Yamoussoukro, acquired by Australian firm Perseus Mining when it bought the outstanding shares from UK-based Amara Mining. Perseus received approval to begin construction in 2019 and is now moving to invest $265m in the site. The firm has a 90% stake in the facility, and the state holds the remaining 10%. Perseus also began commercial operations at its Sissingué mine, located near the border with Mali, in April 2018. The mine is expected to have a lifespan of five years and total output of 357,000 oz of gold.

In late 2017 the gold mine at Bonikro in southern Côte d’Ivoire changed hands after Australia-based miner Newcrest sold its 89% stake in the project to Afrique Gold for $81m. Bonikro had a combined gold output of more than 1m oz of gold over the 2008-17 period, according to figures by Afrique Gold.

The government has placed a lot of emphasis in the future performance of these gold mines, and during a speech made at the opening of an ECOWAS summit in late 2018, the vice-president, Daniel Kablan Duncan, estimated that annual gold production would double to 50 tonnes by 2025. A recent move which might help meet this target occurred in October 2019, when Ivorian Resources, a subsidiary of Australia’s Predictive Discovery, was granted a new gold prospecting licence. The permit, called Bocanda North, occupies an area of 400 sq km and straddles the western edge of the Birimian Greenstone Belt in Côte d’Ivoire.

Manganese

Production of manganese has surged in recent years. This trend has been led by rising international prices on the back of a decrease in 2016 which caused manganese miners to halt operations. As a result, output grew from 204,000 tonnes in 2016 to 1.2m tonnes in 2019. India’s Taurian Manganese operates mines at Bondoukou and Odienné, while a third manganese site at Korhogo in the north restarted operations in 2017 under the management of Shiloh Manganese, a subsidiary of India’s Shiloh Industries, which started operating the concession in 2014.

Nickel & Bauxite

As further confirmation of its mining potential, Côte d’Ivoire recently expanded its production of base metals and ores through the exploitation of its nickel and bauxite deposits. Nickel production began in 2017, when output of 379,766 tonnes was recorded. While this rose to 889,585 tonnes in 2018, it fell by 26% to 660,144 tonnes in 2019.

Local firm Compagnie Minière du Bafing is operating several nickel production sites in the Biankouma and Touba regions in western Côte d’Ivoire. The area under concession is believed to hold as much as 300m tonnes of the metal, and the company has stated that it intends to invest up to CFA220bn ($378.1m) in the project’s long-term development, including a CFA90bn ($154.7m) nickel processing plant.

Production over the coming years will be strengthened by a nickel-copper mine being developed by Canadian company Sama Resources at Samapleu. Located in the west of the country, the area is estimated to have up to 60m in reserves. Sama Resources is also developing mining operations in adjacent areas in neighbouring Guinea. On the Ivorian side, the exploitation of resources will be managed under a joint venture between Sama Resources and SODEMI.

Bauxite is another recent addition to the mining portfolio, and April 2018 saw the beginning of production operations at the first mine. The site is operated by Lagune Exploitation de Bongouanou (LEB), which has invested CFA218bn ($374.7m) to mine the estimated 35m tonnes of deposits there. In the first phase of development the mine is set to produce calcined bauxite with 80% alumina content. However, by 2023 LEB expects to establish an alumina production plant at the site which will be able to generate product with an alumina content of 90-97%.

Over the past few years, as the government has implemented measures to enhance sector performance, investor interest in developing local mining assets has varied according to fluctuations in international prices for minerals. “The fall in price of minerals such as bauxite, manganese, nickel or gold affects the mining sector, which is exposed to economic volatility. Having minimum pricing agreements, like those reached by Côte d’Ivoire and Ghana in cocoa, would be positive for the miners,” Michel Moumini Bictogo, president and general director at LEB, told OBG.

Illegal Mining

Besides working to expand formal activity, the state has also strengthened its fight against illegal mining. This activity has clear negative repercussions for the domestic industry and, although it is hard to quantify, an estimated 20-25 tonnes of illegally mined gold are taken out of Côte d’Ivoire every year through informal channels. Besides the lack of traceability of these informal exports and lost revenue, illegal mining creates serious environmental and social problems. To combat this, Jean-Claude Kouassi, the minister of mines and geology, announced in late 2018 the creation of a special police force to counter illegal mining and other violations of the mining code. To help the new unit undertake this work, it will have access to satellite and drone technology. “Beyond construction, mining and agriculture, the presence of drones in Côte d’Ivoire is quite exceptional. Companies and people are becoming increasingly aware of the useful services a drone can provide and their advantage over traditional tools, especially for mapping,” Marouane Jebbar, director-general of Côte d’Ivoire Drone, told OBG. Meanwhile, to encourage informal miners to move into the formal sector, a network of learning centres is being created around existing sites, the first of which opened in early 2019.

Outlook

The domestic mining industry is still in its infancy, but the combination of new investment and a transparent and competitive regulatory framework is likely to encourage activity in the coming years. Although international price variations may impact investment and output flows, especially in segments such as manganese, the long-term prospects are good.

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The Report: Cote d'Ivoire 2020

Energy & Mining chapter from The Report: Cote d'Ivoire 2020

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