African mining: a macroeconomic and political analysis
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AFRICA RESOURCESINVESTMENT CONGRESS
IRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY, 12 JUNE 2012
www.ObjectiveCapitalConferences.com
African mining: a macroeconomic and political analysisEd Coughlan – Commodities Analyst, Business Monitor International
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Commodities Research
West African Mining: A Macroeconomic & Political Analysis
Business Monitor International
Edward Coughlan, Commodities Analyst
12 June 2012, London
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Commodities Research
Presentation Agenda1. Introduction To Business Monitor International
2. West Africa’s Mineral Reserves
3. Why Now?
4. Macroeconomic Implications
5. Risks
6. Key Takeouts
7. Q&A
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Commodities Research
1. Introduction To BMI
• Market Intelligence provider producing analysis on Industry Risk, Country Risk, Commodities, Financial Markets and Companies
• Covering 175 countries and 22 industry verticals with a historical expertise in Emerging Markets
• Clients in over 140 countries worldwide including more than 400 of the Fortune 500
• A unique analytical approach of Total Analysis, Investor Focus and Wide-Ranging Systematic Coverage gives us unparalleled expertise in producing opportunity and risk analysis for our clients
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Commodities Research
2. West Africa’s Mineral Reserves
• We expect the region to gain greater global importance
• Gold & iron ore will be the main growth areas
• Substantial reserves of copper, uranium and nickel
• China’s interest in the region to continue growing
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Commodities Research
West Africa To Drive Output GrowthIron Ore Production (mntpa)
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Commodities Research
Africa’s Importance To RiseGlobal – Iron Ore Output (% Share)
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Commodities Research
Chinese Investment To Pour Into Africa
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Commodities Research
West Africa To Erode South Africa’s DominanceAfrica - Gold Output (% Share)
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Commodities Research
3. Why Now?
• Elevated metal prices by historical standards
• Falling grades and rising costs elsewhere
• Marked improvements in political risk
• Countries are eager to attract investment
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Commodities Research
Prices To Remain Elevated Metal Prices Rebased
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Commodities Research
Africa – Regional Business Environment Ratings (Out Of 100)
West Africa Shows Greatest Improvement
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Commodities Research
4. Macroeconomic Implications
• Mining to drive West Africa’s rapid growth in GDP
• Substantial inflows of Foreign Direct Investment
• Positive impact on infrastructure
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Commodities Research
Average Real GDP Growth Rate (% Chg y-o-y, 2011-2016)
Mining Boom To Result In Rapid Growth
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Commodities Research
5. Risks
• Political stability remains the key risk
• Governments may seek to capitalise on populist support
• Greater resource nationalism likely
• A sharp decline in metal prices would affect capital expenditure
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Commodities Research
Capex At Risk
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Commodities Research
6. Key Takeouts
• We are very optimistic regarding West Africa’s mining sector
• Mining will have a substantial impact on GDP & FDI
• Large untapped reserves in a range of metals will continue to attract investment, particularly from China.
Key Risks
• Significant decline in metal prices• Infrastructure deficit• Uptick in political risk