african mining: a macroeconomic and political analysis
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Objective Capital's Africa Resources Investment Congress 2012Ironmongers' Hall, City of London12 June 2012Speaker: Ed Coughlan, Business Monitor InternationalTRANSCRIPT
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
Commodities Research
West African Mining: A Macroeconomic & Political Analysis
Business Monitor International
Edward Coughlan, Commodities Analyst
12 June 2012, London
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
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
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
Commodities Research
West Africa To Drive Output GrowthIron Ore Production (mntpa)
Commodities Research
Africa’s Importance To RiseGlobal – Iron Ore Output (% Share)
Commodities Research
Chinese Investment To Pour Into Africa
Commodities Research
West Africa To Erode South Africa’s DominanceAfrica - Gold Output (% Share)
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
Commodities Research
Prices To Remain Elevated Metal Prices Rebased
Commodities Research
Africa – Regional Business Environment Ratings (Out Of 100)
West Africa Shows Greatest Improvement
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
Commodities Research
Average Real GDP Growth Rate (% Chg y-o-y, 2011-2016)
Mining Boom To Result In Rapid Growth
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
Commodities Research
Capex At Risk
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
