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African mining: a macroeconomic and political analysis
- 1. AFRICA RESOURCES INVESTMENT CONGRESS African mining: a macroeconomic and political analysis Ed Coughlan – Commodities Analyst, Business Monitor International IRONMONGERS’ HALL, CITY OF LONDON TUESDAY, 12 JUNE 2012 www.ObjectiveCapitalConferences.com
- 2. West African Mining: A Macroeconomic & Political Analysis Business Monitor International Edward Coughlan, Commodities Analyst 12 June 2012, London Commodities Research
- 3. Presentation Agenda 1. 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
- 4. 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
- 5. 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
- 6. West Africa To Drive Output Growth Iron Ore Production (mntpa) Commodities Research
- 7. Africa’s Importance To Rise Global – Iron Ore Output (% Share) Commodities Research
- 8. Chinese Investment To Pour Into Africa Commodities Research
- 9. West Africa To Erode South Africa’s Dominance Africa - Gold Output (% Share) Commodities Research
- 10. 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
- 11. Prices To Remain Elevated Metal Prices Rebased Commodities Research
- 12. West Africa Shows Greatest Improvement Africa – Regional Business Environment Ratings (Out Of 100) Commodities Research
- 13. 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
- 14. Mining Boom To Result In Rapid Growth Average Real GDP Growth Rate (% Chg y-o-y, 2011-2016) Commodities Research
- 15. 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
- 16. Capex At Risk Commodities Research
- 17. 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 Commodities Research
- 18. 10. Q&A Business Monitor International ecoughlan@businessmonitor.com Commodities Research