African mining: a macroeconomic and political analysis

transcript

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

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

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

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

West Africa To Drive Output GrowthIron Ore Production (mntpa)

Africa’s Importance To RiseGlobal – Iron Ore Output (% Share)

Chinese Investment To Pour Into Africa

West Africa To Erode South Africa’s DominanceAfrica - Gold Output (% Share)

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

Prices To Remain Elevated Metal Prices Rebased

Africa – Regional Business Environment Ratings (Out Of 100)

West Africa Shows Greatest Improvement

4. Macroeconomic Implications

• Mining to drive West Africa’s rapid growth in GDP

• Substantial inflows of Foreign Direct Investment

• Positive impact on infrastructure

Average Real GDP Growth Rate (% Chg y-o-y, 2011-2016)

Mining Boom To Result In Rapid Growth

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

Capex At Risk

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

10. Q&A

Business Monitor International

ecoughlan@businessmonitor.com

African mining: a macroeconomic and political analysis

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