AMN - Gold shines brightly in West Africa – comment by Yolanda Torrisi

Gold mining on the continent is moving away from the traditional stronghold of South Africa to West Africa. New analysis has shown that despite South Africa still hosting significant resources, West Africa is holding appeal with Ghana as the continent’s leading producer of the precious metal.

The lure of gold generally has been top of mind worldwide in recent times due to high prices, trade wars and positive sentiment.

Merger and acquisition activity has prompted re-assessment of gold project values and focus on the attraction they hold for local communities. Resolute’s acquisition of Toro Gold is a recent example of a bigger player investing further in gold and in West Africa.

But what of South African’s gold reserves and other resource projects?

New analysis based on Statistics South Africa data has highlighted a familiar trend – the well-known decline in South African gold production over the past 19 years.

South Africa is producing 83% less gold in 2018 than it did in 1980, all the while continuing to hold the world’s second largest reserves of gold, according to a US Geological Survey count.

Minerals analyst S&P Global Platts has highlighted the trend in new reporting, pointing to difficult operating conditions in South Africa such as strikes, high labour costs and increased costs of operating underground.

There’s no doubt it’s time for a rethink, after successive quarters of falling production in South Africa.

After all, fulltime employment in mining has shrunk by 146,457 people, or 24%, in South Africa in the past 25 years, with the industry’s fulltime headcount shrinking 11% or by 56,366 people in the past five years.

Based on the one job loss affects 10 dependants estimate, up to 4.4 million people were affected by the mining industry downturn in the past 25 years — and up to 1.7 million in the past five years.

Still, according to Minerals Council South Africa, mining makes up 29% of exports and employs more than 464,000 people who support about 4.5 million dependents.

A renaissance is certainly needed, based on 21st thinking and practice, to keep things moving in gold and other SA mining sectors.

Ghana is holding appeal, backed by a supportive government whose actions are factored into investor and financier calculations of sovereign risk.

The West Africa nation returned to watch lists several years ago, experiencing new investment and growth as the effects of a new government brought hope amid improving global conditions.

In the past year, key reforms continued to give it wings. Among these were a efforts to permanently lift a ban on small-scale mining, as the mining industry thrived.

But projects with bigger potential also hold promise, as M&A activity like Resolute’s Toro acquisition is signalling.

Regimes must implement reforms and implement them consistently for the benefit of their communities and industries to attract lasting investment.

But big problems in project assessments, such as ever-increasing power and utility costs must be solved, and governments must be more reliable and responsive, to turn renaissances into lasting change that benefits all parties keen on moving forward economies on the continent.

- Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact: yolanda@yolandatorrisi.com