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African mining: a macroeconomic and political analysis


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Objective Capital's Africa Resources Investment Congress 2012 …

Objective Capital's Africa Resources Investment Congress 2012
Ironmongers' Hall, City of London
12 June 2012
Speaker: Ed Coughlan, Business Monitor International

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  • 1. AFRICA RESOURCESINVESTMENT CONGRESS African mining: a macroeconomic and political analysis Ed Coughlan – Commodities Analyst, Business Monitor International IRONMONGERS’ HALL, CITY OF LONDON TUESDAY, 12 JUNE 2012
  • 2. West African Mining: A Macroeconomic & Political Analysis Business Monitor International Edward Coughlan, Commodities Analyst 12 June 2012, London Commodities Research
  • 3. Presentation Agenda1. Introduction To Business Monitor International2. West Africa’s Mineral Reserves3. Why Now?4. Macroeconomic Implications5. Risks6. Key Takeouts7. 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 historicalexpertise in Emerging Markets• Clients in over 140 countries worldwide including more than 400 ofthe Fortune 500• A unique analytical approach of Total Analysis, Investor Focus andWide-Ranging Systematic Coverage gives us unparalleled expertise inproducing 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 Commodities Research