Cape Town, South Africa — The 10th annual Indaba 2005 was a hive of activity with representatives from major and junior companies, government, media and service supply companies exchanging information with that personal touch that comes with meeting people face-to-face.
At this Indaba, at least 25 Canadian-listed companies had booths in the exhibit room and adjacent hallway, which housed more than 200 displays. Many other representatives of Canadian firms were seen networking, though they had opted out of manning a booth. About 3,000 delegates attended the conference, a 40% increase over last year’s tally.
The ministries of mines from 25 African countries were represented. In addition, the Canadian government was represented by the Department of Natural Resources.
Over the past decade the number of Canadian-listed companies working in Africa has proliferated. London- and Australian-listed companies also have a strong presence in the industry. And the list grows.
The chief executive of
Maree was optimistic that China’s need for raw materials will be linked with African opportunities and capital, and that Asian demand should help alleviate poverty in Africa. “Demand for coal, copper, nickel, iron and steel should accelerate development.”
Subsequent to the World Summit on Sustainable Development that took place in Johannesburg in 2002, the Canadian government became a member and sponsor of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development. At Indaba 2005, a couple of companies joined the group so that it has a membership of 25 countries (this was the minimum number of companies designated at the outset in order for the Forum to proceed).
Natural Resources Canada represents Canada and has a lead role in the Forum. It will assist the group in part, by informing them about Canadian mining regulations so that governments will create specific standards of environmental protection and sustainable development. The group believes that countries can improve their economies through good governance in the mining, minerals and metals sector. As well, the Forum will provide recommendations for best practices.
One theme that was repeated among the talks was the need for countries to have stable governments with up-to-date, straightforward, transparent mining regulations. In addition there was talk of a need for countries to reap some of the benefits of development and some companies gave examples of programs they support that aid their employees and communities in general.
Maree stressed that “partnerships between governments, investors, developers, financial institutions and environmentalists are needed to ensure sustainable development to stimulate social and economic development in Africa.”
The Minister of Mines and Energy of South Africa, Phumzile Mlambo-Ngcuka welcomed delegates to Indaba 2005. South Africa celebrated its 10th anniversary of full democracy on Feb. 11. The Minister said that a lot of jobs have been lost in the gold sector over the past few years, but other mining sector jobs have taken their place. The latest legislative changes have not been a deterrent to businesses, she said, and now further changes to legislation regulating the diamond industry are in the works.
On the second day of the conference, the Minister gave an update from the conference’s mining minister’s forum, which was held concurrently with other talks at Indaba. She stressed the importance of social issues and expressed appreciation towards the companies that spoke of the importance of this, stressing that black people in particular need to see an enhancement in their living conditions.
The countries of Mali, Ghana and South Africa are working on getting increased benefits from mining investment. “We probably are fanatical about it and we are not apologetic about it,” said Mlambo-Ngcuka. “Our experience, especially those that come from the liberation movement trend, is that if you are not fanatical about a cause, it just doesn’t happen.” She tempered these words, saying that a mixture of fanaticism and reasonableness is needed.
Many African countries agree that they want to create a market of supply and demand for minerals so that a surplus in a specific commodity is not created. Several companies broached this topic.
The topic of “blood” diamonds came up at various times. A collaboration between governments and industry has helped stem the flow of the illicit gems. The minister said that finding solutions and building partnerships has helped to regulate diamonds.
South Africa plans to increase access to rough diamonds in order to encourage a secondary cutting industry and further controls will be put in place so that the origin of diamonds on the market can be traced.
The South African Minister of Mines said that skills-development and training are major initiatives that need to be addressed. Small-scale, or artisanal, miners require assistance. These miners are numerous, they support families and their lives could be improved using a co-ordinated approach to help them with training, financial assistance, and marketing. Education would help change practices that are unsafe. Human resource studies to do with education and training are under way.
De Beers proved itself a master of marketing and began its presentation at Indaba with a diamond fashion video depicting celebrities and runway models sporting diamond jewellery. The video was interspersed with clips from classic films of actresses, such as Marilyn Monroe and Elizabeth Taylor draped in diamonds.
De Beers managing director, Gary Ralfe, explained that the company has succeeded in linking diamonds to romance and dreams. Sales have seen increass over the past three years.
In the past few years, the company has changed its image and the way it does business. Ralfe stressed that De Beers has changed its philosophy and practice, from control of an industry, to being a partner of choice. The company is prepared to partner with governments, as well as companies. It wishes to be a “partner of choice in exploration, mining and marketing.” It has experience in all aspects of the diamond industry and wants to continue to be at the forefront.
As it stands, with three Canadian projects at advanced stages of exploration, De Beers has the potential of mining an additional US$1 billion per year from Canada by 2015. It has partnered with numerous junior companies who are exploring for diamonds worldwide.
De Beers is protecting its investment, and at the same time providing necessary care for its employees. It has collaborated with governments to create jobs and, when necessary, it supplies medicines that help to combat HIV/AIDS to both its employees and their spouses.
Because of South Africa’s new mining law, De Beers has separated its research and development, and international exploration departments, which are global in nature, from its South African properties. This was done to encourage black investment. A Black Economic Empowerment transaction will be implemented this year.
De Beers ended its presentation with another gem of a promotional video depicting the myth and magic of diamonds. The “miracle of creation” video was awe-inspiring, and a slick, subtle advertisement that ended with the trademark slogan “a diamond is forever.”
The Canadian law firm, Fasken Martineau DuMoulin, established an office in Johannesburg years ago and it has a group that is dedicated to many facets of mining law, including Black Economic
Empowerment issues. This year, several sessions were moderated by partners of the firm.
One evening during Indaba, a gala was held that was sponsored by
The harsh reality of life in Africa was summed up by Barclays Capital managing director Gerard Holden, who began his talk with the statement: “Not wanting to dwell on the negative, Africa is still blighted by war, famine, drought, poverty, AIDS/HIV and despotic leaders.” He was, however, optimistic about changes in attitude in some parts of the world that have resulted in countries that are actively encouraging underdeveloped economies.
Newmont Ghana, a unit of
Newmont’s agreement includes a fixed tax and royalty rate, free export of gold and a 10% carried interest by the government of Ghana (which may be increased after 15 years of operation). At the end of 2004, ore reserves at Newmont’s two advanced Ghanaian projects, Ahafo and Akyem, totalled 16 million oz. gold. Reserves have tripled over the period 2002-2004 and the company expects to find more.
The Ahafo project will be the first to come into production. This is slated for the middle of next year. Gold production is expected to cost about US$200 per oz., with an expected mine life of 20 years. About 600 jobs will be created.
The company plans to make a production decision concerning Akyem by the middle of this year. Gold production would commence mid-2007.
The company plans to motivate employees by making sure they are highly trained. This training should give them the ability to perform tasks well, improve productivity and feel pride in their work.
Gold Fields is partnering with junior exploration companies to diversify its portfolio of properties.
Orezone has properties that border Burkina Faso and Niger. One of these, Essakan, is a joint venture with Gold Fields. The major is earning an initial half-interest in the property. A 2.3-million-oz. gold resource has already been found and a pre-feasibility study should be completed by August.
Two other 100%-owned Orezone projects, Sega and Bondi, require work, which the company hopes will get them to the feasibility stage within the next 18 months. Orezone has found that induced polarization surveys and modified BLEG geochemical surveys are the exploration tools of choice.
Placer owns a half-interest in the South Deep mine in South Africa which will report an operating loss in 2004. At present, he said, “the increased strength of the rand has increased rand-based costs by 44%, offsetting the increased production through mechanized mining and advancements in work practices.”
The new South Deep twin shaft was recently completed. It is the longest in the world, extending 3,000 metres in one lift. A new mill and infrastructure were added and commisssioning has begun. The company and its partner are changing the culture and work practices of the old mine and all workers are being trained and educated.
Tomsett said that Placer is committed to the health of its workers, but that “the HIV/AIDS pandemic is bigger than one company can handle.” He said the company has programs in place “to help do our part” but that a co-ordinated effort from government and industry is needed to do more.
The strength of the rand has affected the Klipspringer diamond mine, a joint venture 55.8%-owned by
SouthernEra Diamonds’ president, Patrick Evans, gave an overview of the company’s exploration in Gabon, Angola, DRC and South Africa. He praised Gabon for having a “superb mining code.” Southern-Era found the government to be very supportive, transparent and efficient in issuing prospecting permits.
The Democratic Republic of Congo opened up permits to investors in 2003, on the back of the World Bank’s new mining code. Although the country has had acute political problems, 41 of 50 exploration permits were granted within one year of application.
Historically, many diamonds have been produced in the Congo, however little exploration has been done in the last 40-50 years. SouthernEra flew an airborne geophysical survey and performed some ground follow up, which identified targets which require more work.
Anvil’s president William Turner said the mine suffered a setback when the mining contractor went bankrupt in June of last year, but the mine is recovering. Anvil is allocating 10% of the mine’s profit towards social development and education in the community, and has built a school.
Since 1995, Lero has processed 1 million tonnes per year in a heap leach operation, but a switch in technology is planned. The company has bought
Barrick Gold’s vice-president of exploration, Alex Davidson, explained that “Given the long lead times needed to develop mines, it is the decisions that are made yesterday and today that influenc
e what the company will be doing in 2007.”
In the short term, to help reduce costs, Barrick is planning to reduce the number of expatriates working at its Bulyanhulu mine in Tanzania. The mine produced 350,000 oz. of gold in 2004. Barrick owns a 70% interest in the Tulawaka open pit mine, 120 km west of Bulyanhulu, which should be producing gold in early March. Other exploration projects have advanced to the stage where environmental impact and engineering studies are underway.
Mali is the second largest gold producer in West Africa.
Bristow concluded, “if you have a good company with a clear and differentiated strategy, a strong value composition and a record of delivery then the most discriminating investors in the world will follow you, even into Africa.”
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