Canadians lead new Scramble for Africa

London, U.K. — Africa is endowed with an abundance of natural resources, particularly minerals — hence the “Scramble for Africa” of the pre-colonization era in the 18th and early 19th centuries, when Western companies competed to bring iron, copper and other metals to an industrializing Europe.

However, a combination of bad politics and technological inadequacies from the 1970s to the 1990s saw a marked reduction in mining on the African continent as wars drove out investment in such countries as the Democratic Republic of the Congo (DRC) — formerly Zaire — while a lack of equipment to extract ore from deepening mining shafts saw copper, tin and gold mines close in Zambia, Zimbabwe and other countries.

But there is a renewed scramble for Africa’s mineral resources in the 21st century and Canada is leading investment in the continent’s mining sector. At least 33 companies listed on the Toronto Stock Exchange poured an estimated total of $8 billion worth of finance and assets into Africa by June this year.

The plans of these companies for future investment in Africa are even more striking.

According to Natural Resources Canada (NRC), in the next four to five years, Canadian-capitalized companies are set to invest a whopping $46 billion into mining ventures in Africa.

Of that amount, $13 billion worth of finance and assets have already been concluded and work is in progress in at least 15 countries, including previously unknown mining destinations like Burkina Faso, Kenya, Madagascar and Tanzania, where new geological technology has helped in the discovery of abundant reserves of anything from traditional metals like gold, copper and nickel to newer resources such as titanium, uranium and cobalt.

More than 100 Canadian exploration and mining companies are active in 37 African countries. Canadian spending on exploration alone accounts for more than $278 million, or 24% of all exploration spending in Africa.

Of note, almost half of planned Canadian investment in Africa came as a direct result of efforts by a Toronto-based business development company, MINEAfrica, whose main focus is promoting mining investment in Africa.

Since its launch in the 1990s, MINEAfrica has been at the forefront of promoting investment in the African mining sector through its annual Investing in African Mining seminars held in Toronto alongside the prestigious Prospectors and Developers Association of Canada (PDAC) conference every March.

MINEAfrica’s principal, Bruce Shapiro, recently brought the seminar here to London, where presenters — mostly Canadian and African mining executives — touted Africa’s potential to a full house.

Investors, finance experts and mining regulators flew in from as far as Australia and Japan to sample the secret recipe that has made Canadian mining companies successful in Africa.

Part of that success is based on Canadian companies’ participation in African Black Economic Empowerment (BEE) regimes.

BEE policies differ from one country to the next, but they all have one thing in common: a determination by national governments to see indigenous people get a fair share of the extraction and processing of minerals in their communities through equity partnerships with foreign investors.

The South African model is considered the best because it is somewhat flexible, and modelled on the system Canada has employed to empower First Nations communities in its mining regions.

There were plenty of examples of collaborations between Canadian and South African companies in London during MINEAfrica seminar on BEE in South Africa’s mining industry.

South African companies like BSC Resources, First Uranium (FIU-T, FIU-J), Homeland Energy and GVM Metals (GVM-L) are either listed or in the process of seeking a listing on the Toronto Stock Exchange because of an assured investor base in Canada.

These companies are now being used as examples by MINEAfrica, in conjunction with NRC, to promote Canadian joint-venture investment in other African countries, notably Burkina Faso, the DRC, Malawi, Namibia and Zambia.

The growing focus on Africa has led MINEAfrica to launch another promotion program, the Africa Investor Series. Unlike the annual Investing in African Mining seminars, which bring together a broad cross-section of people, including government officials and observers, the new seminar series focuses on a select number of companies listed on the TSX with investments in Africa.

Shapiro says information presented during these seminars should assist investors in exploring opportunities in any country to make “informed investment decisions, comparisons, reports and recommendations.”

The Africa Investor Series started in September with a focus on the DRC, and in October, there was a presentation on Burkina Faso. Botswana, Mozambique and Namibia will be featured in early 2008.

The choice of Toronto as the venue for both of MINEAfrica’s seminar series is not coincidental. The city is the mining finance capital of the world and Canadian companies are proving to be leaders in tapping into the vast mineral wealth of Africa.

— The author is a freelance writer, based in Toronto, and the managing editor of thesouthernafrican.com.