Overview of West African Gold market.
Ghana, Cote D’Ivoire, Mali, and Burkina Faso are three of West Africa’s most active gold-mining countries. These nations are all major gold producers, and for investors interested in gold in Africa, they are important areas to keep a close eye on.
Other countries with significant gold mining activities include Nigeria, Togo, Niger, and Sierra Leone.
West Africa supplied the world 9.4% of its gold in 2016.
While world gold production is expected to decline in the coming years, West Africa continues to be one of the fastest-growing regions for gold production in the world. There are few regions with this much activity. West Africa produces half of the continent’s gold and is closing in on North America production levels.
Artisanal mining forms a large part of the mining sector in the region but is often associated with smuggling, revenue loss, child labor, human rights abuse, and environmental and human health and safety concerns.
Key players include AngloGold Ashanti, Barrick Gold, and Newmont Goldcorp all have mines in the region, and Newmont recently completed an expansion project in Ghana.
Most of West Africa’s deposits have yet to be found and mined, according to Oumar Toguyeni, IAMgold’s vice-president for the region.
Several smaller companies are exploring in West Africa, aiming to either develop their own mines or making that initial discovery, firming it up and then selling to the mid-tier or major miners.
The Gold mining sector has been identified by most countries in the region as a potential catalyst for economic development, and there is a determined effort to attract foreign direct investment. For instance, the Nigeria government recently licensed 2 Gold refining companies to begin operation any moment from now.
The majority of Gold produced in West Africa are currently exported for further processing. In 2017 West African countries exported minerals worth US$16.1bn, 26.3% more than the previous year, mainly as a result of the large increase in Guinea’s exports. Factors such as a lack of infrastructure, and, in some countries, security, continue to have an impact on the performance of West Africa’s Gold mining sector.
Summary of WA Gold Market
Ghana produced 4.1 million ounces of gold in 2016 with small scale miners accounting for nearly a third of total gold production.
There is presently no internationally recognized gold ‘market center’ in Africa.
West Africa has a thriving underground gold economy that if regulated, could unlock the West African region as the gold market center of Africa.
Despite the mostly informal structure of the gold market, Nigeria has one of the largest economies, the largest population in Africa, and is a top contender for the largest emerging market for luxury goods in Africa.
In just five years, Burkina Faso has become the fourth largest gold exporter in Africa.
The number of artisanal mines increased from 200 in 2003 to more than 700 in 2014. In 2014, 640,800 people (about 3.6% of the country’s population) worked in the extractive sector. With only 6000 people employed by industrial mines in the country, over 90% of the gold produced in Burkina Faso is artisanal.
Mali is Africa’s third-largest gold mining country behind South Africa and Ghana, and their artisanal production contributed to a third of the 70.2 tonnes of gold it exported in 2015.
In 2016, The Chamber of Mines estimated that more than a million artisanal miners worked at about 350 sites, producing between 10 and 15 tonnes of gold each year. 2015 government export statistics from artisanal mines was 23.7 tonnes.
A UNECA study of gold mining in Guinea Conakry reveals that the economic value of artisanal gold mining in 2016 was estimated at $300 million.
Impressively, Mercury-free gold processing methods amongst artisanal miners are more established in Guinea than in its mining neighbors.
Cote D’Ivoire is experiencing a gold mining boom with gold production doubling between 2013 and 2015.
While the country is sitting on vast deposits of gold ore, the recent 2014 mining code review has played a large role in bringing investments into the sector.
Like the rest of West Africa, Artisanal gold mining footprints are significant, more so as a result of a long period of political instability in the window of increased international gold price. The management and impact of artisanal mining issues are significant and sensitive to the future of the gold sector of the country.
Senegal is beginning to emerge as a gold mining destination, the majority of its gold is informally traded and exported due to the dominance of artisanal gold mining in the sector.
The Senegalese jewelry market is significant, but their heritage of jewelry production is dying out in the face of cheap, low-tariff imports from Dubai.
Niger’s increased participation in gold mining in the region has been a fast-growing attraction especially among artisanal miners for socio-economic reasons. Approximately 20,000 artisanal gold miners are active in the Liptako region of Niger produce an estimated 1000kg/year. There have been significant gold rushes in several regions of Niger but the far remote locations of the discoveries and the informal channels of the business do not allow much visibility into the production volumes of the artisanal miners across the country.
Low hanging fruit/ target markets.
Nigerian narrative on gold is advancing from gold exploration and mining to the gold market and economy.
The first-ever West Africa gold conference, “Gold West Africa” was hosted by Kian Smith Gold Refinery in collaboration with Noemdek, a Nigeria-based international advisory firm, took place in Lagos State between June 25th and 26th 2019.
Perhaps we should be on the lookout for the next edition of the conference tentatively scheduled for 23–25th September 2020, after the Covid-19 lockdown.
Kian Smith Trade & Co has started gold production with a capacity of three tonnes per month of 99.99% gold and one tonne per month production of 99.99% silver.
The refined gold is produced in bullion that the CBN [Central Bank of Nigeria] can buy at international prices. Nigeria is also planning on implementing the Federal Gold Reserve Scheme under it’s Central Bank.
People we should be talking to include;
- Nere Teriba, is the Vice Chairman of Kian Smith Trade & Co
- CBN [Central Bank of Nigeria]
- The Minister of Mines and Steel Development, Olamilekan Adegbite.
What can set us apart from competitors in these markets
Kinesis Money brings a totally unique offering into the Wes African Gold Market being a Blockchain-powered technology company. Its vision of attracting 1% of the global Gold reserve into its system can be accelerated by taking advantage of the West African Gold Market. It’s an emerging market with huge opportunities for foreign investors.
Possible partners from institutional, govt, and individual perspectives.
- Multinational players in the ecosystem
- Investment Banks, Brokers
- Pension funds management organizations
- Asset Managers
- Commodity Trading Firms
- Precious metals refiners and traders.
The report is compiled by Chimezie Chuta (Kinesis Money Advisory for West Africa)
