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How Canada Dominates African Mining


April 18, 2013
Foreign companies from a range of countries compete in Africa‘s mining sector. But according to a number of measures, those from one country dominate: Canada.

Artisanal miners being chased away from a majority Canadian-owned gold mine in northern Tanzania. Photograph by Tamara Herman.

When asked to think about foreign mining contracts in Africa, many people’s minds will jump to China, or perhaps one of the former colonial powers such as the UK or France. China’s construction and agricultural projects in particular are at the core of the ‘Africa Rising’ narrative, as are the Asian giant’s more than 1.3 billion consumers.

Some readers might be surprised therefore to learn that Canada – with a population less than one-tenth that of China’s and geographically about as far from Africa as one can get – has quietly grown to become one of the largest stakeholders in Africa’s mining sector – possibly the largest, depending on how you quantify it.

A grizzly competitor

“We certainly are one of the biggest players [in Africa] in several respects”, Pierre Gratton, president and CEO of the Mining Association of Canada, told Think Africa Press. “It’s a largely undeveloped, unexplored continent, which makes it interesting….A new frontier. Our industry is often one of the first to go where no-one has gone before.”

Countries competing with Canada in African mining include the UK, France, Australia, China, and South Africa, but ranking their relative dominance is all but impossible; countries measure and declare assets and investments using different methodologies and with varying levels of transparency. However, documents provided by Natural Resources Canada seem to portray a relatively accurate picture of the country’s activities in Africa.

According to these documents, in 2011 – the most recent year for which statistics are available – 155 Canadian companies were operating in 39 African countries. Their combined assets* totalled more than $30.8 billion, up from $26.5 billion in 2010.

Canadian firms were most active in East Africa, with $12.7 billion on the ground in 2011. West Africa came next with $9.9 billion invested, followed by Southern Africa ($4.9 billion), Central Africa ($3.4 billion), and North Africa ($36.7 million).

Ranked in descending order by value of assets, Canada’s most important mining partners in 2011 were: Zambia, Mauritania, South Africa, Madagascar, Democratic Republic of the Congo, Ghana, Tanzania, Mali, Senegal, and Eritrea.

While Canada is a major force in African mining, current projects on the continent actually only comprise a minority of Canadian companies’ operations overseas. According to Natural Resources Canada, assets in Africa accounted for just 21.5% of Canadian mining companies’ cumulative assets abroad. The majority are in Latin America.

Taking stock

However, those numbers describe just the interests of companies headquartered in Canada. Expand the picture to take into account other country’s projects financed on Canada’s Toronto Stock Exchange (TSX) and the TSX Venture, and Canada’s role in mining around the world grows even more substantial.

According to a December 2012 report drafted by the TSX, during the first nine months of 2012, 89% of all global mining equity financings were done on the TSX and TSX Venture (up one point from 2011). The document states that only 7% of mining projects traded on the TSX are located in Africa, but that does not diminish the fact that a lot of money for mining sites in Africa is going through the exchange in Toronto.

“There are approximately 315-20 listed [mining] companies that are not African but are doing business in Africa”, says Bruce Shapiro, president of Mine Africa, a Canada-based business and marketing company. “Of those, over 50% are Canadian. So in terms of the companies that we would normally look at, we certainly dominate that market.”

Shapiro explains that what sets Canada apart is the level of access to finance available on the TSX, where there’s a tradition of an appetite for risk. “Capital, at the moment, is impossible to raise”, he remarks, in reference to struggling developed economies. “But if it wasn’t, it would be relatively easy in Canada, compared to some other markets.”

Shapiro notes that Canada has vast deposits of mineral wealth within its own borders, a long history mining those deposits, and is now taking this expertise to Africa. Looking to the future, he continues, prospectors tend to be moving either into less-explored low-risk areas with stable governments or high-risk regions that tempt miners with the potential of very high rewards.

Rocky relations?

But in addition to a favourable private sector, mining companies are also attracted to Canada for a less-flattering reason, suggests Jamie Kneen, a coordinator for advocacy group MiningWatch Canada.

“There are hardly any Canadian laws of international application”, he says. “If something goes wrong, people may be able to sue in Canada, but that’s not entirely clear – it hasn’t worked yet.”

Kneen explains that while countries such as the US have passed domestic laws that govern corporations’ activities abroad, Canada has not done the same. The current Conservative government has actually voted down several attempts to increase accountability abroad.

One of those attempts to regulate the mining sector overseas was initiated by Member of Parliament John McKay. In April 2009, he proposed a bill that aimed to increase corporate accountability in developing countries, but to no avail.

“It died a glorious death”, McKay recalls on the phone from the Canadian capital of Ottawa. “They [mining lobbyists] don’t play to lose.”

He notes that without such legislation, international corporations based in Canada are left to self-regulate their conduct and adhere to the domestic laws of the countries in which they operate as they see fit.

“We have no ability to tell any mining company what to do, when to do, where to do, or how to do it”, McKay emphasises. In much of Africa, that creates potential for abuse. “Canadian companies are venturing into areas they’ve never ventured before”, he says. “There doesn’t seem to be any hesitation to go into conflict zones and areas where you know darn well you’re going to have some difficulties of some kind.”

Indeed, as Pierre Gratton from The Mining Association of Canada notes, Africa’s mining sector is expected to continue to expand, and Canadian interests on the continent to grow with it.

“There’s a recognition that this is something that we do well here, that we’re good at mining”, he says. “It’s one of the exceptions to the Canadian economy – we tend not to necessarily dominate sectors, but in mining, we do.”

*Natural Resources Canada defines mining companies’ cumulative “assets” as “calculated at acquisition, construction or fabricating costs, and includes capitalized exploration and development costs, non-controlling interest, and excludes liquid assets, cumulative depreciation [sic], and write-off.”

Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, syndication or educational purposes, please contact: editor@thinkafricapress.com

 

 

 

World Bank Advised Ethiopia to Audit Large Telecom Agreements


Business Ethiopia

Reporter

January 11, 2013

The World Bank (WB) in its report on the status of corruption in Ethiopia advised the government to audit Ethio Telecom’s large agreements. 

According to the report launched this morning at the Hilton Addis, focusing on the level of corruption in the country in different sector sectors, the government needs to apply standards to Ethio Telecom that are in line with Ethiopia’s Public Procurement Proclamation.

The report, “Diagnosing Corruption in Ethiopia”, in its subtopic that assessed the level of corruption in the telecom sector also stated that absence of uniform procurement standards is one of the major causes of corruption, among others.

The report highlighted that the vendor financing contract entered into by the then ETC (Ethiopian Telecommunications Corporation now named Ethio Telecom) in 2006 appears to be highly unusual. “…This brief study should not be seen as an investigation or interpreted as alleging in itself that corruption has necessarily occurred. However, the circumstances as perceived both by stakeholders and by independent observers do raise serious questions about the control of risks in this sector.”

The stakeholders of the then 1.5 billion US dollars vendor financing argue that ETC’s financial requirements were not provided in detail to those suppliers (other than possibly the winning supplier –China’s ZTE) that had been approached to consider providing such financing. The report also stated that there is no evidence of a formal tender procedure for the finance package.

“The supplier selected by the ETC to supply the finance package that suited the ETC’s purposes. The equipment supply element of the vendor financing contract was not put out to competitive tender.”
The report stated that generally the contract was not in accordance with the ETC’s procurement procedure and no competitive tender for the contract and subcontracts.

“Difficulty in measuring technical compliance: By appointing one supplier without competitive tender, the ETC has no opportunity to assess the degree of technical compliance of the supplier’s equipment. The contract was also inappropriate and went through unclear procedures for ensuring technical quality and competitive pricing,” according to the report.

In addition, the report further mentioned that Ethio Telecom is vulnerable to corruption because it is under government monopoly.

Health, education, water, justice, construction, land and mining are also the sectors surveyed by the report sponsored by the World Bank, Canada International Development Agency, UK Aid and the government of the Netherlands.

“Some of the recommendations of the report are under implementation,” said Ali Suleman, Commissioner of the Federal Ethics and Anti-Corruption Commission (FEACC).  While the report also recalled that in January 2008, the FEACC 2008 brought charges against a former ETC CEO and 26 former ETC executives for allegedly “procuring low-quality equipment from companies that were supposed to be rejected on the basis of procurement regulations.”

World Bank country Director, Guang Zhe Chen, on his part stressed that the purpose of the study is conducted to support evidence-based policy formation.

Nigeria Validates Manitoba’s Power-Mangement Contract


Bloomberg

By Elisha Bala-Gbogbo

Nov 21, 2012

Nigeria validated a power-management contract signed by Canada’s Manitoba Hydro Electric Board in July to run the state-owned power utility Transmission Co. of Nigeria after regulatory approval, the Bureau of Public Enterprises, the privatization agency, said.

“We have received ratification from the Bureau of Public Procurement and the contract has been certified,” Chukwuma Nwokoh, a spokesman for the Abuja-based privatization agency said by phone today. Under Nigerian laws, all contracts entered into by the government needs to be certified by the Bureau of Public Procurement.

Reuben Abati, a spokesman for President Goodluck Jonathan, on Nov. 14 announced the cancellation of the contract saying the correct procedure wasn’t followed. Manitoba “did not follow the law strictly” and initial report of the termination was a “misunderstanding,” Jonathan said on Nov. 18 in an interview broadcast on state-rub television NTA

Nigeria, Africa’s top oil producer, is selling majority stakes in power plants and letting private investors buy as much as 60 percent of 11 distribution companies spun out of the former state-owned utility as it seeks private investment to curb power shortages. Blackouts are a daily occurrence in Nigeria, Africa’s most populous country with more than 160 million people. Demand for electricity in Nigeria is almost double the supply of about 4,000 megawatts and the government plans to boost output to 14,019 megawatts by 2013.

Bids worth more than $2 billion by companies including Siemens AG (SIE) and Korea Electric Power Corp. (KEP) were approved by the government for the sale of the companies on Oct. 30.

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja atebalagbogbo@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

 

Semafo Shuns Quebec For Africa To Double Its Gold Output


bloomberg.com

By Frederic Tomesco

June 5th, 2012

The Quebec government plans to spend C$47 billion ($45 billion) to attract mining investment over the next 25 years. Benoit La Salle, a former aid worker who runs Montreal-based Semafo Inc. (SMF), sees more opportunity in Africa and is braving military coups and mine invasions to drive the company’s expansion.

“Africa is the new frontier,” La Salle, Semafo’s chief executive officer, said in a telephone interview. “That’s where you’ll find the most favorable geology.”

The operator of three gold mines in Burkina FasoGuinea and Niger, is betting it can double output in the next five years with its current properties as it scouts for acquisitions. Semafo produced about 250,000 ounces of the metal last year, and plans to reach 500,000 ounces to become Canada’s ninth-biggest producer based on 2011 production.

“Here in North America, we’ve been exploring for 300 years and there really isn’t much left in the ground,” La Salle said from Montreal. “Burkina Faso has seen seven mines built in the last five years. It’s been several decades since we saw that kind of activity in Quebec.”

Semafo, coming off a record year for net income and gold sales in 2011, said May 15 that first-quarter net income jumped 55 percent to $28.1 million as gold production reached 60,900 ounces. Total cash margin jumped 34 percent to $1,002 an ounce from a year earlier as gold prices averaged $1,694 an ounce…Read more.

Canada’s military hunting for seven new foreign bases


thestar.com

By Allan Woods

June 5th, 2012

OTTAWA—The military is hunting for seven strategically placed nations willing to host a network of Canadian bases aimed at cutting costs and boosting response times to future wars, disasters and humanitarian crises.

Two of those bases — in Germany and Kuwait — have already materialized, but the full extent of the plan to create overseas beachheads for military planes, ships and equipment has not been previously acknowledged.

Defence officials and diplomats, armed with a $500,000 budget, are now working to finalize agreements with governments in some of the most volatile parts of the world.

When the collection of operational support hubs is complete, Canada’s military will also have a permanent footprint in the Latin America and Caribbean region, on both sides of the African continent, in the swath of countries marked by the conflicts in Afghanistan and Pakistan, as well as in Southeast Asia.

Defence Minister Peter MacKay said last week that Canada is actively seeking a deal to set up one of those hubs in Singapore.

The bases will form dots along the line of what military planners refer to as the Arc of Instability— the parts of the world where future conflicts are deemed most likely to occur…Read more.

South Africa: Minister baits hook for graft


Fisheries scientists sorting a catch of small ...
Fisheries scientists sorting a catch of small fish and Norway lobster (Photo credit: Wikipedia)

 IOL Business Report

March 22nd, 2012

An independent committee, which is likely to be headed by a retired judge, will be trawling through all awards of fisheries tenders following what Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson admitted was a saga over the awarding of a marine patrol contract.

She said yesterday that a black empowerment company, Sekunjalo, had been tainted by dodgy departmental tender processes, which led to it losing its preferred bidder status.

In an admission that one of her departmental branches was a bit “shoddy”, the minister called an emergency press conference on a public holiday to announce the committee’s pending appointment.

Sekunjalo lost its status last month as preferred bidder for the R800 million, five-year contract to police South Africa’s marine resources and conduct marine research.

The incumbent provider, Smit Amandla Marine, took legal action, arguing Sekunjalo had a conflict of interest as it would police marine resources while having a fishing company in its fleet. It also argued the adjudication process was fishy.

The minister said the fisheries branch had been under scrutiny “with regard to alleged irregular processes and procedures” being followed in the awarding of tenders.

Acknowledging that the award to Sekunjalo had been withdrawn “on the basis of advice from senior counsel”, Joemat-Pettersson said that as a consequence “of our own flawed processes, an innocent company, Sekunjalo, has been portrayed as the culprit in this saga and its reputation has been tainted”.

In an apparent reference to Smit Amandla, she said “another company” could have taken legal action against the department for awarding and withdrawing a tender “based on shoddy government work”. “I have consulted with the ministry of justice and constitutional development with the view of appointing a judge to head the committee of inquiry.” Read more.

Zimbabwe: Beaumont sacked over procurement deals


Zimbabwe Independent

Chris Muronzi

October 6, 2011

A BOARD investigation into Meikles Africa Ltd former CEO Brendan Beaumont’s involvement with the group’s foreign suppliers resulted in the board resolving to sack him, businessdigest has established.
Sources told businessdigest that an investigation sanctioned by the board found that Beaumont was connected to some of the group’s foreign suppliers and did not declare his interest. Retailers rely heavily on imported goods, a situation made worse by low capacity utilisation in the local manufacturing industries.
Meikles FD Onias Makamba would not be drawn into confirming whether the board had instituted an investigation into Beaumont’s involvement with suppliers, insisting he had left to “pursue personal business interests.”
Makamba would also not comment on whether Beaumont had been serving notice, saying “his resignation is with effect from  September 30 2011.”
Other sources say an internal auditor unearthed a transaction involving Beaumont’s company and alerted Moxon, prompting a full board investigation.
Sources say Beaumont had been supplying various goods to the group’s retail division — TM Supermarkets.
As a result, Moxon reportedly felt that he had to be seen to be strict when applying the rules of internal disclosure.
But other sources say Beaumont’s position no longer augured well with that of John Moxon, who is now back to his old position of executive chairman, a position  that duplicates roles with that of CEO…Read more.

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