Tag Archives: Africa

Openness can help lift the curse of resources

Openness can help lift the curse of resources
By George Soros

Published: March 3 2011 22:13 | Last updated: March 3 2011 22:13

The natural resources sector has the potential to generate billions of dollars in revenues that can be used for poverty reduction and sound investment. For decades, however, management secrecy has allowed corruption to thrive in countries such as Angola, Cambodia, and Guinea. According to Nigeria’s own corruption agency, up to $400bn of oil money has been stolen or wasted over the past 50 years. And in Libya, in particular, we now see a population rising against rulers whose control has been financed by the immense revenues they manage, and mismanage, in secret.

Ending this problem and letting new democracies flourish will, of course, not be easy. The resource curse undermines the investment climate, raises costs for companies, threatens energy and mineral security, and consigns millions of citizens in resource-rich countries to poverty. But evidence suggests that transparency in extractive industries can play an important role.

In 2002, I helped to launch the Publish What You Pay coalition, a global network of civil society organisations that has advocated for better management of oil, gas and mining revenues, and worked to ensure monies received are invested in schools, hospitals and poverty reduction. The coalition recruits oil companies, which then pledge to reveal what they pay to the governments and leaders of the states in which they operate, allowing them to be held accountable. In Liberia, this approach has seen moves towards new transparency standards, including openness on payments and contract terms – amazing progress in a country better known for former president Charles Taylor’s macabre violence and blood diamonds.

There are further positive signs from the Extractive Industries Transparency Initiative, an alliance to improve standards of transparency on a voluntary basis. Azerbaijan’s credit rating improved in part because it played a constructive role in the initiative. This week, after the first democratically held elections in its history, Guinea rejoined the initiative too, because its leaders know that with EITI membership comes a better investment climate.

Now, governments that regulate stock markets are going one necessary and long-awaited step further, in establishing mandatory listing rules. In July 2010, the US passed the Dodd-Frank Act, which requires all oil, mining and gas companies registered in the US to report payments to foreign governments, both by country and by project. Companies as diverse as PetroChina, BHP Billiton and BP will have to comply. Similarly, Hong Kong recently improved the disclosure of its companies’ payments as a condition of listing on its exchange.

The French and UK governments have also indicated support for new European oil and mining rules. EU revenue transparency legislation could build on US plans to move towards a new global transparency standard. The London Stock Exchange is one of the world’s most important financial markets, hosting more than £1,000bn worth of oil, gas and mining capital. It should follow others’ lead and change its rules too.

All of these measures hold great promise. Africa is the new frontier for investors in the natural resources sector, holding a 10th of the world’s oil reserves, 40 per cent of its gold and significant reserves of other minerals vital for modern industrial economies. The Middle East, meanwhile, could soon develop a string of prosperous democracies. Those promoting greater transparency in the natural resources industries are helping to reinforce powerful historical forces, which will unlock transformational sums of money to improve the lives of millions of people in some of the most fragile countries in the world.

The writer is chairman of Soros Fund Management LLC and founder of the Open Society Foundations

Copyright The Financial Times Limited 2011. 
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Which Gold Miners Might Be Impacted by Possible Unrest in The Ivory Coast ? (Sales Commentary)

CONCLUSION: The situation in the Ivory Coast continues to simmer after recent elections.  Now the army has closed the Ivory Coast borders and is suspending foreign news organizations from reporting issues.  If tensions continue then mining operations in the country could potentially be negatively impacted.

 For reference, here are the gold miners with operations in the Ivory Coast:

Endeavour Mining (not rated. EVD CN, mkt cap C$320mm) – A development project in the Ivory Coast but producing assets are located in Burkina Faso

Cluff Gold (Market Perform, no target, CLF LN, mkt cap £150mm)- A producing mine in the Ivory Coast that accounts for approx. 25% of our NPV.  Key asset is in Burkina Faso and an exploration play in Sierra Leone

Newcrest (Outperform, A$52.50, NCM AU, mkt cap A$31.1bn) – The Ivory Coast assets are only 4% of our project NPV, but the exploration upset 

La Mancha (not rated. LMA CN, mkt cap C$368mm) – Highly levered to the Ivory Coast, with existing production from the country and many exploration targets.

Perseus (not rated. PRU AU, mkt cap A$1.3bn) –  Main development project is Tengrela in the Ivory Coast, with a feasibility expected by year-end and production possible in late-2012

Randgold (Outperform, target US$125, RRS LN, mkt cap £5.5bn) – Growth asset Tongon is in the Ivory coast and is ramping towards production by the end of the year.  The mine is 30% of our project NPV 

Please see attached map from our West Africa gold analyst, to see locations of each asset in the country.

     ABIDJAN, Ivory Coast,  Dec. 3 (UPI) — The United Nations
has urged Ivory Coast election rivals to refrain from violence
while officials try to determine who won a presidential runoff.
     The Army sealed borders after Ivory Coast’s electoral
commission announced that opposition candidate Alassane
Ouattara defeated incumbent Laurent Gbagbo, the BBC reported.
     However, the Constitutional Council said the announcement
is invalid, alleging voter fraud by Ouattara.
     The army announced it closed Ivory Coast borders. It also
said it would suspend foreign news organizations from reporting
     The election, the first presidential election in a decade,
was intended to reunify the nation, which was torn by a civil
war in 2002.
     The United Nations received reports of violence in parts
of the west and north during recent voting but said overall the
election seemed peaceful.
     “Our job is to remind them of their promises and
commitments and especially not to use violence,” said U.N.
spokesman Hamadoun Toure.
     “They have to abide by electoral law, they have to keep
their promise during the campaigning that they won’t use
violence to settle disputes and they also said they’d abide by
the results,” Toure said.
     The Constitutional Council has one week to publish
official results of the election.
     Ivory Coast is the world’s largest producer of cocoa.

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-0- Dec/03/2010 14:49 GMT

Eurasian Natural Resources (ENRC-LSE): DRC Assets Acquired, Including Kolwezi; Potential Negative to Sentiment – BMO Comment

Eurasian Natural Resources (ENRC-LSE): DRC Assets Acquired, Including Kolwezi; Potential Negative to Sentiment – Negative
Rating:   Market Perform
Price:     £8.66
Target:   £10.50
Description: cid:image007.gif@01CB42A0.411A3BF0
The acquisition of DRC copper-cobalt assets from companies associated with the Gertler Family including the exploration licence for First Quantum’s Kolwezi project (currently in international arbitration) is expected to generate negative market sentiment. Further, it may open up potential future legal issues with respect to the ownership of Kolwezi, plus suffer potential ill-will from the community of global mining companies in future. ENRC has announced the acquisition of a 50.5% interest in DRC-focused Camrose Resources. The stake was purchased from Silvertide Global, Zanette and Cerida Global, all held by the Gertler Family Trust. Total consideration is US$175M, comprising US$50M in cash and US$125M in promissory notes payable in 9-24 months.