Africa - Home to world’s most wanted minerals

Generally speaking there is virtually no mineral that Africa does not have in exploitable quantities but the continent tends to follow its economic nose and root out those that are the money-making flavours of the day. Tom Nevin digs out the story

Strategically, energy-generating coal and uranium will be Africa’s most important minerals in the decade ahead, followed by gold for the sheer flow of revenue it is generating. Right now we live in a world that turns on electrical power, and one that is building a seemingly unquenchable thirst for the means to spin turbines. And Africa has more of energy generation’s wherewithal than anywhere else.

Coal The International energy Agency (IeA) reports that world energy demand will grow by two thirds over the next 30 years with a third of that growth in China and India and coal, as the most abundant and affordable of all fossil fuels, will be used to meet the demand. As the most important fuel for electricity generation, it will have a major and vital role to play, along with other fossil fuels. Coal prices reached a record high of $77.87 in July 2004. The following three years, coal prices saw a steady decline until they reached the same figure again in July 2007. From then, they improved, reaching an all-time high of $128.40 in November, an increase of 65% in only four months, according to Miningmix. com, an influential voice in the south African extraction industry. “These incredible ArA (Antwerprotterdam-Amsterdam) prices have been followed closely by the richards Bay Coal Terminal ‘free on board’ (FoB – i.e. delivered to the vessel) prices that during the week of 30 November 2007 were at $100.45, an increase of more that 50% in two months,” it says.

India eyes Africa’s coal and uranium

Coal is still the world’s major source of energy generation and Africa possesses hundreds of millions of tons of it.

India, trailing China in chasing its share of the African resources it needs to fuel its high-flying economy, has entered 2008 with a powerful new investment and procurement vehicle dedicated to acquiring vast supplies of foreign coal. It can dip into an annual government-funded war chest of Rs10bn. It is also looking for uranium mining deals in Africa, but problems abound. The new special-purposes organisation, Coal Ventures International Ltd (CVIL), is supported by an amalgam of Indian mining and energy parastatals and has invited expressions of interest from bankers worldwide. CVIL’s broadly-based terms of reference underline the urgency the Indian government is placing on procuring massive tonnages of coal and sub-equatorial Africa is in the crosshairs, especially Botswana,

Mozambique, Zimbabwe and South Africa. It has carte blanche to negotiate private equity deals with unlisted companies, partners and owners having coal assets across the world. It is also open to acquiring mining licences to develop coal mines globally.

India’s bid for African uranium With its uranium deal with the US heading for the rocks, the Indian government is also looking to Africa for uranium supplies, particularly in Namibia and Niger. A Mumbaibased company, Taurian Resources, has been licensed to explore for and mine uranium in Niger, the world’s fifth largest producer. “The progress by Taurian Resources is bold and encouraging,” reports an Indian government official, although he concedes that actual mining of uranium there could take years to yield results, and that India’s standing in the global nuclear club could be a problem. Both Namibia and Niger, as non-Nuclear Suppliers Group (NSG) countries, are signatories to the African Nuclear Weapon Free Zone Treaty. As members, Niger and Namibia could dig in their heels against transferring nuclear material to states that are not party to the Nuclear Non-Proliferation Treaty, including India. The NSG has a powerful voice in global nuclear commerce, controlling close to an estimated 80% of the world’s uranium reserves and about 78% of its production. Niger and Namibia, along with Uzbekistan, are the major producers. Niger recently issued some 20 permits to mainly Canadian and British firms with Taurian being the first Indian company to secure a licence. China is already a big investor in Niger’s uranium producing sector.

African Business | February 2008 31