Two major projects on the horizon stand to significantly increase revenues from Gabon's mineral exports, helping to reduce the government's reliance on hydrocarbon sales.
The Moanda Metallurgy Complex will be brought on-line in 2014 by Compagnie Minière de l'Ogooué (COMILOG), a subsidiary of France's Eramet and the primary miner of manganese in Gabon. Meanwhile, the contract for exploiting Bélinga, a huge iron ore deposit, was cancelled late last year, opening the door for a new bidding round. Both projects set up the possibility for boosting mineral output.
Gabon's mining sector accounted for 6.3% of GDP and 6% of exports in 2012, according to the African Development Bank. Given its vast reserves - about 250m tonnes of manganese, 1bn tonnes of untapped iron ore and sundry deposits of gold and other minerals - the sector could contribute even more.
As set out in the Industrial Gabon policy, one of the three pillars of the Emerging Gabon national development plan, the government wants to quadruple mining's contribution to GDP by 2025. That may be a long way off, but in the meantime these two projects should help jump-start production and improve infrastructure.
Manganese in MoandaThe COMILOG complex offers the most potential in the short term. The French-led company is responsible for most of Gabon's manganese production, averaging around 3.3m tonnes in recent years, although output jumped 24% in 2013 to reach 3.7m tonnes. Eramet has invested about CFA135bn (€205.8m) to build the complex, which consists of two plants, one for manganese metal and another for silico-manganese alloy. Combined, their output is slated to boost COMILOG's minimum annual production to 4m tonnes by 2015.
China's Compagnie Industrielle et Commerciale des Mines de Huazhou, opened the country's second manganese mine near the central town of Ndjolé in 2012. The deposit has estimated reserves of around 30m tonnes, and company executives aim to increase annual production from 340,000 tonnes to 500,000 in the next few years. BHP Billiton also began prospecting in Mounana and Okondja before freezing its Gabon projects in early 2013 as it rebalanced its portfolio. All told, the Ministry of Industry and Mines has targeted manganese production of 6.5m tonnes a year by 2025.
Bidding on BélingaThe return of the Bélinga project offers the most interesting medium-term opportunity. According to previous studies, the site holds an estimated 1bn tonnes of iron ore with high mineral content. In 2007, China Machinery Engineering Corporation (CMEC) was awarded a concession to begin extraction in north-east Gabon. Amid concerns about the environment and commercial feasibility, however, the project stalled. The government suspended CMEC's permit in late 2011 as a result of the lack of progress, finalising negotiations in late 2013.
According to local media, the state will pay CMEC a sum of CFA17bn (€25.9m) to reimburse development expenditures and acquire its 75% share in the public-private company that was created to manage the project, Compagnie Minière de Bélinga. This will give the state full control.
The British mining consultancy firm SRK Consulting is currently conducting a two-year review of Bélinga's reserves estimates. Results are expected in 2015, at which point the licence will be re-tendered. Several big players have shown interest, including Glencore Xstrata and Brazil's Vale.
Infrastructure spending will necessarily accompany the project's execution. To develop the site will require a 600-km railway linking Bélinga to the main Trans-Gabon rail at Booué and a new deepwater port for mineral exports in Cap Santa Clara, as Gabonese officials confirmed at the Mining Indaba conference in February.
bInvestors have also turned to Gabon's gold reserves, estimated at 40 tonnes. Sites currently run by Morocco's Managem and London-listed GoldStone Resources stand to create a promising new source of export revenue. In late February the Société Equatoriale des Mines (SEM), a state-owned company formed in 2011, announced revenues of CFA759m (€1.2m) from gold sales in 2013.
In the same month, the company signed a CFA300m (€457,000) deal with the state development agency, Caisse des Dépôts et Consignations, to finance more small-scale gold mining in the country. The deal formalises SEM's gold-mining subsidiary, Comptoir Gabonais de Collecte de l'Or, which has collected some 43 kg of gold dust and nuggets since it began activities in 2013. Its goal is to double that in 2014.
COMILOG also plans to launch a pilot project soon at its Mabounié site, about 50 km from Lambaréné. There, deposits of valuable minerals such as niobium, tantalum, uranium and rare earths could blaze a new trail for the mining industry. Project partners have been working to develop a special hydrometallurgical process to maximise the capture of various minerals. The site will need more time, testing and development before the technology is honed, but offers another potential source of growth in the medium term.
Regulatory reform may be on the horizon. As with many African mining countries, the government is looking to increase its share of mining revenue by revising the country's mining code. Though details have yet to be firmed up, Mining Minister Régis Immongault has indicated that special provisions will be applied to large-scale projects like Bélinga and Mabounié.
© Oxford Business Group 2014
