Simon Meadows Smith, Managing Director, SEMS

MACIG Connect Series

“SEMS is committed to its long-term strategy of servicing the West African sub-region. We know that the mining industry in Ghana will rebound since downturns in this industry are cyclical.”

How would you describe the investment environment in Ghana and the West Africa region?

Simon Meadows Smith (SMS): Junior exploration companies have put a brake on exploration projects in Ghana. To mitigate this, SEMS has been working with mid-tier producers who have operating mines and therefore have a budget for exploration, albeit a reduced one. Today, our largest client is in Burkina Faso, a jurisdiction that has seen significant investment and growth in its mining industry over the last seven years. Ivory Coast is also generating enthusiasm among investors since it has a reliable energy supply, good infrastructure, and a trained workforce. Additionally, the Ivorian Ministry of Mines is doing an excellent job in processing license requests in a timely manner.

How does the geology of Ivory Coast compare to that of Ghana?

SMS: Ivory Coast has a very similar geology to that of Ghana, with a third of West Africa’s Birimian occurring within the Ivorian borders. Its gold production has been growing in the past few years with the opening of new mines such as Endeavour’s Agbaou mine. With abundant opportunities and a government eager to capitalize on the country’s mineral wealth, Ivory Coast is set to experience an increase in mineral exploration and production projects. The country’s original president placed an emphasis on developing the agriculture sector and other parts of the economy whereas the current president has highlighted the relevance of the mining industry to boost economic growth. Moreover, after overcoming recent political confrontations between the north and the south, the country is hoping that political stability will help attract foreign investment. The reelection of President Ouattara solidified this view and should mark a new period of opportunity for the country. With favorable geology and a cooperative Mines Ministry, Ivory Coast is shaping up to be the ideal mineral exploration and mining destination.

SEMS has offices in jurisdictions with less mining experience. What draws SEMS to those locations?

SMS: SEMS has operations in Mali, Liberia, Sierra Leone, and Mauritania. There are a variety of services we can provide in these jurisdictions to clients looking to enter the market. SEMS presents a business model characterized by a willingness to share risk with clients. In Ghana, there are many players positioned to offer similar services to ourselves but these tougher jurisdictions allow us to diversify our services by adapting to very different business environments. SEMS is willing to set up offices, invest physical and human capital on the ground, so our clients can work through our in-country resources and expertise. If at any point our client feels their projects have reached a stage where they want to establish their own operations in the country, we will assist them build up their own in-country expertise to develop a defined mineral resource. This allows them to invest, knowing that their new liabilities come with less associated risk.

Even in more stable jurisdictions such as Ghana and Ivory Coast, some junior exploration companies decide to work through SEMS in order to establish lean, in-country operations as they assess market opportunities. We are able to quickly set up operations for our clients and scale-up accordingly in all the countries where we are located.

Many investors are hesitant to make further investments in mining due to current market conditions. Where are the funds coming from for new projects?

SMS: Today we see a lot of interest from investors in China, Russia, and the Middle East. Investors from the Middle East, in particular, are looking to diversify their portfolio and look beyond oil and real estate. Moreover, as important gold trade centers, Dubai and China have increased their investments in African mining projects. The conventional means of raising money are not currently available. Junior companies are not raising money from Canada or Australia’s stock exchanges and are looking to private companies and wealthy investors for capital.

Ghana is a mature mining jurisdiction and its regulatory structure is complex. Do you see government efforts by Ghana to pass regulatory reforms that will put it in a position to attract more investment once the market adjusts?

SMS: Governmental agencies in Ghana need to be more efficient in order to remain competitive in the region. Applications for new mineral licenses and the renewal of existing licenses need to be reviewed faster. In comparison, some adjacent jurisdictions are reviewing and returning applications in a quicker and more structured manner, which builds confidence among companies and facilitates a smoother management of their operations. Ivory Coast, for example, has established a 60-day limit for the Mines Ministry to respond to permit applications.

In Ghana, some parts of the country remain relatively unexplored, even though they have been covered by mineral concessions for many years. By promoting a faster turnover of concessions and fast tracking the resolution of legal disputes, the Mines Ministry would help boost mineral exploration and the discovery of new mineral deposits in the country. There is frustration in Ghana in this regard and the government would benefit from adjustments to its regulatory program. There is still a lot of opportunity in Ghana and these improvements would help bring investors back to the country.

Where do you see SEMS in the next five years?

SMS: SEMS wants to increase its presence in Central Africa and expand its consultancy arm. SEMS is committed to its long-term strategy of servicing the West African sub-region. We know that the mining industry in Ghana will rebound since downturns in this industry are cyclical. Although it is difficult to predict when the industry will recover, SEMS will be present in the region to offer the services and quality our clients have come to trust. Ghana’s significant untapped mineral resources and political stability will continue to attract investors in coming years.

This interview was part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Amal Lahraichi at amal@gbreports.com.

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