PIC looks to invest in West African gold mining

Africa’s largest money manager sees “significant investment opportunities” in West African gold mining as the industry at the southern end of the continent declines.

Investor-friendly policies can help Ghana and other countries in the region drive the next “gold-mining boom,” said Lebohang Sekhokoane, a mining research analyst at the Public Investment Corporation (PIC).

Low-cost deposits in Mali, Burkina Faso, Guinea and Ivory Coast offer the long-term investment potential the PIC prefers, rather than the 5- to 10-year lifespan of projects in SA, she said.

“When you look at gold sector in West Africa, that’s where the sun is rising,” Sekhokoane said in an interview this week in Johannesburg.

“We expect to see more opportunities from West Africa.”

The PIC, which oversees about R2-trillion of assets for more than 1.2-million SA state workers, doesn’t yet have any unlisted mining investments in the continent outside its home nation. The money manager can invest as much as 5% of its assets in such unlisted African projects across all sectors.

“Opportunities do exist and focus is shifting to other parts of the continent,” Sekhokoane said. “We obviously like to fund longer-term projects.”

SA's gold industry, which has produced half the world’s bullion ever mined, has been shrinking amid the geological challenges of exploiting the world’s deepest mines. AngloGold Ashanti and Gold Fields have shifted production to lower-cost operations, including West Africa, with the former in the process of selling its last underground mine in SA.

While the government has fixed some regulatory issues, there is “little incentive” to invest in SA gold mines, according to the PIC, which owns shares in both the producers.

“The SA sector is mature,” Sekhokoane said.

“Compare that to new opportunities in West Africa where operations are shallower, making it easier to mine and there is an investor-friendly environment.”

Bloomberg