Profiles of Some Canadian Mining Companies Operating in Africa
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PROFILES OF SOME CANADIAN MINING COMPANIES OPERATING IN AFRICA Tenke Mining Corporation Melkior Resources Inc. Barrick Gold Corporation First Quantum Minerals Ltd. IAMGold Corp Tiomin Ressources Inc. Ashanti Goldfields Company Ltd. Banro Corp. Why are the activities of Canadian mining companies in Africa of interest? The mining sector is the largest source of foreign private investment on the African continent, and Canadian investors are at the centre of this economic boom. “Between 1992 and 1999, the number of mineral properties held in Africa by companies of all sizes listed on Canadian stock exchanges grew at an average annual compound rate of over 40%. As a result, at the end of 1999, these companies held interests in almost 630 mineral properties in 39 countries on that continent.”1 A number of factors influenced the emergence of Canadian mining companies in Africa: The mining sector has the advantage of offering easily identifiable and measurable business opportunities; The costs of producing a high-quality product are lower in Africa than in Canada; The declining profitability of Canadian sites whose reserves have substantially decreased means that Canadian companies must explore new sources of supply in order to survive; The liberalization of the fiscal and legal environments in Canada, along with the promotional programs of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), helped convince Canadian businesses to invest in Africa; Furthermore, Canada has adopted very generous taxation policies to attract investment to the mineral sector. As Keith J. Brewer and André Lemieux explain, “Canadian legislation with respect to investment in Canada or abroad makes the tax burden on profits generated from minerals at least comparable to, if not less burdensome than, that in other mineral producing jurisdictions.”2 It is well-known that, since the 1980s, liberalization of trade and investment regulations has become a condition for the severely indebted nations of Africa to access financing from multilateral institutions. By the end of 1995, over 35 African countries had already amended their mining regulations to make them more attractive to foreign investment.3 1 André Lemieux, “Canada’s Global Mining Presence,” in Canadian Minerals Yearbook, 1999, p. 7.13, Natural Resources Canada, Ottawa, 2001. 2 Keith J. Brewer and André Lemieux, Canada’s Global Position in Mining: Canadian Financing of the International Mining Industry, presented at the Metals Finance 4th International Conference, Finance for the Global Metals Industry, Toronto, May 7-9, 1997. 3 “Mining Boom: Harnessing the Gain for Africa,” in African Agenda, no 15, 1997, journal published by Third World Network - Africa Secretariat. Groupe de recherche sur les activités minières en Afrique (GRAMA) - Spring 2001 1 Le Groupe de recherche sur les activités minières en Afrique (GRAMA), formed three years ago, is part of the Centre Études Internationales et Mondialisation (CEIM) of the Faculty of Political Science and Law at the University of Quebec at Montreal. GRAMA also benefits from the support of Entraide missionnaire. For us, examining mining activity in Africa, a very dynamic and important economic sector for both African nations and the West, provides valuable material for analyzing the impact of deregulation and privatization policies on social and economic rights in Africa. Why compile profiles of mining companies? Canadian mining companies active in Africa, as vectors of the forms taken by globalization and, as such, sharing responsibility for some of its impacts, are at the centre of our research. To be informed about the mining industry and to better understand the mechanisms of power that connect mining companies and government institutions, we have set about to produce brief profiles of Canadian mining companies operating in Africa. Our work currently focuses on Canadian companies active in five countries: Ghana, the Democratic Republic of Congo, Mali, Kenya and Tanzania. We have selected eight companies, all of which are listed on stock exchanges in Canada and operate in at least two of the five countries being studied. Although their sizes and sales figures vary substantially, they are all significant players whose activities have considerable impact, not only on the economies of the countries in which they operate, but on the life of the communities they affect. The accuracy of the facts contained in these company “snapshots” was confirmed at the time they were compiled (data as of spring 2001). The work we present to you is evolving and the mining sector is changing very rapidly. To reflect the changes influencing it, we plan to periodically update and supplement the reports you are about to peruse. We also hope to be able to offer further analysis and to develop more reports on other mining companies. Please note: The information presented is primarily of a financial and economic nature. Some profiles do describe the social impact of a company’s mining activities; however, not all the profiles include this information. This apparent imbalance reflects a disparity in the data to which we have had access, rather than an evaluation of any mining activity consequences for which we did not have information. We would like to thank MiningWatch Canada, whose financial support made it possible to translate these profiles into English, and who helped to distribute them. Should you want to reach GRAMA to share your comments or to raise questions about the content of this document, please contact our co-ordinator, Mr. Yves Rochon, at the following e-mail address: [email protected] Groupe de recherche sur les activités minières en Afrique (GRAMA) - Spring 2001 2 Some useful Internet sites for finding out more about the activities of mining companies The Web site of Natural Resources Canada is full of documents on the Canadian mining industry and its activities in Canada and the world. You can find trend analyses and geological data, but also economic and environmental information. http://www.nrcan-rncan.gc.ca/homepage/toc_e MiningWatch is a Canadian non-governmental organization created in 1999 to provide a coordinated public interest response to the threats to public health, water and air quality, fish and wildlife habitat and community interests posed by irresponsible mining policies and practices in Canada and around the world. www.miningwatch.ca. Of particular interest is the document: “Towards a Spiral of Violence? The Dangers of Privatization of Risk Management of Investments in Canada,” a report presented to Minister Lloyd Axworthy, March 2000. The International Development Research Institute (IDRC), based in Ottawa, has a program devoted to mining issues: the Mining Policy Research Initiative (MPRI). http://www.idrc.ca SEDAR – System for Electronic Document Analysis and Retrieval: www.sedar.com. This site, developed and managed by the Canadian Depository for Securities, contains information on all Canadian public corporations. The site of the Northern Miner newspaper, the voice of the mining industry: http://www.northernminer.com The Mining Association of Canada’s mission is “to promote, through the collective action of members, the growth and development of Canada’s mining and mineral-processing industry, for the benefit of all Canadians.” http://www.mining.ca The Prospectors and Developers Association of Canada describes itself as representing the interests of the Canadian mining industry. It has 5,000 individual and 200 corporate members. http://www.pdac.ca Project Underground, based in California, is a group that supports communities resisting mining and oil exploitation throughout the world. It puts particular emphasis on the situation of Aboriginal peoples. http://www.moles.org The Mineral Policy Centre, Washington, D.C., U.S.A. focuses its attention on mining issues in the United States, and American mining interests in the world. http://www.mineralpolicy.org/ The Mineral Policy Institute, an Australian group, specializes in information on mining activities in the Asia-Pacific region. http://www.mpi.org.au/ Groupe de recherche sur les activités minières en Afrique (GRAMA) - Spring 2001 3 TENKE MINING CORPORATION Tenke Mining Corp., formerly Consolidated Eurocan Ventures Ltd. (the name was changed on January 27, 1997), is a Canadian mining company based in Vancouver. The Chairman, President and CEO is Adolf H. Lundin, who is also the majority shareholder in Tenke Mining Corp. with 27.6% of the shares. Tenke Mining Corp. owns three subsidiaries: Tenke Holdings Ltd., Tenke Fungurume Mining SARL and Lunding Holdings Ltd – Eurocan (Bermuda). The company’s chief expenditures in the 1997 fiscal year were US$112,500,000 for the acquisition of the Tenke Fungurume mining concession, US$50,000,000 for the licence and US$2,145,000 for the purchase of assets. Its balance sheet indicates that, as of March 31, 2000, the company had assets valued at US$204,044,028, liabilities of US$2,937,289 and shareholder’s equity of US$200,643,162. Tenke Mining Corp.’s financing comes primarily from shareholder’s equity and loans from international banks. Tenke Mining Corp. has been active in Argentina, Chile and, until recently, in the Democratic Republic of Congo (DRC). Tenke Mining Corp. is involved in the exploration, acquisition and development of mining concessions (base metals and precious metals). Tenke Fungurume Mining SARL is a subsidiary of Tenke Mining Corp., created from the partnership between Gecamines (the DRC state mining company) and Tenke Mining Corp. Tenke Fungurume is 55% owned by Tenke Mining Corp. and 45% owned by Gecamines. Tenke Fungurume’s mining concessions are located within the African copper belt. The chief deposits controlled by Tenke Fungurume are in two concessions totalling 1,437 square kilometres in Katanga Province, about 175 kilometres northwest of Lubumbashi. In December 1998, Tenke Mining Corp. concluded an agreement with BHP Copper (“BHP”) whereby BHP may directly or indirectly acquire a 45% ownership interest in the Tenke Fungurume concession. The mining resources of the concessions owned are high-grade and appear to exceed 547 million tons, including 19.1 million tonnes of copper and 1.47 million tonnes of cobalt.