Courtesy of The Africa Report, a look at how Gabon is banking on its untapped mines for the post-oil energy era:
As Gabon seeks to transition away from an oil-dependent economy, mining – mainly for manganese, iron and gold – has emerged as a key pillar in its strategic roadmap.
Despite a resurgence in oil prices in the aftermath of the Covid-19 pandemic, compounded by Russia’s invasion of Ukraine, Gabon’s oil industry has been experiencing a steady decline since 2014, with an annual reduction in production of around 4%.
Between 2014 and 2019, Gabon’s non-oil gross domestic product (GDP) saw a 3.4% increase, even as its overall GDP grew at a more modest rate of 1%. This shift has prompted the attention of government authorities and investors.
Untapped energy
“Considering our transition towards a greener future, mining takes precedence in our global strategy,” says Wesbert Moussounda Ngoumba, managing director of Société équatoriale des mines (SEM). He further expects that, with the rise in demand for electric cars, “we will need it [mining] more than oil”.
If his predictions prove accurate, this could significantly benefit Gabon, a country whose mining potential remains largely untapped.
Despite mining accounting for about 5% of GDP, 7% of employment and 9% of Gabon’s exports in 2022, according to the African Development Bank (AfDB), there are concerns.
Léod-Paul Batolo, managing director of Compagnie minière de l’Ogooué (Comilog, an Eramet subsidiary), warned, “I am not certain that mining will replace oil as quickly as hydrocarbons have, considering the latter requires less investment.”
There is a sense of urgency for larger-scale exploration, especially given that the few exploration licences issued have yet to yield industrial-scale projects. Budgetary allocations for mining exploration have nosedived from $23.9m in 2014 to a mere $3.7m in 2020. This decline, according to economists involved in the Transformation Acceleration Plan (PAT) 2021-2023, is primarily due to the lack of private investment, outdated geological maps, and significant infrastructure needs that precede operational commencement.
Mining royalties
The mining code, which mandates the payment of royalties between 5% and 10%, further compounds this issue, especially when juxtaposed against competing countries such as the Congolese Republic and South Africa where royalties range between 2% to 4%.
“We need Chinese investors, our main buyers, to evade the middle-man.”
However, Gabon’s unexploited subsoil has lured in some new players, including French group Bouygues. Its Heling Minerals Gabon branch has initiated a mining exploration campaign in the Rio Muni region in the north. Gabon, however, is seeking more investments, particularly from China.
“We need Chinese investors, who are our main buyers, to directly invest,” said Ngoumba. This agenda was likely a driving force behind Ali Bongo Ondimba’s visit to China in April.
To enhance its allure for investors, the government is revising the mining code. The aim, according to newly-appointed minister of mines, Chen Sylvestre Mezui M’Obiang, is to “optimise state revenues through a proportional mining royalty and by reducing the tax burden on operators”.
As the nation shifts focus, manganese, iron and gold mining have been earmarked.
World-class manganese reserves
Ranked as the world’s third-largest exporter of manganese following South Africa and Australia, Gabon’s mines are renowned for their competitiveness, thanks to high-quality ore, impressive productivity and cost efficiency. This performance can be attributed to the high-grade ore, harvested at depths of merely 30cm or 40cm through open-cast mining, which necessitates fewer investment resources for exploration and extraction.
Manganese – the fourth most used metal globally and a hot commodity in the Chinese market – has seen its production on an upward trajectory.
In Gabon, the production record was broken with the output of 7.3 million tonnes of ores and sinter in 2019. Forecasts by the Ministry of Economy and Recovery indicate that national manganese production will rise by 12.8% in 2021 to 9.5 million tonnes, and further surge by 7.4% in 2023, achieving the symbolic threshold of 10 million tonnes.
Driving this momentum is the development of Comilog’s infrastructure, responsible for extracting 90% of Gabon’s subsoil manganese. Their expansion project of the Moanda mine, housing 25% of global manganese reserves, has been instrumental. According to the company, the sector contributes more than $380m annually to Gabon’s economy through payroll, local purchases, taxes, royalties and dividends.
Adhering to Gabon’s mining law, the Eramet subsidiary has been processing manganese locally since 2015. Article 148 of the law requires operators in the exploitation phase to process part or all of their production domestically, fostering job creation and development within the country.
However, the requirement is often hampered by inadequate energy resources required for processing operations. The construction of the Poubara-II hydroelectric dam in Moanda enabled Comilog to process a portion of its manganese production at the Moanda Metallurgical Complex (CMM), which was inaugurated in June 2015 at a cost of nearly 150bn CFA francs (around $240m).
Notable developments in 2022 include an increase in Comilog’s production by 21.2% at its Moanda site and the Okouma plateau, and the positive production performance of the Chinese company, Compagnie industrielle et commerciale des mines de Huazhou (CICMHZ), at Ndjolé.
Iron deposits
On the iron front, Gabon boasts an impressive potential estimated at 1.7 billion tonnes, spread across nine sites. The government estimates that if exploited, these reserves could generate up to 1.2bn CFA francs (around $1.9m) annually.
While many operations remain dormant, there is progress with the Belinga iron ore mine in Ogooué-Ivindo. Initially suspended, the mine, once considered the “project of the century” by former president Omar Bongo Ondimba, has been relaunched as part of the 2021-2023 TAP. In August 2022, a new mining agreement was signed with Australian Fortescue Metals Group and the Fonds pour la transformation et l’industrialisation de l’Afrique (Atif), partners in the Ivindo Iron SA joint-venture.
Gabon’s mining law requires operators in the exploitation phase to process their production locally.
Mining operations are set to commence in the latter half of 2023, with the Australian company planning to invest $90m over the next three years.
“We are initiating a world-class exploration business,” declared then-minister of mines, Elvis Ossindji, at the agreement’s signing in 2022.
Discovered in 1995, the Belinga mega-iron deposit stretches over 4,500km² and is one of the largest mining projects under development on the continent. Reserves are estimated at 1 billion tn at a grade of around 65%. Fortescue Metals Group expects to produce up to 2 million tn a year.
Conquering refined gold
After a temporary halt, the gold industry in Gabon is bouncing back, with gold export revenues soaring from 1.4bn CFA francs in 2017 to 8.4bn CFA francs in 2021, as stated by the government. However, the potential of the gold industry remains underutilised, primarily due to imprecision regarding the deposits. The industry, on average, requires extensive exploration work on around 5,000 deposits to identify a viable mine.
For now, the government is focusing on the Étéké site, near Mouila in the south, owned by Managem, a subsidiary of Moroccan holding company Al Mada. This company is the primary player in Gabon’s gold industry. With the site already mapped, it is prepared for mining operations.
“This primary gold mining project is expected to yield over 1.4 tonnes of gold annually from 2024, providing a much-needed boost to this burgeoning sector,” confirms M’Obiang.
In 2017, to combat illegal mining, the government launched Operation Bayende, which prohibited the artisanal mining of gold. This year, however, a bill was adopted aimed at reviving gold panning in a more regulated manner. The bill mandates the refining of gold intended for export, ensuring Gabon reaps the added value of its gold products – a strategy similarly implemented in the timber industry when an export ban on logs was enacted in 2010.
Anglo-Emirati firm Alpha Centauri Mining (ACM) is financing the construction of the nation’s first gold refinery in the Nkok Special Economic Zone. Expected to be operational imminently, the refinery will have the capacity to process four tonnes of gold per year. As the first refinery in the sub-region, it offers neighbouring countries the option to purify their gold production there. ACM, which has a mine at Mboumi near Ndjolé, has been developing a site at Ntsenkele since 2021 and obtained new mining and exploration licences at Minkébé in 2022.
Other resources such as lead-zinc at Kroussou and copper at Tchibanga, projects led respectively by Australian companies Appolo Minerals and Harmada Metals, also hold promising prospects, “offering a brighter outlook for the sector”, says the minister of mines. This reinforces the national sentiment that the sector is integral to the future of Gabon’s economy.