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Burkina Faso-based miners have been on uncertain ground since violent protests there last fall led the country’s longtime president, Blaise Compaore, to finally step down.
That’s because when Transitional President Michel Kafando took over, the new government decided to review all previously signed mining contracts. And while the situation is starting to clear up a bit, with the country’s Ministry of Mines and Energyrecently announcing plans to submit a revised mining code to parliament for discussion, some companies have been tripped up by the move.
Most recently, Pan African Minerals, a subsidiary of Timis Mining, was told that it must halt production at Tambao, one of the largest manganese deposits in the world. The project, which is estimated to cost up to $1 billion, gained approval in May 2014, but now must wait until further notice to move forward.
While sources say the mining license for the project hasn’t been revoked, the company has been ordered to stop production until the review has been done.
A need for manganese mining
In the past, the Burkina Faso government has said the development of manganese mining is a priority for it as it is seeking to diversify its economy and move away from its reliance on gold and cotton.
It’s tough to say if the new government will continue along that path. However, Tambao’s potential — it is believed to contain over 100 million tonnes of manganese — may make it difficult to sideline it for too long.
Also worth noting is the fact that Pan African made agreements through Burkina Faso’s former president to help fund the development of a rail project that will link seven countries in West Africa. The company signed a memorandum of agreement with Bolloré Africa Logistics for the development of the $895-million rail project, agreeing to contribute $360 million for the construction of a 300-kilometer section that would serve the Tambao mine.
The railway is expected speed up transportation, reduce the prices of consumer goods for landlocked countries like Niger and Burkina Faso and grant access to Tambao — all reasons the new government may want to maintain a healthy relationship with Pan African.
It also bodes well that some companies whose contracts were put under review are already moving forward. Gold-focused Roxgold (TSXV:ROG) announced recently that it has received the final permitting approvals for its Yaramoko mine.
Mining in uncertain times
Given the current unpredictability of the mining situation in Burkina Faso, there will be an understandable reluctance to develop new projects there. Having said that, considering the possible volume of manganese in the Tambao deposit and the railway and infrastructure currently being built to give better access to the country, future endeavors could pop up — provided, of course, that the government comes to a conclusion with its mining code revisions.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.