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Canada a quiet powerhouse in Africa's mining sector Add to ...

Laurent Coulibaly's degree in geology has led him from the Burkina Faso city of Bobo-Dioulasso to a small office in west-end Ottawa where he works on developing gold mines in his homeland.

The 43-year-old father of three has worked for the past six years for Ottawa-based Orezone Gold Corp., part of an army of Canadian companies in the forefront of Africa's push to develop its vast mineral resources.

Back home in Burkina Faso, siblings, cousins and friends are now working in the mining sector; he can count at least 20 cousins in the industry, which has provided an economic boost for a country that ranks near the bottom of global rankings for per capita income, literacy and human development.



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Resource development is key to Burkina Faso's - and indeed, Africa's - future, he said.

"Burkino Faso is a landlocked country with no open space to the ocean. Communication is very difficult and there is very little revenue from the population," he said. "So mining is very important to bring wealth into the country."

Sub-Saharan Africa is witnessing an impressive surge in foreign investment that is being driven by a 21st-century resource rush. Countries such as the United States, China, Europe, India, Russia and Canada are vying to exploit the continent's barely tapped, but vast, deposits of oil and gas, metals and precious minerals, coal and uranium.

Indeed, Canadian companies - including firms listed on the Toronto Stock Exchange and nominally headquartered here - represent the largest source of foreign investment in Africa's mining sector. After a recessionary lull, the commodity boom has reignited, driven by demand from China and other emerging markets. It is that same hunger for resources that has buoyed the resource-rich economies of western Canada.

"Africa has been a significant beneficiary of the rapid growth of Asian, mainly Chinese, demand for Africa's commodity exports," Admassu Tadesse, executive vice-president of the Development Bank of Southern Africa, told a Canada-Africa business conference held in Toronto last month.

The demand for commodities will remain an important driver of African growth, even as countries look to consolidate their gains and stimulate the broader economy through investments in infrastructure, health and education.

But foreign investment is not an unmitigated blessing. Mr. Tadesse acknowledged that African countries have experienced the "resource curse," in which the influx of foreign money contributes to corruption and environmental degradation, while providing little or no benefit to the local population.

Non-governmental organizations are pushing resource companies to provide greater transparency in the revenues they pay to governments in order to reduce corruption, and to devote significant resources to development projects aimed at ensuring the local population benefits from investment.

And they want the Canadian government to take the lead, both domestically and by pushing the Group of 20 countries at the coming Toronto meeting to adopt the Extractive Industries Transparency Initiative, which would force companies to spell out their local payments.

So far, Ottawa has resisted those calls, said Ousmane Déme, an Ottawa-based spokesman for the international Publish What You Pay coalition.

"Because Canada is now the biggest player in Africa in the mining sector, we would like to see the Canadian government adopt a more sustainable approach on corporate social responsibility and accountability," he said.

"Unfortunately, we are not seeing a positive sign in that direction."



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Canadian officials, however, have signalled a willingness to put the transparency issue on the agenda at the Group of Eight meeting in Huntsville, Ont., with hopes that Canada, the United States and the United Kingdom will commit to adopting regulations for companies listed on their stock exchanges.



Because Canada is now the biggest player in Africa in the mining sector, we would like to see the Canadian government adopt a more sustainable approach on corporate social responsibility and accountability. Ousmane Déme, Ottawa-based spokesman for the international Publish What You Pay coalition


The Canadian mining industry says it supports broad-based, global commitments to transparency if they are adopted in a way that creates a fair playing field against international competitors.

Mr. Tadesse said many African governments are committed to programs to combat corruption, and have learned from past mistakes to use the resource revenue more wisely.

"As the lessons are applied, Africa's natural resources will enhance the business environment and help foot the bill of the massive infrastructure program under way," he said. "There is much promise in this regard as new oil and mineral discoveries are creating new opportunities in countries that previously had limited endowments.

The largest recipients of that influx of capital are mineral-rich and rapidly growing South Africa and the nations of Nigeria and Angola, whose prodigious offshore oil reserves have propelled them into membership in the Organization of Oil Exporting Countries.

But resource wealth is spread across the continent, and many of the countries have only begun to exploit it. Africa ranks first or second among continents in reserves of bauxite, cobalt, diamonds, platinum and zirconium, the U.S. Geological Survey notes in a recent report.

Much has been written of late about the Chinese invasion of the continent: how China's state-owned companies - backed by Beijing's resource diplomacy - have been investing heavily in the resources needed to feed its growing industrial demand and the infrastructure needed to get the commodities to market.

But in mining, Canada is the quiet powerhouse.

At the end of 2008, Canadian companies had mining assets of $21-billion (U.S.) in 33 countries, although 92 per cent of that was concentrated in just eight countries: Democratic Republic of Congo; Madagascar; Zambia; Tanzania; South Africa; Ghana, Burkina Faso and Mauritania.

The strong Canadian presence is the result of the country's traditional mining prowess and the financial clout of the Toronto Stock Exchange, which is the world's largest capital market for the mining sector. The exchange has 169 listed companies that have projects in Africa, from giants like Barrick Gold Corp. to exploration companies like Orezone. Last year alone, just its top 10 African-focused financings raised $1.8-billion.



Top 10 Africa-focused financings on the Toronto Stock Exchange in 2009



Company

Project

Paladin Energy Ltd.

$400-million raised for uranium in Namibia

First Quantum Minerals Ltd.

$345-million raised for copper and diamond in DRC, Mauritania, Zambia

IAMGOLD Corp.

$345-million raised for gold in Burkina Faso

Katanga Mining Ltd.

$282-million raised for copper in DRC

Anvil Mining Ltd.

$200-million for copper in DRC

Equinox Minerals Ltd.

$184-million for copper in Zambia

Red Back Mining Inc.

$165-million for gold in Ghana, Mauritania

Banro Corporation

$117-million for gold in DRC

Centamin Egypt Ltd.

$98-million for gold in Egypt

Mantra Resources Limited

$52-million for uranium in Tanzania, Mozambique

But Ottawa's diplomacy has failed to keep up with the inroads made by the private sector. There is no strategic push to advance and broaden Canada's investment and trade with the growing continent. Outside of the mining and engineering sectors, there is only spotty Canadian business presence, said Lucien Bradet, president of the Canadian Council on Africa.

Canadian colleges, however, have been working with the mining sector and local governments to provide training programs so local residents can find skilled work in the mines. Funded by the Canadian International Development Agency, Sudbury's Cambrian College worked with a college in Mwanza, Tanzania, to train electricians and heavy-duty mechanics for mine work for Barrick, among others. It's now working with several other colleges in the country to expand the program.



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In a program funded by African governments themselves, the Association of Canadian Community Colleges has been asked to establish training programs in six West African nations, including Burkina Faso, to provide technicians and skilled workers for the mining industries, as well as other growing sectors of those economy.

"There is a tremendous shortage of skilled workers," said Paul Bennett, the association's vice-president, international partnerships. As a result, many companies import expatriateworkers - largely from South Africa and Australia - a trend that is both expensive and minimizes the benefits to local populations.

 

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