EIC DAILY INSIGHTS 14th November 2019

Daily Insights

November 14, 2019


EQUATORIAL GUINEA: Exxon Mobil’s Zafiro Oil Field license is expiring 2025. Equatorial Guinea is already shopping for interested parties and for this, Minister Gabriel Obiang is setting up a dedicated data room for potential takers. http://bit.ly/36UKUn4

MOZAMBIQUE: The sixth licensing round is scheduled for launch at the end of March 2020. Demarcated are 3 blocks in the Angoche basin, 6 blocks in the Zambezi basin and additional blocks in the Ruvuma and Palmeira Basin. Carlos Zacarias, chairman of INP Mozambique’s upstream regulator, outlined a nine months timeline – from nominations, the bid round launch, to the submission of proposals and their evaluation. The fifth licensing round, the EPCC signing process took three years with some bidders (Equinor and Delonex) eventually withdrawing their interest. Lets hope this time round things will be different. http://bit.ly/3759qC0

KENYA: Uganda is working to complete it’s oil jetty 19 months after Kenya completed work on the $19M Kisumu jetty according to Kenya’s Energy Principal Secretary, Joseph Njoroge. From Uganda, the oil will also be exported to other land-locked countries, including Rwanda, Burundi, South Sudan and Eastern Democratic Republic of Congo (DRC). http://bit.ly/2Xf4ZQt

KENYA: Tullow Trading Update. (1) The upstream and midstream Engineering, Procurement and Construction (EPC) tenders to be issued end of 2019. (2) Pipeline/Midstream Environmental and Social Impact Assessment (ESIA) submitted to the National Environment Management Authority (NEMA) approval expected first quarter of 2020. (3) Upstream ESIA are ongoing, to be shared with NEMA before the end of the year. (4) National Lands Commission has completed over 75% of midstream land surveys & valuations in 4 out of 6 affected counties. (5) Negotiations ongoing on the draft framework agreement for use of water from the Turkwel Dam. (6) Joint Venture Partners and the Government of Kenya set to commence discussions with prospective lenders for the project financing of the export pipeline from Turkana to Lamu Port. (7) FID for Project Oil Kenya targeted for second half of 2020 http://bit.ly/32L0FK7

MOZAMBIQUE: The National Hydrocarbon Company (ENH) is seeking to raise $1.3BN for it’s 15% participation stake in the $23BN Area 1 LNG Project. Total is the lead operator after acquiring the Anardarko 26.5% stake from Occidental Petroleum for $3.9BN. The Prime Minister Carlos Agostinho do Rosario promoted the project at the Africa Investment Forum and it’s likely they will get their wish. Russia’s oil giant Rosneft has an appetite for some of the LNG action and this has led the Russians to cooperate with Maputo to fight off jihadist insurgents in the northern Cabo Delgado province where the LNG project is based. This is part of a larger Russian strategy that includes military cooperation with Maputo and Pretoria. http://bit.ly/355exk6

SOUTH AFRICA: US International Development Finance Corporation commenced on disbursement of a $40M loan to Tetra4 for the development and commercialisation of a natural gas and helium field in SA. Since the Tetra4’s gas reserves are a non-depleting and renewing resource, the facility will both improve the reliability and the supply of energy. http://bit.ly/2O7VS00

MOZAMBIQUE/TANZANIA: Natural gas has the lowest share of Africa’s energy mix at 5% making it the lowest in the world according to the latest International Energy Agency Africa Energy Outlook 2019 report. The irony of it is that Africa holds 40% of the global gas discoveries in this decade most notably Egypt, Mozambique and Tanzania. This is why US Senator John Barasso, who is the Chairman of the Senate Committee on Environment and Public Works & Chairman of the Senate Republican Conference, is calling on the new World Bank President to commit to ending extreme poverty by helping countries use all of the world’s abundant energy resources and remove restrictions on supporting coal, oil and gas projects. In other words, the US being the top contributor to the World Bank, wants the bank to invest more in development of fossil fuels. So natural gas does indeed stand a chance to be the panacea for Africa’s energy demand. http://bit.ly/2QgchC6


MADAGASCAR: Australia’s Base Resources plans to build a $439M mine in Toliara Madagascar. Base acquired the project in 2018 and is now looking to make a final investment decision by 2020 and commence operations in 2022. The project which has a mine life of 33 years will also entail building of infrastructure such as a 55km road, a bridge and a specialised port facility all amounting to $150M. Fundraising for the project is in earnest according to the CEO Tim Carstens. http://bit.ly/36YfTyC.

KENYA: Base Titanium which runs the Base Resources Kwale project has now moved its operations to the Southern dune after having depleted the central dune in June 2019. In addition, the company has in this year made 5 new applications for prospecting licenses. (1) Kwale – PL/2019/0234 on 21/01/2019 covering 31sqKM (2) Kwale – PL/2019/0260 on 11/09/2019 covering 211sqKM (3) Tana/Lamu – PL/2019/0263 on 19/09/2019 covering 317sqKM (4) Lamu/Tana – PL/2019/0265 on 24/09/2019 covering 291sqKM (5) Lamu – PL/2019/0266 on 03/10/2019 covering 226sqKM http://bit.ly/2rLXpBt

DRC: Cobalt prices are set to rise in 2020 as growth in production output slows to 3.5% from the 2019 average of 6.5%. Glencore’s August announcement to begin shutdown of it’s Mutanda mine for two years citing low prices took out 25,000 tonnes from the market. Since the shutdown, Cobalt prices have risen from $26,000 in August to the present $36,000. Trafigura in the meantime is betting on the Chemaf owned Mutoshi mine to inject 16,000 tonnes by end of 2020 in exchange for marketing rights. But watch out for the Chinese. Although DRC accounts for 76% of global cobalt supply, by the end of 2019, the Chinese will have control of 26% of the supply through their various investments in various countries. https://reut.rs/2NL6LpE

DRC: Ivanhoe Mines is a Canadian company developing copper mines in the DRC with the Chinese and successfully so. The company has partnered with CITIC Metal Africa Investments Limited’s (CITIC Metal Africa) which has invested $1BN in the company within one year. Ivanhoe has also partnered with Zijin Mining Group Co., Ltd. (Zijin Mining) in a joint venture on the $1.3 BN Kamoa-Kakula project and has seen Zijin Mining’s Chairman Chen Jinghe elected to Ivanhoe’s Board on June 28, 2019. For those who say you can’t partner with Chinese companies, here is a clear example for you. http://bit.ly/353drW0

MALI/BURKINA FASO/NIGER: Artisanal Gold Mining in the Sahel is providing a new source of funding for jihadists and other armed groups. Artisanal production currently accounts for almost half of overall regional output, reaching between 20-50 tonnes/yr in Mali, between 10-30 in Burkina Faso and 10-15 tonnes in Niger, for an overall annual value of between $1.9 and $4.5 billion. The International Crisis Group (ICG) has called on saharan states to take steps to formalise artisanal gold mining through increased regulation of trade in the metal. ICG estimates the number of artisanal miners at 1m in Burkina Faso, 700,000 in Mali and 300,000 in Niger. Further ICJ urges the main importers of gold from the region — the United Arab Emirates (specifically Dubai), Switzerland and China — to “strengthen their legal frameworks for gold imports.” http://bit.ly/2rKPp3B

GHANA: Leonardo Di Caprio has stood up against Sino Hydro’s Bauxite Project. The project designed as a barter between Ghana and China in exchange for $2BN would require mining in the Atewa Forest Reserve which is a major hydrological source. The reserve is estimated to hold 165 million tonnes of bauxite. With this much star power, will the project fly? http://bit.ly/2XbdmwG

GHANA: Societe Miniere de Boke (SMB) wins tender to mine Iron ore on two blocks covering the Simandou mountains for an investment of $10BN. The Simandou deposits have been estimated at 2.4 billion tonnes of high-grade ore. The Asian consortium is a joint venture that includes a Guinean transport and logistical company, United Mining Supply; a Singaporean shipping company, Winning Shipping; Chinese aluminium producer Shandong Weiqiao; and China’s Yantai Port. The bid was successful because it promised to build a 650-kilometre (400-mile) railway line and a deep-water port at Matakong on the Atlantic coast thereby going through Guinea instead of Liberia which the losing Australian bidder Fortescue Metals Group had proposed. http://bit.ly/2KnXK3w

RWANDA: In 2018, Rwanda declared gold exports of 2,163 kg, while the United Arab Emirates officially imported 12,539 kg from Rwanda during the first nine months of 2018. This according to the UN doesn’t add up. So where is the gold coming from? A UN Panel of Experts report reckons its coming from DRC. You can read the entire report here: http://bit.ly/2CFz2Ye

ZAMBIA: Women participating in Artisanal Mining require protective gear. “One feature of the ASM sector in Zambia which is worth paying attention to is the growing presence of women assuming important roles in the sector. It is imperative that we pause and address the myriad of challenges that the ASM sector faces in general and more specifically the challenges that have the greatest impact on women and their health” CTPD Head of Research, Brian Mwiinga http://bit.ly/2Xk9I3x

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