What lies beneath:

Risks and rewards in West African Mining

Control Risks’ Perspective

Optimism for 2011 and beyond

“Big Banks Cash in on Commodities”June 2011 (WSJ.COM)

““Buoyant mining sector Buoyant mining sector lifts European indices”lifts European indices”(THE IRISH TIMES) January 2011

“Economic optimism spurs copper”January 2011 (Copper Investing News)

“Turmoil fails to dent growth expectations”

(Financial Times) March 2011

“2010: a year of strength for commodities”January 2011 (CBC.com)

West Africa: diverse risk landscape for mining

NIGER, MALI, MAURITANIAUpsurge in terrorist activity

NIGER, MALI, MAURITANIAUpsurge in terrorist activity

GUINEA

Ongoing uncertainty surrounding contracts

GUINEA

Ongoing uncertainty surrounding contracts

CÔTE D’IVOIRE

Post-election political, security crisis

CÔTE D’IVOIRE

Post-election political, security crisis

GHANA

Artisanal mining problems persist in gold-mining areas

GHANA

Artisanal mining problems persist in gold-mining areas

GABON

Personalised politics, institutional weakness

GABON

Personalised politics, institutional weakness

LIBERIA

Upcoming elections amid concerns over impact of

Ivorian crisis

LIBERIA

Upcoming elections amid concerns over impact of

Ivorian crisis

NIGERIA

Shifting security dynamics

NIGERIA

Shifting security dynamics

CAMEROON

Corruption, governance challenges

CAMEROON

Corruption, governance challenges

Political risk

• National stability remains unpredictable

• Weak institutions, erratic policy making, political interference

• Security-sector reform is often slow or non-existent

• Socio-economic conditions are challenging

Risk 2: Reform, red tape and regulation

• Sub-Saharan Africa is the most complicated region in the world for doing business; and West Africa is no exception. This pattern will not change in 2011.

• The mining sector will remain a favoured target for ‘special treatment’ in regulatory and fiscal contexts

• Further political interference into the mining business cycle, populist social development and tax policy moves can be anticipated

Source: Doing Business database

Security risks

Headline risks: Low Likelihood, High Impact

Civil war in Mano River Union

Coup d'états

Terrorism: QIM in the Sahel

Election-unrest

At project level it is often: High Likelihood, Low(er) Impact

Product and equipment theft

Violent crime

Workforce and labour unrest

Local community discontent

Supply chain disruptions due to unrest, road blockages

Sabotage

Operational risks: Infrastructure

• Roads • Telecommunications• Power and water• Health infrastructure• Pressure on key infrastructure (shared railways, ports etc) • Pressure on operators to build infrastructure

These problems will only increase as mining expands into ever more remote regions

Local environment: contractors, staff, communities

• Contractors: influence of own staff and sub-contractor behaviour on theft and community relations

• Workforce: if not managed carefully, labour disputes are most regular cause for site-specific unrest and security incidents

• Communities: Competition for jobs and other benefits from mining projects need to be managed carefully as disputes can have severe impact on operations and social license to operate.

What to do

Step 1

Do your homework

Step 2

Plan, prepare, practice

Step 3

Engagement

Step 4

Monitor and adapt

• Anticipate problems

• Threat assessment

• Vulnerability study

• Due diligence into counter-parties

• Map stakeholders

• Research legal and bureaucratic framework

• Anticipate problems

• Threat assessment

• Vulnerability study

• Due diligence into counter-parties

• Map stakeholders

• Research legal and bureaucratic framework

• Political scenarios

• Community strategy

• Factor possible delays into project timeline assumptions

• Security risk management strategy / policies

• Integrity programme

• Training and awareness

• Contingency planning (crisis management)

• Political scenarios

• Community strategy

• Factor possible delays into project timeline assumptions

• Security risk management strategy / policies

• Integrity programme

• Training and awareness

• Contingency planning (crisis management)

• Zero tolerance on corruption

• Community development

• ‘Soft security’

• Focused infrastructure development

• Close supervision of staff and sub-contractors

• Building relationships, not fences and walls

• ‘Long-term view’

• Zero tolerance on corruption

• Community development

• ‘Soft security’

• Focused infrastructure development

• Close supervision of staff and sub-contractors

• Building relationships, not fences and walls

• ‘Long-term view’

Control Risks and the Mining Industry

• More than 35 years of experience in consulting clients in the mining sector. In the last five years we have undertaken more than 500 consulting engagements for clients in the industry.

• Recent mining consultancy has included locations as diverse as Gabon, Cote d’Ivoire, Ghana, Guinea, Liberia, Mali, Burkina Faso, Sierra Leone, Eritrea, Niger, Burundi, Madagascar, Mongolia, Pakistan, Samoa and East Timor.

• Our client list includes the majority of the largest mining companies by market capitalisation from across the world

• Consulting engagements have ranged across metallurgical

groups: gold, silver, diamonds and gemstones, copper and cobalt, uranium, iron ore, PGM, potash, phosphate, tantalum, coal, rare earth…