Canada and Africa’s Natural Resources:

Key Features 2013

by

Aniket Bhushan

Senior Researcher, The North-South Institute

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This report provides an overview and analysis of key data available through the

Canadian International Development Platform (CIDP). The CIDP is an interactive data

and analysis platform on Canada’s engagement with the developing world. The web-

based platform is available through the main North-South Institute website or at

www.cidpnsi.ca.

Contents

Figures ............................................................................................................................ 2

Oil and Gas Reserves and Trade ................................................................................. 3

Canadian Mining Assets Abroad .................................................................................. 6

Canadian Capital Markets as Source of Finance for Africa’s Growing Natural

Resource Sector .......................................................................................................... 9

Natural Resources and Governance in Africa ............................................................ 12

References .................................................................................................................... 16

Figures

Figure 1. The World's Resources: Oil Reserves, Africa Relative to Other Regions ......... 3

Figure 2. Top 20 Countries in Canada’s Oil and Gas Trade ............................................ 4

Figure 3. Top 20 Countries in Canada’s Mining Trade .................................................... 5

Figure 4. Canadian Mining Assets Abroad ...................................................................... 6

Figure 5. Canadian Owned Producing Mining Properties in Africa .................................. 7

Figure 6. Top 40 Mining, Oil and Gas Companies Listed on Canadian Exchanges with

Operations in Africa ......................................................................................................... 9

Figure 7. Extractive Industries Transparency Initiative and Africa ................................. 12

Figure 8. Mo Ibrahim Index of African Governance ....................................................... 14

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This report focuses on the theme of natural resources and governance with an

emphasis on Africa. In addition we reflect on Canada’s and Canadian companies’ role in

Africa’s natural resource sector. The primary focus is on mining and the oil and gas

sector. This report also covers governance issues, both at the general level as well as

specific to the natural resources sector.

Oil and Gas Reserves and Trade

Figure 1. The World's Resources: Oil Reserves, Africa Relative to Other Regions

Source: BP (2012)

Africa is rich in natural resources. Indeed revenue raised from the natural resources

sector has been the most important driver of revenue mobilization for African countries

in recent years (Bhushan 2013). Africa accounts for 8 per cent of the world’s proven oil

reserves.1 The continent is also home to new oil producers such as Uganda and Ghana.

Libya and Nigeria account for the majority of Africa’s proven oil reserves.

1 By comparison, Canada accounts for nearly 11 per cent of the world’s proven oil reserves.

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Figure 2. Top 20 Countries in Canada's Oil and Gas Trade

Source: Industry Canada (2013), data are for 2012 (the United States is excluded from

map)

As mentioned earlier oil and gas extraction is one of the largest industries in Canada’s

bilateral trade, accounting for around 20 per cent of total trade. The United States

dominates Canada’s bilateral trade in this sector. However, six African countries are

among the top 20 countries in Canada’s oil and gas trade: Algeria, Nigeria, Angola,

Equatorial Guinea, Cote d’Ivoire, and Chad. Algeria is the second largest oil and gas

trade partner for Canada and accounts for significant share of Canadian imports of oil

and gas.

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Figure 3. Top 20 Countries in Canada's Mining Trade

Source: Industry Canada (2013), data are for 2012 (the United States and United

Kingdom are excluded from map)

Mining is the single largest industry in Canada’s bilateral trade, accounting for around

23 per cent of Canada’s imports. With the exception of the United States and United

Kingdom, which are Canada’s largest trade partners in the mining sector, countries in

Latin America and Asia dominate Canada’s mining trade, while the only African country

among the list of top 20 partners in terms of import value in 2012 was Egypt.

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Canadian Mining Assets Abroad Figure 4. Canadian Mining Assets Abroad

Source: NRCan (2013)

The value of bilateral trade in the mining sector is one of several ways of looking at

Canada’s engagement in the sector globally, and specifically in Africa. The data above

show Canadian mining assets abroad.2 The calculation of mining assets abroad is on

the basis of asset valuation (as opposed to trade). Mining asset valuation provides a

good sense of Canada’s mining presence internationally, even though there may be

limitations in terms of comparison with other data. Specifically mining asset valuation

2 Note on data definitions provided by Natural Resources Canada: Mining Assets are those associated to a

company’s mining and mineral businesses segment non-current fixed assets. Assets are recorded geographically as accurately as possible based on data availability from company financial reports. Only investments in foreign mining companies are recorded, in order to avoid double counting. Values are converted to Canadian dollars using the rates posted at the date of the financial report. Canada’s mining assets abroad estimates, as calculated by Natural Resources Canada, differ from the Canadian Direct Investment Abroad figures estimated by Statistics Canada.

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differs from foreign direct investment (FDI) data in a few key ways: FDI presumes

financing comes from Canada while asset valuation does not. FDI considers both asset

and liabilities while the above only considers assets. FDI data are based on first

destination while the above is based on the final destination.3 The stock of total

Canadian mining assets in Africa is estimated at C$31.6 billion in 2011. The largest

region for Canadian mining assets abroad, by far, is Latin America, with around C$156

billion. The total stock of Canadian mining assets abroad is estimated at C$215.3 billion,

which implies Africa’s share of total Canadian mining assets is about 14.6 per cent.

Within Africa the largest countries in terms of Canadian owned mining assets are:

Zambia, Mauritania, South Africa, Madagascar, Ghana, Tanzania, and Burkina Faso.

Figure 5. Canadian Owned Producing Mining Properties in Africa

Sources: InfoMine (2013) and SEDAR (2013), mines producing in 2011 and 2012

geocoded

3 Canadian investment destined for Mexico that goes through a US subsidiary is counted as FDI in the United States.

The same transaction asset valuation terms would be counted in Mexico.

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For a more granular picture of Canadian mining in Africa, we analyzed and geocoded

data from two additional sources for this report: InfoMine, a mining industry data portal,

and the System for Electronic Document Analysis and Retrieval (SEDAR). InfoMine

provides data from the perspective of individual properties or mines. In the view above

we limit the data to mines that had production in 2011 and 2012.4 We assess total

production per commodity per mine site. This information is further collated from

company financial reports and/or from SEDAR. Data in the map view are provided for

mine sites in production (geocoded to the actual location within each country) for

Canadian companies producing in Africa in 2011 and 2012. We also calculated the total

revenue yield per mine site, company, country, and commodity. The revenue estimate is

calculated by multiplying total production with the international price of the given

commodity.5 It should be stressed that this is a partial approach and we are well aware

of the limitations. It does not include the associated operational, capital and other costs,

and therefore is only a gross figure. The thinking behind it is simply to illustrate the

sense of scale involved.

Our findings are as follows: total revenue yield, or the total value of all commodities

produced by Canadian owned mines in Africa, in 2012 was approximately $7.6 billion.6

The equivalent figure for 2011 was approximately $4.1 billion. The largest producing

Canadian companies were: First Quantum, Lundin Mining, New Dawn Mining, Franco-

Nevada, IAM Gold, Kinross, Galane, Barrick Gold, Nevsun Resources, and Semafo.

Gold and copper are by far the most important commodities produced by Canadian

companies in Africa. Zambia, the Democratic Republic of the Congo, Ghana,

Zimbabwe, and Burkina Faso were the most important countries for Canadian-owned

properties in production. While countries like Eritrea, endowed with gold, are also

rapidly emerging.

4 Mining activities take place at specific stages, from exploration, to mine construction, to actual production.

Production is a late stage. Mining properties at the exploration, prospecting or construction stage are excluded from the view above. 5 For gold and copper average annual prices for the production year were taken from the London Metal Exchange.

For diamonds company sources were used for price. International Monetary Fund price data were used for other commodities. 6 By comparison, using the same method and sources, our estimate of the total revenue yield for Latin America for

2011 is $18.7 billion.

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Canadian Capital Markets as Source of Finance for Africa’s

Growing Natural Resource Sector

Figure 6. Top 40 Mining, Oil and Gas Companies Listed on Canadian Exchanges with Operations in Africa

Name Headquarter Region

Headquarter Location

Sector

Where They Are Active in Africa

Listed on Exchange

Barrick Gold Corporation

Canada Ontario Mining Tanzania,Zambia TSX

Canadian Natural Resources Limited

Canada Alberta Oil & Gas

Offshore West Africa

TSX

Nexen Inc. Canada Alberta Oil & Gas

Nigeria TSX

Africa Oil Corp Canada British Columbia

Oil & Gas

Somalia TSXV

Kinross Gold Corporation

Canada Ontario Mining Mauritania TSX

Talisman Energy Inc.

Canada Alberta Oil & Gas

Algeria TSX

First Quantum Minerals Ltd.

Canada British Columbia

Mining Mauritania,Zambia TSX

Mart Resources Inc.

Canada Alberta Oil & Gas

Nigeria TSXV

IAMGold Corporation

Canada Ontario Mining Burkina Faso,Mali TSX

Uranium One Inc. Canada Ontario Mining Tanzania TSX

Strategic Oil & Gas Ltd.

Canada British Columbia

Oil & Gas

West Africa TSXV

Sherritt International Corporation

Canada Ontario Mining Madagascar TSX

TransGlobe Energy Corporation

Canada Alberta Oil & Gas

Egypt TSX

Madalena Ventures Inc.

Canada Alberta Oil & Gas

Tunisia TSXV

Afferro Mining Inc UK/Europe UK Mining Cameroon TSXV

Semafo Inc. Canada Quebec Mining Burkina Faso,Guinea,Niger

TSX

Great Western Minerals Group Ltd.

Canada Saskatoon Mining South Africa TSXV

Paladin Energy Ltd.

Australia/NZ/PNG

Australia Mining Malawi,Namibia,Niger

TSX

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Reservoir Minerals Inc

Canada British Columbia

Mining Cameroon TSXV

Canaco Resources Inc.

Canada British Columbia

Mining Tanzania TSXV

Banro Corporation

Canada Ontario Mining DRC (Congo) TSX

Roxgold Inc Canada British Columbia

Mining Burkina Faso TSXV

Orca Exploration Group Inc

Africa Tanzania Oil & Gas

Tanzania TSXV

True Gold Mining Inc.

Canada British Columbia

Mining Burkina Faso TSXV

Endeavour Mining Corporation

Other Cayman Islands

Mining Burkina Faso,Côte d'Ivoire,Ghana,Liberia,Mali

TSX

HRT Participacoes em Petroleo S.A.

Mexico and Central/South America

Brazil Oil & Gas

Namibia TSXV

Denison Mines Corp.

Canada Ontario Mining Zambia TSX

Gold Canyon Resources Inc.

Canada British Columbia

Mining Malawi TSXV

Longreach Oil and Gas Limited

Canada Ontario Oil & Gas

Morocco TSXV

Emperor Oil Ltd Canada British Columbia

Oil & Gas

Sudan TSXV

Perseus Mining Limited

Australia/NZ/PNG

Australia Mining Côte d'Ivoire,Ghana

TSX

Robex Resources Inc.

Canada Quebec Mining Mali TSXV

Diamcor Mining Inc.

Canada British Columbia

Mining South Africa TSXV

Nevsun Resources Ltd.

Canada British Columbia

Mining Eritrea TSX

Loncor Resources Inc

Canada Ontario Mining DRC (Congo) TSXV

Platinum Group Metals Ltd.

Africa South Africa Mining South Africa TSX

Atlatsa Resources Corporation

Canada British Columbia

Mining South Africa TSXV

Great Quest Metals Ltd.

Canada British Columbia

Mining Mali TSXV

Sunridge Gold Corp.

Canada British Columbia

Mining Eritrea,Madagascar

TSXV

Ivanplats Limited Canada British Columbia

Mining DRC (Congo),Gabon,South Africa

TSX

Sources: TMX Group (2013a,b), data as of March 2013 Float Quoted Market Value

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Africa’s rapidly growing natural resources sector needs access to capital to realize its

huge potential. Canadian capital markets are one of the most important sources of

financing for the mining, oil, and gas sector. Ninety per cent of all global mining equity

financing and 39 per cent of the equity capital raised for mining globally in 2011 was

raised on the Toronto Stock Exchange (TSX) and the Venture exchange (TSXV).

Canadian exchanges are the largest source of mining financing in the world. The vast

majority of companies raise capital on Canadian markets to finance the exploration and

advanced exploration phases. Thanks to a highly mining-friendly business climate,

Canadian capital markets are especially attractive to small and medium-sized mining

companies. In 2011, 173 companies raised around C$1 billion in capital on Canadian

markets to finance mining operations in Africa. The largest of these were for gold,

uranium, copper, diamonds, and other minerals in regions and countries including

Tanzania, West Africa, Ghana, Zambia, the Democratic Republic of the Congo, and

Namibia. Zambia, South Africa, the Democratic Republic of the Congo, Gabon, Ghana,

and Burkina Faso are key countries where equity capital raised in Canada finances

mining projects. The table above shows data for the top 40 companies listed on either

the TSX or TSXV (by quoted market value as of March 2013) with operations in the

mining, oil, and gas sector in Africa. In total, as of March 2013, there were 189

companies listed on the TSX (83) and TSXV (106) with operations in the mining, oil, and

gas sector in Africa.

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Natural Resources and Governance in Africa

Figure 7. Extractive Industries Transparency Initiative and Africa

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Sources: EITI (2013) and World Bank (2013)

The Extractive Industries Transparency Initiative (EITI) is a global standard that

promotes revenue transparency at the local level by bringing together audited data on

payments made by companies in the extractive sector to governments, and government

reports on payments received. Eighteen African countries have either compliant or

candidate status within EITI. The majority of EITI-compliant companies are in Africa.

However, five of the eight suspended EITI countries (as of April 2013) are also in Africa.

These include some of the largest natural resource-rich countries in Africa including:

the Democratic Republic of the Congo, Mauritania, Madagascar, Central African

Republic, and Sierra Leone. Notably, Canadian mining companies are highly active in

most of these countries. Nigeria reports the largest extractive revenue of any country at

US$68 billion or 28 per cent of Nigeria’s GDP. EITI reported extractive sector revenues

are also significant in the Republic of the Congo, Ghana, Mali, Zambia, and Tanzania.

EITI revenue reported for African countries range from 38 per cent in the Republic of the

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Congo to less than 1 per cent in Mozambique, Burkina Faso, and Sierra Leone.

Figure 8. Mo Ibrahim Index of African Governance

Source: Mo Ibrahim Foundation (2013)

The Mo Ibrahim Foundation produces the only comprehensive annual African-led

governance rating system that measures governance across the continent along four

dimensions: human development, participation and human rights, safety and the rule of

law, and sustainable economic opportunity. The same countries have more or less

consistently topped the rankings since 2006: Mauritius, Cape Verde, Botswana,

Seychelles, and South Africa. However, the rate of progress, measured as the change

in the index value between 2006 and 2012, is more interesting. Of the 52 countries for

which data are available, governance improved during this period in most countries and

deteriorated in only 16. Delving deeper into the components, it is clear that overall

performance is driven by progress in human development, with only six countries show

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deteriorating performance on this dimension. Safety and the rule of law is the clear drag

on overall performance, with 35 countries showing deteriorating performance on this

dimension. The countries where governance is deteriorating the most as measured by

the overall index include: Madagascar, Libya, Eritrea, Senegal, and Mauritania. Notably,

these are countries in which Canadian companies have significant presence, as we

have seen earlier.

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References

BP. 2012. BP Statistical Review of World Energy June 2012. London: BP.

Bhushan, Aniket. 2013. “Domestic Resource Mobilization and the Post-2015 Agenda.”

GREAT Insights 2 (3): 22–23.

EITI (Extractive Industries Transparency Initiative). 2013. “EITI Reports.” Accessed May

9, 2013. http://eiti.org/countries/reports.

Industry Canada. 2013. “Trade Data Online.” Accessed May 9, 2013.

http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home.

InfoMine. 2013. “Charts & Data.” Accessed May 9, 2013.

http://www.infomine.com/chartsanddata.

Mo Ibrahim Foundation. 2013. “The Ibrahim Index of African Governance.”

http://www.moibrahimfoundation.org/iiag.

NRCan (Natural Resources Canada). 2013. “Canadian Mining Assets Information

Bulletin.” January.

SEDAR (System for Electronic Document Analysis and Retrieval). 2013. “SEDAR

Database.” Accessed May 9, 2013. http://www.sedar.com/search/search_en.htm.

TMX Group. 2013a. The MiG Report: February 2013. Toronto: TMX Group.

———. 2013b. The MiG Report: March 2013. Toronto: TMX Group.

World Bank. 2013. “World Development Indicators.” Accessed May 9, 2013.

http://data.worldbank.org/data-catalog/world-development-indicators.

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About the Author

Aniket Bhushan is a Senior Researcher at The North-South Institute (NSI), a Canadian-

based policy research institution. His research focuses on open data and domestic

resource mobilization in sub-Saharan Africa. Mr. Bhushan heads NSI’s work on the

Canadian International Development Platform (CIDP), a data and analytical platform on

Canada’s engagement with the developing world. Mr. Bhushan’s current research

focuses on the impact of big data and open data on public policy. His academic

background includes degrees in political science and commerce, and he completed his

M.A. in political science at Carleton University (Canada).

The author wishes to thank Nathan Bowers-Krishnan for research assistance.

About The North-South Institute

The North-South Institute is a non-profit organization that provides research, capacity-building and policy advice on international development to governments, inter-governmental organizations, the private sector and civil society. www.nsi-ins.ca