THIS
POST WAS ORIGINALLY PUBLISHED DECEMBER 05,13, 2009
General
In this
short series of posts, I am attempting to outline one of the most obscured
topics – mining industry in Middle East and Near Africa (MENA). While the
numbers of countries that are included in this term by many institutions vary –
I shall stick to the World Bank definition.
Some
vital facts:
- Region has 6% of World’s Population
- It is 1.25 times larger than the USA
- Total GDP roughly is over $3 Trillion
MENA is
one of the fastest growing economies in the world:
Generally
speaking, everyone thinks about MENA region as of the one that has abundant
hydrocarbon mineral resources – and this is true. The region is rich in natural
resources, but they are unevenly distributed:
• 57% of
world’s oil resources, 41% of natural gas
And
there is one peculiarity: enormous disparity exists between countries rich in
resources and countries that are not. Another true fact is – mining sector here
is really non-exploited and still has a lot of potential. The governments in
the area are striving to diversify their economies, secure more foreign
investments – and one of the roads here is to make the most of non-hydrocarbon
mineral resources.
Of
course, there are many challenges for investors in MENA, as the Deloitte’s
Shaping up for 2010 MENA Private Equity Confidence Survey states: “One of the
biggest challenges is getting the right valuation at the moment. Also, there is
a lack of intermediaries established in the region, so when you approach
companies about change they aren’t ready for it. You have to convince companies
to take on third-party investors, and as a result, transactions can take a long
time.” This graph gives an idea of the issues:
Identified
challenges and barriers to growth for the MENA private equity industry to
overcome:
Deloitte_MENACITI
group however, lists several good reasons to invest in MENA economy:
- Strong economies
- Companies profitable and growing
- Valuations reasonable
- Real interest rates: very low
- “Immature Bull”: decent returns and low volatility
- Low correlations w/global markets
- Opening up of markets to foreign investors
Nevertheless,
there are some risks that you may read about in the whole document
You may
also watch this video: OECD and MENA countries cooperate for a better business
climate
On these
general issues of investment, I would like to point you to the following
documents:
- Perspective on the Middle East, North Africa andSouth Asia (MENASA) region a very detailed report by the McKinsey&Company
- MENA.Private Equity – Tremendous Prospects for the Taking! by the Global Investment House
- AnEconomic Overview of the Opportunities in the Region Kim Eckermann Partner THE MONITOR GROUP
- IFCFinancing in MENA
MENA at this
time is not well known for its mining opportunities; however, a lot of effort
is being taken to promote them. This is highly visible in the series of shows International
Exhibition for Mineral Exploration and Development (MENA-EX) – the next one is planned in January 2010 in Jeddah. As it was
mentioned this year at MENA-EX 2009 “Saudi Arabia and the MENA region is the new mining development area…” As
it is usual for new mining regions, the infrastructure is one of the biggest
problems.
The subject region is very diverse in its investment
opportunities – both in terms of resource potential and legal
development. A very brief outlook at specific countries.
Saudi Arabia
There is a
strong perception that Saudi Arabia is a major oil producing country, however,
in addition to that, it possesses deposits of many minerals, including bauxite,
copper, gold, iron, lead, silver, tin and a number of non-metallic minerals.
This Web-site provides information on most of them. Excellent overview – Mineral Resource Potential and Its Development in Saudi
Arabia by MAHMOUD
ALI DARWISH and NAZIR AHMAD BUTT – provides detailed description of the subject
with geologic data and maps.
This country is
very actively pursuing the issues of foreign investment in its mineral
projects. General idea of Saudi Arabia situation is summarized in this
slide from CITADEL RESOURCES presentation:
However, the hardest point, as it seems right now – is
to actually develop activities with the funds raised.
Ma’aden is a Saudi
joint stock company operating since 1997, that is developing five gold mining
operations, as well as phosphate, aluminum and other projects. A respectable
industry overview may be found in the company’s Prospectus and in this corporate presentation, while a very good description of mining in Saudi Arabia is in the Corporate Brochure. For more than 4 years an Australian CITADEL RESOURCES is operating in the
country, and as an example, here is the progress on their copper project
Source: CITADEL Resource Group
Council for
Australian‐Arab Relations (CAAR) and Australia Arab Chamber of Commerce and Industry
(AACCI) had prepared this excellent Business Guides to the Arab Gulf The Kingdom of Saudi
Arabia – a comprehensive reference book on how to do business in Saudi Arabia:
starting from the general issues and entering the market, as well as basic
industries. Another Guide on doing business that includes some legal aspects is provided by the Arab-German Chamber of Commerce and Industry.
Other useful links for investments in Saudi Arabia:
A Brief Overview of the Saudi Arabian Legal System By Dr. Abdullah F. Ansary
No comments:
Post a Comment