WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Alt Text

Why The Oil Industry Shouldn’t Fear Peak Demand

The question of when markets…

Alt Text

Asian Crude Markets On Edge As OPEC Meets

While OPEC infighting continues in…

World Bank to Issue “Billion Dollar Map” of Africa's Mineral Wealth

Beginning at the end of the fifteenth century, European explorers came to Africa for slaves and raw materials such as ivory. Since European African colonies became independent in the aftermath of World War Two, they have lost immense amounts of money by undervaluing their resources. Nowadays Western (and Eastern) businessmen fly to Africa to cut deals for its minerals and hydrocarbons, including oil, copper, zinc and tungsten, to name but a few, as the First World needs them for everything from skyscrapers to automobiles to telecommunications.  

The lack of accurate knowledge of resources means that most African governments don’t know the true value of their underground natural resources but Western and Chinese mining companies do, allowing them to buy in cheap, with some estimates of African fiscal losses over the past three decades as much as $1.4 trillion.

Now, a financial institution intensely reviled in much of the Third World, the World Bank, is proposing to draw up a “Billion Dollar Map” of Africa’s resources to allow its governments to determine more precisely what their raw resource reserves actually are. The World Bank initiative aims to compile Africa’s mineral maps into a single, public database, the “Billion Dollar Map,” intended to give African nations as much information as possible about their natural resources so that they can earn a fair price for their minerals.

Related Article: Small Oil Companies Eye Huge Prize in Ghana

One of the reasons Africa's wealth can been so easily exploited is that African countries are often unaware of the extent of its resources when approached by foreign mining companies, leaving governments in poor negotiating positions and the uniformed public unable to assess the value of any particular deal. South Africa's Council for Geoscience scientist Gerhard Graham noted, “A mining company comes to you and says ‘this is what we’ve found, this is the reserves, so this is the total value’…and that’s all that you have. This data (Billion Dollar Map) gives you insight into…what is there, and you can determine what is ultimately the value so you don’t sell a ton of talc (a mineral used in ceramics and steel) for $1 billion that is actually worth $10 billion. Typically for every $5 spent from a regional survey - the World Bank type of survey - you can grow about $1,000 of investment into mining in the country,”

World Bank Sustainable Energy Department gas, oil and mining unit manager Paulo de Sa, in charge of the project, argues that if the Billion Dollar Map had already existed, some undervalued deals of the past might have been avoided, claiming that the Democratic Republic of Congo’s state mining agency Gecamines is selling its own properties well below the market price. "If that data was publicly available," he says, "the public would have been able to contest that transaction.” De Sa added, “When a government licenses its acreage for mining companies, they really don’t know what’s underground,” says Paulo De Sa, the World Bank geologist in charge of the project. “The mining companies know what the true potential of these minerals is, and the government doesn’t have a clue. The private companies are interested. Initial exploration is very costly and the success rate is very, very low. If the companies have good maps, good information, they can much more easily target their investment to the areas with the best potential.” 

Related Article: Nigeria’s Missing Oil Money Sparks Political Crisis

The same is true in Kenya, where Martin Nyakinye, a government geologist, praises a $70 million initiative to conduct aerial mineral surveys of the whole country, a project that the Chinese government has offered to finance, commenting, “This should have been done a long time ago. The only way to assess and evaluate the real potential of the lands which we occupy is by knowing − locating every mineral occurrence.

Given its astronomical price tag, even the World Bank is admitting that the fundraising for the project is tough, expecting on $65 million in time for the decade-long project to launch this July, “While we are still raising funds to make the Billion Dollar Map a reality, the overwhelming positive response from government and companies at the recent Mining Indaba assures us that there is great demand for this endeavor.  … The Billion Dollar Map will literally ‘map out’ the path ahead for more investors to join the journey to deliver on the promise of poverty alleviation and economic development that minerals offer the people of Africa.

Corruption in Africa?

Another story for another time.

By John Daly of Oilprice.com




Back to homepage


Leave a comment
  • Kent on April 08 2014 said:
    Stating hat african govs are mislead by mining companies is naive...can you tell me how come african gov officials from president to ministers get so rich, covet the power so much and cling unto it not caring about their ppl who are dying due to civil wars? Of course, they get a cut of the check thru backdoors deals...
    Stating that population could contest the deals if they knew the real value is emblematic of your naivete...what are you gonna do if the greedy ruling the country are ready for anything even killing their own population for the sake of the cut they get thru backdoor deals?
    Craps...

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News