It is widely known that South Africa’s gold mining industry has been in decline for many years. But what may be less well-known outside specialist circles is the extent to which West Africa and the Sahel are stepping up to plug the gap. Mining production, exploration and development numbers in recent years show that the industry’s focus has shifted across the African continent and moved west and northward.

Banking group Goldman Sachs has described the gold price as a ‘fear barometer’ on account of its ‘safe haven’ role when other economic indicators (especially the US dollar price) are moving in a negative direction. The 2020 Covid-19 crisis saw the yellow metal soaring 32 percent (adding US$500) to an all-time high price of US$2 070.50 in August that year. After falling back to the US$1 800 region on the invention and distribution of Covid-19 vaccines, it leaped upward again, to over US$2 000, after the Russian invasion of Ukraine.

Despite a certain mystique around its drivers, the gold market is, like any other, a creature of supply and demand. The invasion of Ukraine will remove 330 tonnes of Russian gold from the market this year (out of a global total of about 3 500 tonnes). The London Bullion Market has done its bit for Western sanctions by banning all output from Russia’s six accredited refineries. Snarled global supply chains and half-century high levels of inflation in developed countries, as well as other fears (Covid mutations, political risk) look likely to continue to support a high gold price even if the US Federal Reserve hikes interest rates (thereby supporting the dollar).

South African gold production peaked at 1 000 tonnes in 1970. In 2006, the country was surpassed by China as the World’s most productive gold mining jurisdiction. In 2021, it mined only 100 tonnes of gold (slightly more than the 99.2 tonnes in the Covid-19 stricken year of 2020) and South Africa was ranked only 11th among gold producing countries. The well-established gold-mining industry in Ghana became Africa’s premier producer in 2019, ranked 6th in the World. It mined 139 tonnes of the yellow metal in 2020, 7.5 percent down on the 2019 figure thanks to a 3-week Covid-19 lockdown.

In the mid-1990s, South Africa mined more than 15 percent of the World’s gold while production in West Africa, mainly Ghana, accounted for a mere 2.5 percent. By 2019, these figures had inverted. South Africa produced only 3 percent of the World’s gold while West Africa comprised 12.5 percent. None of Africa’s biggest 10 gold mines (by output) are located in South Africa. The biggest is Kibali in the DRC (25 tonnes/year) and seven of the top 10 are either in Ghana (3) or the Sahel (Mauritania, Mali and Burkina Faso) (4).

Despite its immense history and enduring infrastructure South Africa is now just another member of the African gold mining pack. According to the World Gold Council in 2021, its peers (in terms of production) include Mali (93.8 tonnes), Burkina Faso (93.4 tonnes), Sudan (83.8 tonnes), The Democratic Republic of Congo (60.9 tonnes), Guinea (56.9 tonnes) and Tanzania (45 tonnes).

Ghana, as an established mining jurisdiction, can be viewed differently from the Sahel countries to its north. Ghana has matured as a jurisdiction with its regulatory environment regularly praised by benchmark organisations. Some of the mining majors active in the country have made the significant step of starting to develop underground operations as AngloGold Ashanti has done at Obuasi Mine, although many, like Gold Fields’ three large operations in the country (Damang, Tarkwa and Asanko), remain open pits.

The easy access of gold resources from the surface (open pits) is one of the attractions of West Africa and the Sahel. The Saharan gold vein (the Birimian Belt), which is largely unexplored but seems to run across the Sahel, from Mauritania in the west to Sudan in the east (including Mali, Burkina Faso and Chad), was discovered in 2012. It has been mined mostly by artisanal miners who have unfortunately become entrapped in criminality and terrorism. Jihadist groups are known to take over small gold mines to fund their struggle although the dividing line between religious zealotry and banditry can be unclear.

What is clear is that the Birimian Belt desperately needs formal exploration and consolidation. A 2018 arial survey identified 2 200 possible informal gold mines in Burkina Faso. About half of them are within 25 kilometres of places where militants have carried out attacks. These small pit mines may produce a total of over 100 tonnes of illicit gold a year. A clamp down on gold smuggling out of Sudan in 2020 saw the official volume of the metal produced double within a year, accounting for 40 percent of the country’s exports in 2021.

The greater formalisation of gold exports from Sudan is one of the reasons established companies like Pan African Resources (which has gold tailings operations in South Africa) and juniors like Canada’s Orca Gold have stepped up operations in the country in the past 12 months.

There has been a boom in spending on exploration across the Sahel as the Covid-19 pandemic seems to have receded. In fact. Africa’s 10 percent drop in exploration at the height of the pandemic in 2020 was less of a blow than that which struck many other regions. The inflow of exploration spending (US$470 million) was lower than only Australia and Canada, both jurisdictions where travel restrictions forced explorers to concentrate on areas close to home.

This positive news continued into 2021. Increases in exploratory spend into African gold included Endeavour (100 percent), Newmont (26 percent), Barrick (nine percent), Resolute (55 present) and B2Gold (38 percent). Newmont (Ghana), Barrick (Mali) and B2Gold (Mali) already own gold mines ranked among Africa’s top 10 by output. The 50 million oz reserves discovered in West Africa and the Sahel between 2009 and 2019 dwarfs its nearest rivals (Canada (36 million ounces) and Ecuador (24 million ounces). The prognosis is that the region can only grow. The CEO of Endeavour Mining, which has extensive investments in Burkina Faso, has commented that ‘West Africa will overtake China in the near future’. Political risk notwithstanding, he is probably right.