When the project starts in 2027, a fresh find might let the nation to enhance its annual national gold production by about 20%.
The gold industry in Côte d’Ivoire has always shown potential. Significant reserves are found in Burkina Faso, Mali, and Ghana, and geologists have frequently hypothesized that Côte d’Ivoire may also contain comparably rich deposits.
The Koné project, located in the northwest departments of Kani and Dianra, was declared by Montage Gold, a Canadian company, to be the largest gold mine in Côte d’Ivoire and the third largest of its sort in West Africa on May 2. The mine is scheduled to begin production in 2027 and has reserves of about 5 million ounces.
If the projections are correct, after the project is under way, the nation will be able to enhance its annual national gold production by about 20%. Long-term effects on government revenue could be substantial from this, according to Bryon Cabrol, an analyst at Dragonfly Intelligence covering Sub-Saharan Africa.
For Côte d’Ivoire, whose economy was for many years dominated by the production of cocoa, the discovery is huge.
The greatest cocoa grower in the world, Côte d’Ivoire employs close to a million farmers who supply 5 million people, or about one-fifth of the Ivorian population, with their income. It is the main source of foreign exchange earnings for the nation and the backbone of the Ivorian economy.
President Ouattara is adamant on diversifying his economy, though, as the crop has suffered from disease outbreaks and unfavorable weather patterns in West Africa, which have caused many farmers to give up on cocoa. The harvest has lately reached record highs.
Let’s talk about gold.
The senior Africa analyst at risk intelligence firm Verisk Maplecroft, Mucahid Durmaz, asserts that gold is essential to Côte d’Ivoire’s attempts to diversify its economy.
“The discovery will expedite the government’s endeavors to establish the extractive sector as a crucial revenue stream and insulate its economy, which is reliant on commodities, from fluctuations in global market prices.”
The output of gold increased by 14% to 48 tons in 2022, according to government announcements. There are predictions as high as 55 tons for 2024. As the government promotes greater investment in the field, it appears that new discoveries and advancements will be made.
“Gold exports from Côte d’Ivoire have increased considerably in value in recent years; in 2022, they ranked second in value only to cocoa.” The start of this project and the recent inauguration of other significant gold mines indicate that the government is prioritizing gold exploration, according to Cabrol.
Given the significant volatility that many of the other gold miners in the region are experiencing, the emphasis on gold is especially beneficial.
According to Durmaz, “Côte d’Ivoire will position itself as an attractive business environment for gold operators given that major political upheavals and insecurity are adversely impacting gold production in Burkina Faso, Mali, and Guinea.”
The Ouattara government’s aim for diversification has helped more than just the gold industry. There is additional pressure on the oil and gas industry. The major fields in Côte d’Ivoire, Baleine and Calao, are among the discoveries made in recent years. Due to Baleine’s recent start of production, these advancements have been implemented rapidly.
To enhance its appeal as a resource destination, the government intends to carry out additional initiatives to eradicate corruption, remove bureaucracy, and build infrastructure that supports these industries. Over the past ten years, there has been a significant increase in road construction in northern Côte d’Ivoire, the location of several mines.
Increasing involvement locally
It’s also feasible that the government will try to impose stricter local content regulations as these new industries grow. More local content laws are coming, according to Durmaz, despite some efforts to enhance the investment climate.
In an effort to boost local employment in the gold industry and expedite the approval of investor permission applications, the government is now updating the 2014 Mining Code. There is no indication from these modifications that Côte d’Ivoire’s largely pro-foreign investment regulatory framework will change.
The status quo is still in place in many instances, even with the increased talk about local content and the benefits that Ivorians receive from natural resources.
According to reports, Montage Gold owns all of the mine (the Koné project). This will likely restrict the amount of money the government receives from the mine and the size and reach of its social programs, according to Cabrol.
However, there is undoubtedly a public effort underway, one that has already partially materialized with the oil and gas industry, calling for increased advantages for local operators and citizens. The government has been complaining that local content restrictions are too frequently broken and has called on international companies to adhere to them more tightly in recent months.
Increased local content initiatives are probably motivated by a desire to keep jihadists out of the nation. The inability of Sahelian governments to disperse resource earnings has been a cause of great discontent for the populace and has provided jihadist organizations and coup leaders with a convenient tool for campaigning.
Development projects have been at the heart of the government’s counterterrorism strategy in northern Côte d’Ivoire in recent years, and it seems to be working: Since late 2022, there haven’t been any significant terrorist attacks in the northern part of Côte d’Ivoire.
Ouattara’s touch of Midas?
There may be political ramifications to the recent findings and significant advancements in Côte d’Ivoire’s natural resource industries. The findings are probably going to increase government revenue to the point where President Ouattara would be enticed to run for a fourth term in 2025.
Numerous influential members of the ruling party are publicly urging him to consider this, and it is already widely rumored that he is. The gold find might turn out to be more valuable politically than economically in some ways.
According to Martin Roberts, associate director at S&P Global Market Intelligence, “the major gold discovery, on top of the big oil finds, has much more of a symbolic than actual value in emphasising that President Alassane Ouattara has the Midas touch.”
“The sense that he is almost untouchable is probably assisting in removing any possible roadblocks to Ouattara’s candidacy for a fourth term in late 2025, should he choose to run.”
However, detractors claim that a fourth term for Ouattara would be yet another betrayal of democratic principles. As Ouattara ran for a third term in 2020, which opponents claimed was unlawful, more than 60 individuals lost their lives in violent election-related incidents.
The money from natural resources that will soon begin to pour into the nation may also raise the stakes for the upcoming election.
