How has the market turned for the exploration sector in 2020, and how does this reflect on SEMS Exploration’s business?
In the last gold cycle our business was supported by exploration companies, while we survived the downturn years by working with mid-tier and large miners. We see today a growth in our typical client base, the juniors, who are raising funds or listing for the first time.
When we look at Ghana, new projects are coming onstream or are getting new funding. This trend extends beyond gold: a few successful West African lithium projects have encouraged gold-focused companies to add lithium to their portfolios.
Ghana is looking to develop its bauxite industry. What are the challenges around that?
Ghana’s bauxite deposits are well known to the world, and there seems to be a cycle of renewed interest in the bauxite markets, but the challenge with bauxite mining is the heavy environmental impact.
Could you comment on the potential of emerging mining countries, like Equatorial Guinea and Nigeria, which are moving away from oil?
In Nigeria, the government is visibly aware of the need to diversify the economy from petroleum, and the geology is indeed very prospective for solid minerals. Some of the exploration opportunities I’ve seen in Nigeria are comparable to the rest of West Africa, and had those licenses been in Ghana, those opportunities would have been realised by now. However, it may take a little longer for investors to gain confidence and overcome the perceived investment risk.
Equatorial Guinea falls off the radar of mining investors, but we have been working in the country for the past 12 months, enjoying incredibly good support from the government and starting to see the first successes in our exploration efforts. Unlike other countries in West Africa, Guinea benefits from excellent infrastructure.
How is the violence in the Sahel impacting mining exploration in the region?
Security risks are a challenge for Mauritania, Mali and Niger, but the country that was probably most impacted is Burkina Faso, simply because it came from such a high point about 10 years ago when many Australian and Canadian companies picked up licenses and enjoyed great success. Our Burkina Faso and Ivory Coast offices yielded bigger revenues between 2013 and 2019 than our Ghana office, where we are based, although this has changed since last year, funding coming back to Ghana helped by the improved gold prices. That said, we don’t work with any exploration company in Burkina Faso, but just with established producers. I doubt the country is at the top of the list for many investors in mineral exploration, and I cannot see this changing in the short term.
What are the key ESG aspects West African explorers and developers should keep in mind?
The social impact is probably one of the most delicate ESG aspects in West Africa, especially in remote areas where it may be the first time that locals interact with mining companies. As part of our service packages, SEMS offers ESG support services, helping companies go through the different protocols to work with the communities. It is crucial to start this dialogue early on and build a solid relationship with the communities to save a lot of time and money down the line.
How important is digitalization for a service company like SEMS?
We use drones to run photographic and elevation surveys across large landholdings, which generates significant data. One of our key priorities is to invest in an effective data management system. As a first step, our staff have replaced paper-and-pen logs with tablets on the field. The next step is to make it possible for our staff to upload the data directly, centralize the data on our website and make it easily accessible for clients.
Why should mining and exploration companies choose SEMS as a partner in West Africa?
We have accumulated a wealth of experience in our 20 years’ experience in West Africa. For companies coming to the region for the first time, we provide a much more cost-effective and efficient entryway because we can offer the infrastructure – such as setting up office space – already in place, together with our geotechnical and local knowledge.
Across the region, the old model of flying in expats to do the technical job combined with a few locals doing the rest of the work on the ground has to change and has started to change. There are some very qualified West African geologists, mining engineers and surveyors that can perform as well if not better. SEMS is a Ghanaian company with all staff apart from myself being West African in origin.