Iron ore: Main growth driver in West Africa

Much of this growth will be focused on iron ore and gold as the region has untapped and high-grade reserves of both metals. The authors expect the bulk of the growth in the mining sector to be towards the end of the forecast period as many of the projects are still in their early stages of development.

Iron Ore To Be Main Growth Driver: Growth in West Africa's mining sector will be focused on iron ore as the region contains some of the world's largest untapped high-grade reserves. Guinea's iron ore production is set for phenomenal expansion to over 115mntpa (mn tonnes per annum) by 2016, turning the country into one of the world's largest iron ore producers. The Simandou iron ore project, which is majority-owned by Rio Tinto, will be the main driver of growth.

The Simandou iron ore mine is one of the largest iron deposits found in recent years and is all the more attractive given its high-grade reserves. Rio Tinto forecasts output to reach 95mntpa by 2015. In Sierra Leone, the largest project is African Minerals' Tonkolili mine, which has estimated reserves of 12.8bnt (bn tonnes) and is expected to produce 40mntpa in 2014. Development of the mine has been abetted by the completion of the Bumbuna hydroelectric dam in close proximity to the project, thus overcoming the country's perennial power shortages.

Aside from iron ore, Guinea's bauxite sector is set to grow significantly over the coming years and we expect the country to become the world's third-largest bauxite miner by 2015. In addition, Ghana's gold production will receive a substantial boost from Newmont Mining, which is developing two large projects.

Key Players: West Africa's mining sector is fairly well consolidated at present, with only a few companies operating in the region. Iron ore and bauxite mining is dominated by Vale and Rio Tinto, which have the capital to develop mines and the appropriate infrastructure. Gold mining is fairly fragmented with large multinational miners AngloGold Ashanti and Newmont Mining, as well as smaller companies such as Cluff Gold. We expect West Africa's mining sector to become more fragmented over the coming years as smaller companies seek to gain from the region's high-grade riches. However, multinational companies will continue to dominate as their greater diversity will ensure they are not as exposed to risk in the region.