A few weeks ago, towards the end of 2019, I penned an article regarding the perilous state of affairs in Western Africa (the Sahel region as it is called locally). The response was… lively, to put it mildly. I had investors in Sahel-based mining companies calling me every name under the sun, and I even heard the article didn’t go down too well with a few PR teams of junior gold mining companies! They don’t want people talking about it.
Regardless of the backlash, I’m glad I brought the issue to the attention of investors with a fully referenced and factual article that was driven purely by an agenda to tell the truth. Like I said before, retail investors need to look out for one another, and that is exactly why I write these articles.
Since the article went live, I’ve been pleased to see the increase in discourse surrounding the Sahel topic amongst investors, fund managers and mining CEOs. The Sahel is a region, not a country. It crosses borders, as do the tribes and people of several West African countries. It is the way it always has been. Investors have all had plenty to say, and much has happened since my previous article went out, not a lot of it good. Let’s take a look at the latest information.
Mainstream media has begun to cover the situation. Last week, the Guardian (a well respected and independent UK newspaper) has called the situation ‘an unprecedented wave of violence, with more than 4,000 deaths reported last year, and a bloody start to 2020.’ It explained that ‘the number of attacks has increased fivefold in Burkina Faso, Mali and Niger since 2016,’ based on UN figures.
The United States has recently announced intentions to reduce its military involvement in the region, with the ‘Pentagon eying a reduction of its footprint in the region as terrorist groups expand in the Sahel.’ Not enough oil and gas to be of interest?
This announcement has left allied forces extremely concerned; ‘French Armed Forces Minister Florence Parly warned on Monday that expected cuts to US military operations in Africa would hamper counter-terrorism efforts against jihadist groups in the Sahel region.’ France announced that it would send another 600 troops to the region, now totally 5,000. Can this make a difference?
Last year, in Burkina Faso, ‘deaths rose… from about 80 in 2016 to more than 1,800 in 2019.’
On Saturday (1st February 2020), 20 civilians were killed in an overnight attack in North-Western Burkina Faso. This is becoming frighteningly routine in a country branded ‘too dangerous’ for children ‘to go to school.’ This is just a week after 39 people were killed when militants attacked a market in the province of Soum. The violence is constant, brutal and shows no sign of ending.
The Sahel region includes Burkina Faso, Mali, Mauritania, Southern Niger, Benin, Nigeria, Senegal, Sudan, Eritrea and Chad. The threat extends to other countries including Algeria, Cameroon and Libya.
The porous nature of borders in the Sahel region means terrorist groups such as al-Qaeda in the Islamic Maghreb (AQIM) are able to operate across borders and carry out attacks anywhere in the region.
So, what does this mean for investors?
At the moment, as far as the Sahel situation goes, we’re all hearing the same thing from mining CEOs: silence. The few who do comment all make similar remarks. It’s either “this situation will not affect our operations,” or “the security forces in the region provide us sufficient protection from the threat.” Your ability to invest in a Sahel-based company comes down to one thing: your satisfaction with these answers. So far, only SEMAFO Inc. has been affected. Lots of the West African gold miners continue to explore and produce gold; from that point of view, it’s business as usual.
In fact, as Mark Kenwright, Associate Director of Wardell Armstrong, said in a recent interview with Crux Investor, “life goes on.” I am confident there are companies that will make shareholders money. However, I remain unsure whether this confidence would be enough for me to invest in the region. After all, I could very feasibly end up in a SEMAFO-esque situation.
Investors need to be aware of the risks before putting their money on the line. Is the risk worth it? There is a big, wide world out there for investors to explore and invest, so why bother with the Sahel at all? Mining CEOs in the region have to convince us otherwise. The ball is in their court, and I’m waiting to hear why I should choose a company in West Africa as opposed to one in a more stable jurisdiction.
For me, the jury is out, but I will keep checking in and providing investors with this valuable information as the situation continues to develop or deteriorate.
Opinions expressed are solely of contributor, Curious Investor, and do not express the views or opinions of Crux Investor. Do your own research.
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