In November 2019, Equatorial Guinea’s Ministry of Mines and Hydrocarbons announced the winning bids under the country’s EG Ronda 2019 licensing round. Nine hydrocarbon blocks were awarded to foreign firms alongside the country’s national oil company GEPetrol as the country – a member of OPEC and one of Africa’s largest oil exporters – works to reverse declining production rates and rebuild national reserves under its ‘drill or drop’ policy to encourage faster project development from investors.
But EG Ronda 2019 also incorporated something entirely new in Equatorial Guinea’s modern history – its first-ever licensing round for mining. After a year or more of drumming up interest from mining investors around the world, the country announced that 15 mineral exploration blocks had been allocated to five companies.
“This demonstrates that Equatorial Guinea can attract significant interest from investors in the petroleum community as well as the mining industry,” said Minister of Mines and Hydrocarbons H.E Gabriel Obiang, son of President Teodoro Obiang Nguema Mbasogo, who has been in power since 1979. “Hopefully, next year we will attract even more investments to our country.”
With mining licenses allocated and contract negotiations now ongoing under the framework of the country’s Mining Law 2006, it has been a positive start to 2020 for Equatorial Guinea, which has described this year as the country’s ‘year of investment’.
“ will be entirely dedicated to securing funding for investment-ready industrial projects,” said Obiang in November, as reported by World Oil. “There is already huge excitement for these opportunities. Equatorial Guinea is ready to make deals and make 2020 a historic year of investment.”
Equatorial Guinea’s mineral potential
According to the materials published by the Ministry of Mines and Hydrocarbons, Equatorial Guinea hosted gold and iron production in pre-colonial times, but there are no records of any commercial operations under Spanish rule, which ran from 1778 to the country’s independence in 1968.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Since the country won its independence, various surveys and analyses have identified significant potential, particularly in the country’s Rio Muni mainland region (the capital, Malabo, is located on the island of Bioko, 32km off the west coast of Africa). Initial systematic surveys were carried out by Soviet Union geologists starting in 1975 under the violent regime of the country’s first president, Francisco Macías Nguema, and after his overthrow other organisations continued the work, including French firm BRGM and Spanish-Guinean joint venture GEMSA. These early investigations showed Rio Muni’s potential for mineral commodities including gold, bauxite and pegmatite minerals such as tin, tungsten and niobium-tantalum.
The ministry is promoting its promising indications of several commodities in particular. These include potential for diamonds in the zinc-rich samples taken from the Nsork area in the south-eastern part of the country’s mainland territory, which the government says are similar to diamond-yielding deposits in Gabon, Equatorial Guinea’s southern neighbour. Niobium-rich columbo-tantalite soil anomalies have been identified in Aconibe and Ayamiken, two areas that have been little-explored.
Consistent artisanal gold mining in the alluvial soil of Rio Muni’s rivers, along with the common occurrence of gold with vein-quartz, clays and lateritic materials, suggests the proximity of bedrock gold mineralisation in the main artisanal mining areas of Coro, Aconibe and Mongomo, the government has said. Records of artisanal gold production are scant, but the government states at least 2,300kg of gold was produced in Coro alone in the mid-1970s, while a country report by the US Geological Survey notes annual gold production of around 100-200kg in the early 2000s.
The new blocks and the mining newcomers exploring them
Breaking down the EG Ronda 2019 reveals a wide range of mineral exploration projects in the offing, as well as the newcomer status of the companies that will be doing the exploring.
Of the 15 mining blocks awarded, seven were won by Blue Magnolia, in the north-west and east of Rio Muni, which will explore for copper, nickel, platinum group elements, rare earth elements and gold. Oro Sac Corp was awarded four blocks in the centre of Rio Muni, where it will look for gold, silver, copper, zinc and lead, while Manhattan Mining Investment will explore for gold in the one block it won in the same area.
Akoga Resources will prospect for platinum group elements, nickel, copper, cobalt and gold, among others, in its two awarded blocks in Rio Muni’s south, and Shefa Minerals has been awarded one block to explore for gold.
None of these firms are household names in the mining sector, and many are newcomers to the sector or to African mining. Reporting by Africa Intelligence has shed some more light on the backgrounds of these companies: Akoga Resources is a subsidiary of UK-based Pallas Resources, which focuses on mineral exploration in the Middle East and Central Asia.
Oro Sac Corp has the backing of Toronto-based investment and consultancy firm M Partners, which specialises in small projects in mining and hydrocarbons, among other sectors. Oro Sac’s acting managing director Bereket Berhe is reportedly a geological engineer with experience working on Eritrea’s early mining projects.
Africa Intelligence also reports that several license awardees, including Manhattan mining Investment and Blue Magnolia owner Ghennet Tesfamariam, took in-person meetings with President Obiang and the mining minister at Malabo in 2019.
Ongoing corruption concerns
While Equatorial Guinea has seen early success in drawing bids for mineral exploration, ongoing concerns around corruption and a lack of transparency around the distribution of its oil revenues may be holding back its long-term aspirations in the mining sector. The country sits at a ranking of 144 out of 189 countries on the UN’s 2019 Human Development Index, despite having the highest GDP per capita in Africa as a result of its hydrocarbon production.
There are longstanding questions surrounding the enrichment of the country’s political elite while excluding the mass of its population of around 1.3 million, less than half of whom have access to clean drinking water. President Obiang, who has been in office for more than 40 years, has been criticised for allegedly repressing political opponents and fraudulent use of funds. Obiang’s eldest son, Teodorin Obiang, who appears to be next in line for the presidency, was fined €30m and handed a three-year suspended jail term by a Paris court for using public money to buy a lavish Paris property and private cars.
Most crucially from a resources perspective, Equatorial Guinea was expelled from the Extractive Industries Transparency Initiative (EITI) in 2010. The country made an application to rejoin the anti-corruption programme in October last year, which is still being reviewed by the EITI board. Without taking clear steps to address corruption concerns, the country will remain a high-risk investment for miners and may struggle to attract the investment and financing necessary to make good on its commitment to develop its mineral resources.