China's R7.7bn SA mining splurge confounds

China's R7.7bn SA mining splurge confounds

[] – PROPOSALS by Chinese investors to buy marginal South African precious metal assets totalling R7.7bn raises the question as to whether the flurry in business activity signals the bottom of the commodities cycle, or if the approaches are merely coincidental, or just plain wrong-headed?
“The Chinese are very astute investors. Although they do have some difficulty operating in Western economies, it’s still fair to say that they are very commercial,” said Neal Froneman, CEO of Sibanye Gold.
Froneman knows a thing or two about Chinese investment. He sold Gold One International to a Chinese consortium ahead of the combination of some of its assets with Sibanye Gold which was demerged from Gold Fields. As a result, about 20% of Sibanye’s share register consists of Asian investors.
The question about the intentions of Chinese investors comes after a series of announcements by Chinese companies in October and November that they were investing in South African mining.
The first this year was a bid by a consortium led by China National Arts & Crafts Corporation for the Blue Ridge mine of Aquarius Platinum for about $37m (R405m). The transaction was eventually scuttled – much to the annoyance of Aquarius – after the South African government failed to approve the proposed transaction, allegedly because its empowerment credentials didn’t add up.
The other four proposals are still in the pipes.
Three of them are rival takeover bids of a $148m (R1.6bn) and a $150m (R1.64bn) and another $150m for Johannesburg’s Central Rand Gold (CRG). The suitors are a Hong Kong-registered businesses called Hiria Group, Beijing Ankong Investment and Shengbang Jiabo Consulting. Somewhat eccentrically, the parent companies of some of these Chinese businesses have diverse, non-mining interests ranging from yacht hire to chemicals and even media.
The third is the somewhat heftier $225m (R2.46bn) offer by Hebei Zhongbo for Eastern Platinum, a Johannesburg and Toronto-listed platinum mining company that put its eastern and western bushveld properties into mothballs in 2012 and 2013 as the platinum price dived.
What’s interesting is that none of these assets could be described as a dripping roast while the identity of the bidders is strange to Western eyes: the notion of an arts and crafts led consortium makes one think of crayons and glue rather than backacters and graders.
Paul Smith, COO of Wesizwe Platinum, a R1.3bn company in which China’s Jinchuan Group has a 45% stake, believes the bids for Eastern Platinum and Central Rand Gold are misjudged investments.
“I find them astonishing and astounding. I can’t understand why these companies are buying these assets. They are really buying liabilities,” said Smith who added that while Jinchuan Group had knowledge of the bidders, it would be a mistake to think there was “a higher order” logic to the offers.
“I suppose there’s a flavour in them that this is the very bottom of the market. So if people really believe that it’s the bottom of the cycle, and the prices for commodities [such as platinum] recover really agressively, it could be a good buy,” he said.
Ilja Graulich who works at Madini Minerals, a private equity company that is currently investing and helping to manage assets in Africa, said the first wave of Chinese investment was fairly undiscriminating, such as the 2011, $580m bid by Hing Wing International for Taung Gold, an exploration business that is yet to progress.
“The Chinese have never been scared about entering South Africa,” said Graulich. “What has changed, however, is that they are learning to walk away from assets,” he added. His former company, Elemental Minerals, which was developing potash in the Central African Republic, saw an offer from China’s Dingyi Group fail earlier this year.
Froneman said the important perspective about Chinese investment in South Africa is that it’s not time-bound by the same deadlines as Western companies. “In general, they have a longer time-frame in respect of commodities.
“Disruptions don’t phase them and they have a completey different view of political risk,” he said adding that South Africa’s participation in the BRICS alliance was starting to bear fruit in these mining investments. “They are bankrolling some South African deposits as a means of getting in Africa,” he said.
A potential investment by China in the South African steel industry – which has limped along at best over the last five years - is another example of the speculative nature of Chinese investment.
State-owned Hebei Iron and Steel said on September 12 that it had signed a deal to take a 51% stake in a venture with the Industrial Development Corporation and the China-Africa Development Fund to build its biggest overseas steel mill.
It’s an approach that has David Brown, CEO of Coal of Africa, particularly interested.
CoAL recently sold additional shares to Beijing Haohua Energy (BHE) a state-owned Chinese company as part of its strategy to finance its projects and clean up the balance sheet.
“There would be a synergistic benefit of Hebei using our coking coal that serves the greater good for the Chinese,” said Brown. BHE already has about 24% of the company.
Investments by CAD, which has its regional headquarters in Johannesburg’s Sandton, are the ones that seem to stick in South Africa. “An investment by CAD is a major stamp of approval,” said Graulich.
This article first appeared in Finweek.

This article is a printout from
Copyright © 2009

São Tomé and Príncipe

São Tomé and Príncipe 

Central Africa, islands in the Gulf of Guinea, just north of the Equator, west of Gabon

Mineral production is limited to clay and volcanic rock. All other mineral product requirements are imported
Indications of the existence of hydrocarbons in São Tomé and Príncipe were first noted in 1974, but attempts by the Portuguese Colonial Administration to sign a concession agreement with Ball & Collins North Sea consortium (a predecessor of Premier Oil of the United Kingdom) were abandoned following the country’s declaration of independence in 1975.
Other attempts to start petroleum exploration during the late 1980s and 1990s also failed. In 2003, Nigeria (60%) and São Tomé and Príncipe (40%) agreed to jointly operate an overlapping maritime boundary located about 200 km offshore Nigeria known as the Joint Development Zone (JDZ). Activities in the JDZ were to be overseen by the Joint Development Authority (JDADA). The JDZ was divided into nine blocks, and a licensing round was opened for bids in 2004, which resulted in the award of Block 1 to a consortium made up of Chevron Corporation of the United States (51%), Esso Exploration and Production Nigeria-Sao Tome (One) Ltd. (40%), and Dangote Energy Equity Resources Ltd. (a joint-venture of the Dangote Group of Nigeria and Energy Equity Resources AS of Norway) (9%).
The consortium signed a production-sharing agreement with the JDADA in 2005 and, in January 2006, began drilling activities within the block. In May 2006, the consortium announced that it had encountered hydrocarbons in the Obo-1 exploration well in Block 1 and that it was in the process of evaluating reservoir rock and liquid samples to determine the next step of the appraisal process. Block 1 is located about 300 km north of São Tomé and Príncipe and about 200 km south of the city of Port Harcourt in Nigeria.
Asecond licensing round for Blocks 2 through 6 was opened for bids in 2005. Energy Inc. of the United States (ERHC) won the rights to these blocks and, in March 2006, the company signed a series of production-sharing agreements with the JDADA and several petroleum and gas companies, among which were Addax Energy Nigeria Limited, Addax Petroleum (Nigeria offshore 2) Limited, Addax Petroleum Resources Nigeria Limited, Sinopec International Petroleum Exploration and Production Corporation Nigeria, and several other petroleum and gas companies whose names were not disclosed. Following inquires by the Petroleum Affairs Commission, the National Petroleum Council recognized deficiencies in the awarding process and ordered a formal investigation. The Attorney General, after concluding that the procedures used in selecting petroleum companies was flawed, recommended a restructuring of the procedures for future bidding rounds that would conform to international standards. The Attorney General’s report also called for the reexamination of ERHC’s preferential rights for Blocks 2, 3, 4, 5, and 6 within the JDZ.
Since 2006, there has been no word on any of the reexamination of ERHC's preferential rights and the countries of Sao Tome and Nigeria are moving forward with the exploration of the JDZ for oil. In or about July 2009 there were scheduled two oil rigs to start exploration and drilling of petroleum reserves within blocks 2-4 and ERHC is predominant in these blocks. With the possible acquisition of Addax Petroleum by Sinopec, and with the reports of Sinopec looking into acquiring ERHC, it is looking more like Sinopec will be the mainstay of the JDZ for Sao Tome and Nigeria in this area.

ERHC EnergyInc. Signs Memorandum of Understanding for Sao Tome and Principe Exclusive Economic Zone
HOUSTON, Dec. 16, 2014 (GLOBE NEWSWIRE) -- ERHC Energy Inc. (ERHE), a publicly traded American company with oil and gas assets in Sub-Saharan Africa, today announced the signing of a Memorandum of Understanding (MOU) with an International Operating Company ("IOC") related to Block 11 of the Sao Tome and Principe Exclusive Economic Zone (EEZ). ERHC currently holds 100 percent interest in the Block.
Under terms of the MOU, ERHC agreed to grant first right of refusal to the IOC for a farm-out of EEZ Block 11 for a period of six months. Under the terms of the MOU, ERHC will keep the identity of the potential partner confidential except and until a definitive farm-out is agreed on and entered into.
Until a definitive farm-out agreement is entered into and approved, ERHC continues to operate EEZ Block 11. The work program during the first four-year phase includes re-processing existing data, completing an aeromagnetic survey over the Block and acquiring 2,500 km of 2D seismic data.
EEZ Block 11 totals 8,941 square km, situated directly east of the island of Sao Tome and abuts the territorial waters of Gabon. ERHC's preliminary studies on currently available data indicate the possibility of a significant cretaceous play in Block 11 similar to the Jubilee Field offshore Ghana.
In addition to its oil and gas exploration interests in the EEZ, ERHC holds interests in the Republics of Kenya and Chad, and the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).
About ERHC Energy

ERHC Energy Inc. is a Houston-based independent oil and gas company focused on growth through high impact exploration in Africa and the development of undeveloped and marginal oil and gas fields. ERHC is committed to creating and delivering significant value for its stockholders, investors and employees, and to sustainable and profitable growth through risk balanced smart exploration, cost efficient development and high margin production. For more information, visit

Indian Ocean Islands


Comoros consists of an archipelago of islands—Anjouan (Ndzuwani), Grande Comore (N’gazidja), and Moheli (Mwali)—which is located at the northern end of the Mozambique Channel. Grande Comore is the largest and youngest of the islands. The archipelago is the result of volcanic action along a fissure in the seabed running west-northwest to east-southeast. 

In 2012, the only mineral commodities produced in Comoros continued to be small quantities of common building materials that were used for domestic consumption. The demand for cement, petroleum products, and steel was met through imports. Import dependence and deforestation may lead to development of the country’s geothermal resources.

The Government of Comoros announced in 2012 that it had awarded its first petroleum exploration and production license to Bahari Resources Ltd., which was a privately owned company based in Kenya, and was taking the first steps to develop its petroleum exploration strategy. The exploration area has acreage adjacent to the offshore Area 1 and offshore Area 4 of Mozambique’s Rovuma Delta where Eni S.p.A of Italy and Anadarko Petroleum Corp. of the United States had made significant natural gas discoveries. Bahari Resources planned to undertake a phased seismic and drilling program within the licensed area. The Government also announced that it hoped to have a Petroleum Code in place by yearend 2013. 

map of Bahari licence


CIA Factbook
Mauritius Freeport Portal

The Republic of Mauritius, which is located east of Madagascar, consists of the main island of Mauritius, the smaller island of Rodrigues, and two smaller groups of islands. All the islands are of volcanic origin and are surrounded by coral reefs.

In 2012, the country had few mineral resources, and the mineral industry of Mauritius was a negligible factor in its economy. Historically, mineral output consisted of basalt for construction, coral sand, lime from coral, and solar-evaporated salt. Small organic phosphate fertilizer (guano) resources occur on the islands of Agalega, Cargados, and Rodrigues. Imported fuel oil was the main source of energy used for electricity generation  Mauritius’ main mineral commodity imports were lubricants and mineral fuels and related materials.

Seychelles, Mauritius Plan Joint Offshore Oil, Gas Exploration 
NAIROBI, Aug 19, 2013 (Reuters) – Seychelles and Mauritius plan to jointly explore for petroleum in an area in the Indian Ocean that they both own.
East Africa has become a focal point for exploration after oil discoveries in Uganda and Kenya and natural gas deposits in Tanzania and Mozambique.
"An Authority will be established to deal with the Licensing and to oversee the activities in the Joint management Area. All revenues will be split 50:50," Eddy Belle, chief executive officer of Seychelles upstream regulator PetroSeychelles said in an emailed response to questions from Reuters.
"Mauritius and Seychelles are still working on the legal framework that will dictate oil exploration and exploitation in the Joint Management Area (JMA). No deadline has been set for the opening of the area."
The two island nations received permission in 2012 from the United Nations for an extended continental shelf off their respective coasts, estimated to measure 396,000 square km. The granting of the joint exploration rights was meant to forestall any future maritime territorial disputes.
In June, Seychelles invited oil and gas companies to bid for exploration blocks, bringing to an end a two-year moratorium, and introducing new rules for bidders after completing a review of laws regulating the sector.
So far, Afren Plc and Australia's WHL Energy are the only companies holding exploration licences in Seychelles, an archipelago of islands northeast of Madagascar.
PetroSeychelles said in early August it had already received two new applications under the newly introduced Open File Licensing Initiative, which were undergoing due diligence before proceeding to the next stage of evaluation.

(Reporting by George Obulutsa)


Reunion is a volcanic island located about 200 kilometers southwest of Mauritius. Administratively, it is an overseas department of France, and, as such, is part of the euro area.

Mineral production represented only a very small part of the economy of Reunion in 2012, although quantitative information on mineral production was not available. Production of aggregates, cement, and seacoast coral sand was believed to meet local consumption needs. Reunion had no identified resources of coal or petroleum; all demand for metals, mineral fuels, and petroleum products was met through imports.


Source: PetroSeychelles

The Seychelles archipelago, which comprises 74 coralline islands and the Mahe group of 41 granitic islands, lies in the western part of the Indian Ocean. The Seychelles lies just south of the Equator in the Southwest Indian Ocean and at the northwestern part of the “boomerang” shaped Mascarene Ridge. It comprises over 115 islands of a total land area of 445 sq. km spread in an Exclusive Economic Zone of approximately 1.33 million

The outcrop geology is quite simple comprising granite intruded in places by basaltic dykes. This makes the Seychelles unique among mid-oceanic islands and it is this fact that attracted geoscientists to conduct geophysical investigations in the Seychelles in the late sixties.

These granites have been dated and they are Precambrian in age at 750 million years old. It is generally accepted in the scientific community that the islands are the emergent peaks of a microcontinent that once formed part of the super continent of Gondwana. The exact extent of this microcontinent is currently still unknown but there is evidence to support a southeasterly extension at least as far as the Saya de Malha Bank.

Seychelles is not a globally significant mineral producer or consumer. Production of granite, gravel, and salt was limited and not reported. Other mineral production consisted mostly of unreported quantities of construction materials. Small quantities of an organic phosphate fertilizer (guano) was occasionally mined but also was not reported by the Government. Seychelles had no identified resources of coal, natural gas, or petroleum. All demand for mineral fuels and petroleum products was met by imports
The mineral industry is regulated by the Ministry of Industry. The Mineral Ordinance, 1962, governs mineral extraction and mining.

The petroleum potential of the entire Seychelles region continued to be promoted by the Government’s Seychelles Petroleum Co.(Sepec). Although multinational companies have explored the waters around the islands off and on for several years, no commercial quantities of natural gas or petroleum had been found as of yearend 2012. In 2012, WHL Energy Ltd. of Australia completed a comprehensive geologic and technical review of its Seychelles license. These studies indicated a potential for petroleum in WHL Energy’s 21,426 square kilometer acreage. The studies included the reprocessing of existing seismic data and rebuilding the hydrocarbon basin models.

Currently, there are two oil companies exploring in Seychelles and these are AFREN, a UK listed company, and WHL Energy – an Australian listed company. Both these companies have drilling obligations. AFREN has recently completed a 3-D seismic acquisition program and WHL energy will also conduct a seismic infill or 3D programme before drilling.

“Fast-track” data from 3D seismic survey in Seychelles waters is encouraging, says Australian oil company WHL
Victoria, Seychelles | October 16, 2014, Thursday @ 15:57 in Business » ENERGY | By: Sharon Uranie 

“Fast-track” data from 3D seismic survey in Seychelles waters is encouraging, says Australian oil company WHL
Map of surveyed area (Junon Block) in the Seychelle EEZ (PetroSeychelles)

Australian oil company, WHL Energy, has described as “encouraging” preliminary data that has become available as a result of a 3D seismic survey carried out in its Seychelles offshore asset between June and July this year.
The seismic survey of an exploration block known as Junon, 115 kilometres southeast of the main Seychelles island of Mahé was undertaken by its partner FTSE-listed Ophir Energy.
Dolphin Geophysical, a Norwegian service company won the contract for the survey which was conducted by their 3D vessel, the Polar Duchess.
Ophir Energy which is involved in oil and gas exploration in East and West Africa with interests in countries including Ghana, Gabon, Somaliland and Kenya, signed a farm-in deal with Australian oil company WHL in March.
Under the agreement Ophir stands to earn a 75 percent stake in WHL's offshore Seychelles assets in return for an investment of up to $17.0 million on exploration, including the conducting of some 1500 km² of 3D seismic surveying. 

Polar Duchess, of Norwegian company Dolphin Geophysical that conducted the 3D seismic completed in July this year. (Bruno Webster, Dolphin Geophysical) Photo License: CC-BY

In a press statement issued todayWHL Energy says an initial review of the “fast-track” data volume from the Junon 3D seismic survey that it has received is encouraging “in that the key prospects identified on the previous 2D seismic data can be interpreted on the fast track volume.”
WHL undertook a 2D seismic survey when it first acquired its Seychelles exploration permits.
The data now needs to be fully processed and WHL has indicated that an initial interpretation should be available by December this year.
“It is pleasing to see the progress with the investigation of the high potential Seychelles project continue utilising the latest technology available,” said David Rowbottam, the Managing Director of WHL Energy, in the press statement.
“While this initial seismic volume of the Junon 3D seismic data is very early stage with a lot of state-of-the art processing and interpretation yet to be undertaken, it is encouraging that the key geological features noted in the earlier 2D seismic can be interpreted on the fast track 3D seismic volume.”
The state owned company responsible for regulating the hydrocarbon sector of the Indian Ocean archipelago, PetroSeychelles, told SNA that they will have access to the “fast track” data shortly.
“It is encouraging news. PetroSeychelles will nevertheless undertake its own interpretation of the preliminary data that has become available while we wait for the data to be fully processed and get the final interpretation,” the Chief Executive Officer of PetroSeychelles Eddie Belle told SNA.
Once fully interpreted that data is expected to give the investors a better indication of whether drilling should commence around the surveyed areas and where it should take place.
Since the beginning of this year oil exploration in the Seychelles waters has been attracting more interest with several foreign companies currently involved in collecting seismic data.
Apart from the joint venture between Ophir Energy and WHL Energy, the state-owned company responsible for regulating the hydrocarbon sector of the Indian Ocean archipelago, PetroSeychelles, and Japan Oil Gas Minerals Exploration Company (JOGMEC) also conducted a two-week geochemical survey in the waters south-west of the main Seychelles island of Mahé in May.
Before that, in April, Russian seismic vessel ‘Akademik Fersman’ carried out a 2D seismic survey as part of the same JOGMEC-PetroSeychelles venture.
The CEO of PetroSeychellesEddy Belle, also indicated that the country’s other exploration license holder, AFREN, will also be conducting an additional survey within the Seychelles’ EEZ early next year.
As foreign companies continue prospecting for oil and gas in Seychelles waters', the archipelago has also recently been accepted as a candidate country by the Norway-based Extractive Industries Transparency Initiative (EITI) board.

EITI sets the global transparency standard for all minerals and Seychelles joins 45 other countries worldwide, that are required to extensively disclose revenues and measures to improve accountability in exploitation of oil, gas and minerals. 

Seychelles: Oil Exploration - Seychelles, Mauritius And Comoros
Last Updated: 28 August 2014
Article by Luke Havemann
International Oil Companies (IOCs) that have been eyeing East Africa may want to look beyond established jurisdictions like Kenya and Mozambique. Across the water that is, to the Indian Ocean islands of Seychelles, Mauritius and Comoros. All three islands offer interesting opportunities, but in this short article I'll be concentrating on just one of them – Seychelles.
General Background and Geology
Seychelles, which lies outside the cyclone belt, enjoys a stable weather system, with daytime highs ranging between 25 and 31⁰ C. Besides being a high-end tourism destination, Seychelles has a thriving fishing industry, and a versatile port that can accommodate container ships and tankers. There's an international airport, with flights to Europe, Africa, the Middle East and Asia. Telecommunications are good. The country is politically stable. The population of some 87,000 is well educated. In short, it's a good place to do business.
From a geological perspective, Seychelles was once part of the supercontinent Gondwana which, as result a of the rifting that occurred during the early Permian period, led to the formation of East and West Gondwana, as well as the micro-continent where the island nation now finds itself. Seychelles also finds itself in the Seychelles Rifts AU, one of four assessed geological provinces and assessment units (AUs) along the central coast of East Africa.
The Petroleum Industry
As things stand, Seychelles is underexplored and only four exploratory wells have thus far been drilled. The first three wells were drilled in 1980 and 1981. Although commercial quantities of hydrocarbons were not discovered, these wells uncovered oil and gas shows and proved that Seychelles possesses a working hydrocarbon system. In the words of Eddy Belle, CEO of PetroSeychelles: 'Three wells were drilled by Amoco in 1980 and 1981. They found all that is necessary to have an oil province." It was not until 1995 that Enterprise Oil drilled a fourth exploratory well that turned out to be dry.
The petroleum industry in the Seychelles is a truly nascent industry that has much exploration ahead of it, as well as a long way to go before production of domestic hydrocarbon resources might be considered. Notably, the aforementioned PetroSeychelles - which is an arm of government - oversees the upstream petroleum sector, promoting and supervising oil exploration programs in the Seychelles Exclusive Economic Zone. A government-owned company, Seychelles Petroleum Company (SEYPEC), operates in the downstream sector. It used to be the case that SEYPEC was the regulator, not PetroSeychelles, however, since SEYPEC had a share in the companies conducting the exploration, a conflict existed between that shareholding and its obligations as a regulator. Consequently, PetroSeychelles was formed. According to Eddy Belle, PetroSeychelles is well-placed to reduce the amount of time that it may take for Seychelles to develop its own petroleum industry. To this end, Belle has stated that "when it comes to decision-making, we're much faster than a ministry...being an independent body that has its own funds, we move much faster...because we are also like a national oil company, discussion with other companies is much better as we are more or less on the same wavelength."
The Indian Ocean islands have, unsurprisingly, seen benefits in working together closely towards the development of their potential resources. For example, Seychelles and Mauritius are in agreement regarding a Joint Licensing Area in terms of which revenue will be split on a 50/50 basis – the two are hammering out a legal framework for the Joint Management Area (JMA), and some form of authority that will deal with licensing and oversee activities in the JMA. Seychelles and Mauritius have also submitted a joint submission to the Commission on the Limitation of the Continental Shelf (CLCS) for an extended continental shelf in the south east (Seychelles is itself also seeking an extension of the CLCS in the north).
Legal Framework
The Petroleum Mining Act says that the state owns petroleum accumulations within the Seychelles, and that the government can grant non-exclusive licences to companies to carry out exploration services. The Act also allows the government to enter into a Petroleum Agreement with an IOC in terms of which the company is granted exclusive rights to explore for, and produce, petroleum within Seychelles – the size and location of the acreage to be included in the agreement will be settled by negotiation, but the size must not exceed 10,000 square metres.
There is a Model Agreement in existence, and this provides for a duration of 34 years if commercial discovery occurs. This period is divided into two phases - an Exploration Phase of nine years (itself made up of three, three-year periods), and a Development and Production Phase that starts on the date on which the company decides that it's commercially viable, and continues for 25 years.
In June 2013 Belle said this: 'We are working on updating our petroleum model agreement....we're making it in line with what is happening elsewhere in the world... this is where we will look at models like that of Norway." Not only has Seychelles turned to the Norwegians for assistance, it has also sought advice from the Extractive Industry Transparency Initiative (EITI), the World Bank and the Commonwealth Fund for Technical Cooperation. As Belle has, rightly, stated: "we're small so we don't have capacity, which means we have to rely on others who have the capacity to assist us.'
Fiscal Regime
In Seychelles, there are three principal revenue-sharing mechanisms:
  • A royalty of 10% levied on the market value of oil produced and saved during each month.
  • Petroleum Income Tax of 35%, which is paid in accordance with the Petroleum Income Tax Act 2008.
  • Petroleum Additional Profits Tax (PAPT), a resource rent tax levied on cash flows. The Model Agreement provides for a two-tier structure for PAPT - the first becomes due once the company has earned a particular threshold rate of return on its investment, and the second becomes due after the company has earned an even higher post-tax rate of return. The first threshold rate of return which triggers payment of PAPT is 15% and the tax rate is 25%, the second threshold rate and tax rate are negotiable.
Licensing Initiative
As part of its Open File Licensing Initiative, Seychelles invited IOCs to bid for exploration blocks in June 2012. Two applications were received, one from Afren Plc, and one from WHL of Australia. Both companies now hold exploration licences. WHL has already entered the drilling phase and it is in the process of farming out. Afren has conducted a survey and it is apparently in the process of identifying a deep-water drilling location, with drilling due to start in the last quarter of 2014. According to Belle, Petro Seychelles has been trying to establish links with Sinopec and with CNOOC. He says that 'they can see the merit here, but there is an element of risk because we are still frontier...however, once we have the first discovery then there will be a flood of companies.'
The Open File award process works as follows – an application for a 10,000 square km area can be made at any time, PetroSeychelles will then verify if the minimum criteria are met, and there will be a notice of the application's filing and the solicitation of competitive applications (with a 90-day limit). There is no need to reveal the identity of the applicant or the proposed terms.
The variables in the Petroleum Agreement should be the following: area; work program; rental payments; relinquishing terms; fiscal terms; and training commitment. The Exploration Phase should include the following: Period 1 (years 1-3), funding for seismic (US$15 million); Period 2 (years 4-6), funding for at least one well (US$25 million); and Period 3 (years 7-9), again funding for at least one well. As for the recommended minimum acceptable applicant qualifications, these include technical and professional capacity, as well as financial ability.
The weighting criteria for competitive bids are as follows:
  • Work program: geological prognosis, 10%; Period 1 commitment, 40%; and Period 2 proposal, 10%.
  • Fiscal considerations: Tier 2 PAPT and any other items, 10%.
  • Applicant qualifications: technical, 15%; financial, 15%.
new areas


Seychelles may be a frontier area, but much data is available, and interesting leads have been mapped. The data confirms that a working petroleum system exists, with all the necessary ingredients - source, reservoir, seals and structures - to make the area an oil and gas province. The government has recognized the importance that the discovery of petroleum would have for its objectives, and it has put in place the required legal framework to facilitate exploration and the eventual production within its marine boundaries. There are exciting opportunities for companies to bid in the Open File system, or to farm into existing licences. The Indian Ocean islands seem promising and Seychelles may well demonstrate that not all the action, so to speak, is to be found on the continent itself.

Tanzania World Bank Involvement

Tanzania World Bank Involvement
:From 1994-2000, IDA supported mining sector technical assistance in Tanzania in the areas of mining legislation and regulations, mining fiscal regime, environmental policies and enforcement, divestiture of state-owned enterprises, and strengthening institutional capacity. The foreign direct investment in the mining sector increased to an average of US$250 million per year in 2001-08 from less than US$10 million per year in 1990-99. However, as the fiscal regime was designed to attract investment into a declining, high-risk sector, mining tax revenues were only 4 percent of total fiscal revenues in 2007, and several mining communities were not satisfied with their benefits from the mining operations. Since 2009, IDA has been supporting the government to strengthen its capacity to manage the mineral sector to improve the socioeconomic impacts of mining. In 2010, the government passed a new mining law that increases the rate of royalty paid on minerals from 3 to 4 percent and allows for participation by the government in all future mining projects. 

Madagascar World Bank Involvement:

Madagascar World Bank Involvement:
IDA has supported mining sector reform in Madagascar through a series of technical assistance projects since 1998, with emphasis on attracting investment, improving the sector’s environmental performance, and ensuring that the sector’s benefits are widespread. The reforms fostered a large increase in activity, including the development of large mining operations in ilmenite and nickel/cobalt. Given the country’s widespread poverty, the government undertook a strategy centered on strengthening local governance, decentralizing fiscal revenues, and providing technical assistance to community associations and municipal governments for the integration of mineral resources management in their development plans.
Two investment agreements totaling US$5.5 billion were signed in the mining sector in 2005-06. Approximately 12,000 domestic jobs were created during construction of the two mines.The ilmenite mine opened in 2009 and the nickel/cobalt mine opened in 2012 and, according to company reports, is positioned to become the world’s biggest lateritic nickel mine by 2014. Mine forestry committees have been established to assist with biodiversity and land use planning. Both mining companies have provided extensive short-term training and some long-term training for workers that will help provide local communities with a source of income beyond mine closure. Both companies have taken proactive stances in enabling local small and medium enterprises to take advantage of business opportunities arising during construction and exploitation. A multi-use port partially funded by the World Bank (US$32 million, 2006) was built near the ilmenite operation, while the nickel/cobalt operation did a major port upgrade. Both operations provide power to their local areas. An additional objective was to establish a foundation in connection with the ilmenite mine that would provide local communities with a source of income far beyond mine closure.