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Folded Newspapers

Our periodic mini-bite series contain news stories, articles and light reports about Bargate or other activities in the industries that we cover.

November 2021

November 2021

Nigeria: Generous Mining Destination?


Nigeria was in the news a few days ago, for good reasons. The country’s mining sector minister, Olamilekan Adegbite said that foreign investors into Nigeria’s mining sector can not only keep 100% of their minerals mined but also would be granted a three-year tax holiday for their troubles. This is in addition to other incentives being thrown in the direction of potential investors to attract risk capital into a sector that hasn’t quite managed getting off the ground after a series of government attempts since 2007.

Nigeria is a significant player in the West African market space and has the largest economy in Africa with a GDP of USD 448.1 billion as of 2019. It is Africa’s biggest oil exporter and has the largest natural gas reserves on the continent. In recent years, the government of Nigeria has identified diversification of the economy as one of the main policy priorities. Mining has been one of the focus sectors in the government's diversification strategy. However, the sector accounts for around 0.3% of national employment, 0.02% of exports and contributes to about 0.3% of GDP. 

While it is clear that Nigeria is abundant in mineral resources which haven’t been exploited to their full potential, the petroleum sector, along with an absence of dedicated policy and infrastructure driven incentives, have led to the neglect of mining.

The schematic below provides a quick snapshot of the challenge.

Nigeria Mining schematic.jpg

The headline concessions by the federal government are great, but there are questions that still need answering.


What infrastructure is available to transport your mineral ores to the port for export? How easy is it to process this export? How much beneficiation in-country will be mandated? If there is no domestic beneficiation mandate, what is available for processing mineral ores in-country and at what scale? What incentives are there for investors to set up large scale processing activity? How easy is it to enquire about the status of existing mining rights? Where, in fact, are these incentives as spoken about by the minister, articulated?

We can help with answers to these questions and help with framing and executing your entry strategy.

Do get in touch.

October 2021

October 2021

Opinion: An Oil Conference in Angola


There’s an oil and gas and renewable energy conference in Angola in a few weeks. We’re attending, but not speaking. Its timing is interesting. Concluding just two days before the 26th UN Climate Change Conference of the Parties (COP26), you might be tempted to conclude that the participants in this event would be unlikely to actively participate in Glasgow a couple of days later.

The Luanda event has managed to draw a crowd, it would seem. However, the makeup of the crowd is somewhat reflective of the changing dynamics in the public dealings of the big, traditional IOCs and the industry in general. Sinopec is coming and has been accorded special guest status. Other organisations who appear to have permitted employee representation in this conference include BP Angola, TotalEnergies Angola, Chevron Angola. That’s it. Is this indicative of the pull of the conference organisers, bad timing with COP26 around the corner, or the winds of change?

Angola energy.png

There was a Time when events like these would be heavy on the agenda but the transition is well and truly on, if you ignore the boring parts of how markets work and how they interact with regulatory stimuli.


It is useful to note that OPEC essentially held back from boosting production further. Some argue that this is because it can’t. Nigeria, for example, simply can’t at the moment. Why, you ask? Get in touch.

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Oil prices have started crossing 2018 levels. Supply chains really took a beating from  (and have been seriously exposed by) covid. Big players are divesting to meet a double objective of reducing their emissions headache and getting away from troublesome plays. And these exits are to smaller, less experienced companies with budgets not big enough for the kinds of methane-leak-reduction investments that net zero regulations might require of them (as one example). Plus, they will need time to raise capital, build capacity, make mistakes.

The demand profile was disrupted by covid, but that seems to be all that has happened. A 100 mb/d global demand picture is still likely, and the structure of this demand isn’t changing anytime soon. We seem to be willingly allowing ourselves to be blindsided by what is more and more looking like a supply crunch problem ahead. Will this be said in Luanda in a couple of weeks? We’re confident it won’t be said in Glasgow.  

Let us know your thoughts. Join the conversation on Twitter @BargateAdvisory

August 2021

August 2021

Petroleum Industry Act:

a generational wait for the cows to finally come home

If you were born when the new Nigerian Petroleum Industry Act, 2021 was first conceptualised and expressed in draft form, and you were a really bright kid, you’d just be coming out of university or undergoing your National Youth Service Programme.

Until the cows come home.png

 This piece of legislation has taken an entire generation to come to fruition and arrived at a time when the global energy conversation is looking at petroleum the same way it looked at coal over half a century ago, i.e. trying to retire it.  

The Act does a number of things that, arguably, can be said to finally point in the direction of some re-organised governance for the sector. For example, a new Midstream and Downstream Petroleum Regulatory Authority (we will have fun watching people have a go at the acronym NMDPRA) will replace the Petroleum Products Pricing Regulatory Authority and the Petroleum Inspectorate. There is a straight swap at the upstream end of the governance spectrum, in which the Nigerian Upstream Regulatory Commission will replace the Department of Petroleum Resources. Another straight swap is the creation of the Nigerian National Petroleum Company (NNPC) Limited, replacing the Nigerian National Petroleum Corporation (NNPC without the ‘limited’). All of this is fine, until we start to ask questions about what they will do.

The Upstream Regulatory Commission (or the Commission as is later referred to in the law – mafia movie buffs drafting the legislation might have had a giggle or two) will oversee a Frontier Exploration Fund which will be funded from 30% of NNPC Limited’s profit oil and profit gas in the production sharing, profit sharing and risk service contracts. It has rules restricting how it will be utilised, such as locking it in escrow for use subject to appropriation by the National Assembly. On the face of it, especially considering what looks like an increasing global reluctance of risk capital to pursue upstream exploration, this is quite a commitment by the Nigerian government to continue along its upstream exploration path. So many questions come out of this, ranging from who will benefit from the fund, to how efficient the fund will actually be on (say) an investment-to-wells-drilled basis, or where the market will be for developed discoveries (if the world somehow finds itself in the IEA Net Zero world by 2050), or if there really isn’t better use for the funds in other sectors such as education or healthcare.

Another example of what these new entities can do is the NNPC Limited’s ability to participate up to 60% in negotiated contracts or as a stipulated bid parameter. There are so many things that can go wrong with this kind of aggressive state participation strategy, ranging from no deals at all to some really low-quality partnerships. We think it unlikely that state participation levels will frequently exceed 15% in this climate, but stranger things have indeed happened.

In terms of the actual provisions dealing with how to go about exploring for and developing the stuff, much of it is either regular fare or has been covered to some extent in the many previous iterations of the legislation over the last generation. For example, we covered the fiscal provisions a few times a while back (e.g. here and here) when we thought these provisions would be passed as a separate law. Also, significant coverage of these provisions has been done by our friends at Like most other similar pieces of legislation, this new law still applies the inflation-agnostic system of fines, such as the US$3.50 per MMBtu fine for failure to comply with the domestic gas delivery obligations. Something to keep some folk at the Commission busy when it emerges that inflation has eroded the punitive impact of such fines or that they were inappropriately calibrated in the first place. Perhaps.

In all, this new piece of legislation has been hard to read. It hasn’t been hard to read because of its size (it’s only 253 pages with 319 sections). It has been hard because we, like other analysts, have been exhausted by the previous versions and iterations of this law (over a dozen of them) and now we just want to see how it pans out. We have views on how it could pan out and what the economic and strategic implications would be for investors still brave (or silly) enough to play in this space.


We are, as always, happy to talk. Do get in touch.

July 2021

“Authentically” Handmade – what does this even mean?

July 2021
New Microsoft PowerPoint Presentation_edited.jpg

The Democratic Republic of Congo (DRC) is expected to start buying cobalt from artisanal miners by the end of the 3rd quarter of this year. Through L'Entreprise générale du cobalt (EGC), a wholly owned subsidiary of state-owned Gécamines, They hope to bring some structure and (of course) earn some revenue from the informal sector which is known for its rather interesting labour practices, health and safety standards as well as the “occasional” illegal activity.

However, they won’t be the first African nation that makes an attempt to formalise or regulate the artisanal mining sector. In Ghana, the Small-Scale Gold Mining Act of 1989 had the same lofty ideas with the primary objective of formalizing the sector, closing down illicit activity and capturing ‘lost’ revenues. Fast forward to 2019 (still in West Africa), Nigeria launches its Presidential Artisanal Gold Mining Development Initiative (PAGMI) with an aim to integrate artisanal gold mining activities in the country and boost foreign reserves.

How successful are these initiatives and should anyone bother really?

It is universally agreed that there is no universally agreed definition of artisanal and small scale mining (go on, read the sentence again). Artisanal and small-scale mining (ASM) are often discussed as a collective as the distinctions between the two are often blurred when one moves across different jurisdictions in Africa (and globally).

However, artisanal miners are mostly characterised as individuals or groups of individuals (often families) using basic hand tools to mine relatively easy to access commodities, mining on varying sites and mostly without licenses. Where some formal structures have been developed, these miners may belong to cooperatives or some other legal structure and may have dedicated sites for artisanal mining. On the other hand, small-scale miners tend to own their own licenses have more fixed installations and use more complex machinery.

The importance of this bunch for an economy cannot be overemphasised: In Zimbabwe, it is estimated that over 60% of the gold produced is mined by artisanal and small scale miners. In Nigeria, this figure is reportedly around 80%. The sector provides a source of employment for the many rural communities where these minerals are often found. It is therefore not surprising that any tax or royalty-collecting-entity worth their salt will get excited about the opportunity to tap into this seemingly vast pot. An estimated U.S $3 billion was lost by Nigeria due to illegal gold mining.

Someone also needs to step in and bring some order

In Zamfara state, Nigeria, illegal mining is one of the main causes of violent conflict. “The wave of rural banditry is said to be a result of a fiefdom of deadly gangs struggling for a piece of the pie. Criminal networks fuel community violence to provide the necessary cover to continue to exploit these mineral deposits. They do so in collaboration with traditional rulers, politicians and foreign opportunists”, very often, Chinese foreign opportunists. In 2017, Ghana launched Operation Vanguard, a military police unit to combat the activities of “Galamsey” (the street word for illegal miners in Ghana).

Ok class, if you have been paying any attention, you would quickly note that almost 30 years after Ghana’s Small-Scale Gold Mining Act of 1989, it appears that bringing order to and clamping down on illegality has not yet been achieved in the country. The 400 strong military “anti-galamsey” unit in Ghana is expected to remain in specific mining regions until all illegal mining activity seizes to exist.

The thing is some government intervention has actually “encouraged” illegality. In Zimbabwe, miners must sell their gold to Fidelity Printers and Refiners, the state owned buyer of gold. Fidelity pays $54 per gram while private buyers from neighbouring South Africa pay between $58 and $60. It, reportedly, takes more than two weeks for Fidelity to process payments which is given part in local currency (45%) and part (55%) in USD. Yes, smuggling into neighbouring South Africa and nearby Dubai is rife. The monopoly of the government as the sole buyer of gold has contributed towards losses and non-performance in the sector.

Okay, Mr DRC-artisanal-cobalt-state-buyer, back to you. We are excited that EGC will contribute to government revenues and hopefully reduce some pressure on the forecasted global cobalt shortage. We are thrilled that you intend to use blockchain technology to track the minerals passing through the EGC-purchase process but if you have not done so already, it is worth reviewing some of the schemes in other African states to understand where they may have gone wrong.

Do get in touch.

June 2021

June 2021

Oil, gas and arranged marriages

Nigeria’s ongoing marginal field bid round has been a curious one.


For those who submitted bids for specific acreage, it would have been interesting to have cameras at the ready, to capture facial reactions as they learnt from the Department of Petroleum resources that they had partners, about whom they previously had no idea.


Congratulations, you have 25% of a 5-partner consortium for Field X. Of course, this is not what your bid envisaged, as you would have likely run your numbers based on the whole pie. You would also have secured commitments from technical partners who already have misgivings about things from regulatory risk to security and the small matter of whether people still want to invest in E&P anymore.

But you are here now with a fraction of an already small field, with partners you now need to conduct due diligence on, and with whom some agreement must be reached regarding who will operate the field (if DPR has not already decided that for you by virtue of who got the biggest share of the new partnership pie). You also must raise the signature bonus (the deadline has since passed, but part of the curious nature of this round is that deadlines have been more akin to guidelines. Perhaps we can blame Covid-19. It seems to work for everything else).

Are you doing this in consortium with your new partners? Have your new partners struggled to pull their weight? Have you found funders bold (or crazy) enough to invest in your asset? Have you recalibrated the project economics based on the new partnership structure? Have you redone your risk assessment?

Do get in touch, let's discuss.

May 2021

May 2021

A bit about Copper

In the past 5 years, copper has more than doubled in price. As at late April 2021, it was trading very close to US$10,000 per tonne and is predicted to rise to $20,000 per tonne due to low stocks and increased demand, according to analysts at Bank Of America. Other analysts have referred to it as the new oil. Copper is one of the oldest metals known to man and indeed was the first metal traded on the London metal Exchange (LME).

5yr copper prices in Lbs.png

Copper has had a wide variety of uses: it was mixed with tin to create bronze which was used as currency and worn as jewellery during the bronze ages. Egyptians also used it to sterilise water and treat infections.


In present times, it can be found in hospital door handles and stair railings due to its anti-bacterial qualities. Copper is also used for wiring as it is a good conductor of electricity. In addition, it has other industrial uses such as electrical product manufacturing, building construction and infrastructure. Copper is one of the key minerals supporting cleaner power production and energy as it is a primary component for the manufacture of wind turbines, solar cells and electric vehicles.


Copper Production Process.png

Copper production process

source: LME

The Democratic Republic of Congo (DRC) is the largest producer of copper in Africa and the 4th largest producer in the world with 1.3 million metric tonnes in 2020. Most of the country’s copper operations are in the province of Katanga which is located on the Central African Copperbelt. The Central African Copperbelt is the world's largest and highest-grade sedimentary copper province, with approximately 200 Mt of contained copper and the world's largest cobalt reserves. It includes the Zambian Copperbelt, the Congolese Copperbelt, and deposits in the North West Province of Zambia.

Major Producers of Copper from 2010 to 2

China Molybdenum Co through its subsidiary, Tenke Fungurume Mining SA, is the largest copper producer in the DRC. Glencore and Ivanhoe Mines also have large copper mines in the country.

Zambia is the 2nd largest producer of copper in Africa, producing 830k metric tonnes in 2020, up 10.8% from the 796k  produced in 2019. Copper represents 60 percent of the country’s total exports.


The largest copper mines in the country are owned by Barrick Gold, Glencore and First Quantum Minerals. However, in recent times, the Zambian government has pushed to increase its participation in the mining industry.

Major producers of Copper from 2010 to 2020  (in 1,000 metric tons)


What next for Copper?


The demand for metals like copper is expected to rise tenfold by 2050 according to the World Bank. This demand is strengthened by the crucial role copper plays as a key component to growing sectors such as electric vehicle manufacturing, electronics and renewable energy. According to Bank of America, “the world risks running out of copper” as demand grows much faster than supply. The International Wrought Copper Council (IWCC) expect copper market demand to rise to 24.458 vs supply of 23.95mt leading to a deficit of 500,000t this year. Macro-economic shifts in major producing jurisdictions like Chile and Peru will also impact prices globally.

If the ambitions of the US government under the Biden Administration come to fruition, then the huge infrastructure spending envisaged will likely also raise demand for copper. This should add to the excitement.

However, copper is found in many parts of the world, therefore it is not as exposed to country/political risk as other cleaner energy minerals such as rhodium. In addition,  good grade copper is infinitely recyclable: about 50% of the copper used in Europe comes from recycling and this figure is expected to grow as we move towards a greener economy globally, thereby reducing the pressure on the limited supply.

April 2021

April 2021

Another win for Ghana?

Twitter’s announcement in April that it will set up its African base in Ghana apparently restarted the ongoing rivalry between the West African country and its not-to-distant neighbour Nigeria, colloquially dubbed the “Jollof” wars. Whether in football, music, rice or the film industry, the love-hate relationship between the two countries has continued for many years.

That is not what this piece is about: this short write-up takes a cursory glance at the mining sector in Ghana.  However if you are Nigerian, it is probably best to stop reading here.

General Backdrop

Ghana is a well-established mining destination with a few large-scale mining companies operating in the country, including AngloGold Ashanti, Newmont Goldcorp, Gold Fields Ltd and Golden Star Ltd to mention a few. Mining has continued to play a crucial role in the economy and accounts for over half of all foreign direct investment and more than one-third of all export revenues.

With a contribution of around 95% of the country’s mineral revenue, gold is, by far, the most commercially exploited mineral. In fact, Ghana overtook South Africa in 2019 to become the continents largest producer of Gold with over 5 million ounces produced annually. For comparison, Nigeria produced about 500k ounces in 2019 (we did ask that you stop reading!). However, it is worth noting that this represented a 34,900% increase from the 40kg in 2006. It is also important to note that these figures, from various geological surveys, do not capture volumes from the illegal mining trade in places such as Zamfara in Nigeria.

Other notable mineral deposits found in Ghana include manganese, bauxite and diamonds. Ghana also discovered commercial quantities of lithium in 2018, a core component in the rechargeable batteries that run electric vehicles.

Structure of the industry

Private owned companies can obtain rights to minerals through the license application process of the Minerals Commission of Ghana via its Mineral Cadastre Administration System. There is no restriction on foreign ownership although the Government is entitled to a 10% “free-carry” in the rights and obligations of the mineral operations.

The government can also obtain further participation in mineral operations upon agreement with the license holder.  Small-scale mining is reserved for locals, as is the case in most African states (at least on paper).

There are two categories of gold mining licenses that can be obtained in Ghana – large scale and small-scale mining lease. Holders of the latter must sell their mined gold to the Precious Minerals Marketing Company (PMMC) or other gold buyers licensed by Government. Gold produced by such license holders are the ones sold locally and purchased by the licenced gold dealers mainly for export or limited refining by refineries in Ghana. Whereas those with large-scale mining licenses do not sell their gold locally. For these, sales have either been by the spot price at the London Metal Exchange or by other Marketing Agreements with overseas refineries with the approval of Government. Exports of gold are regulated by the Bank of Ghana, Ghana Revenue Authority (Customs Division) and the Minerals Commission.

(source: Bargate research; Minerals Commission Ghana)


For a detailed analysis or evaluation of a specific asset in Ghana, contact us @BargateAdvisory

March 2021

March 2021

Small (and viable) Gas Plays in Nigeria?

The global shift away from fossil fuels is well and truly on. Big IOCs are falling over themselves to show who is more intent on going green (with a particular penchant for solar and wind power technologies), and international development finance institutions are announcing one after the other that they will no longer provide financial support to overseas fossil fuel energy projects. They, however, mostly mean oil.


Gas, on the other hand, mainly because it is cleaner and is considered a “transition fuel”, still has a fair bit of traction and will do for some time yet. And Nigeria has this in spades.

This very brief note invites the reader to consider just one component of the gas story in Nigeria: the bit that gets flared. According to the Department of Petroleum Resources, about 19% of the 1,7  tscf of gas produced in 2018 was burnt.

That is a fair bit of commercial asset that can be compressed and transported in road tankers, or that can be piped to a power station. Moreover, utilising this gas instead of flaring is a cleaner approach.


The government thinks there is a lot of value to be extracted from this. This is largely why they embarked on a (rather stuttering) gas flare commercialisation programme. The aim of the exercise is to get interested parties to come round and propose commercially viable technologies to utilise these flared gas volumes.


We also think there’s value here (not necessarily in the programme itself which, for reasons mainly surrounding process and logic, has stalled). Small and mid-scale projects are increasingly more commercially viable, particularly with regard to gas-to-liquids (GTL) and small scale liquefied natural gas (LNG) projects. It could be power. It could be methanol. It could be fertiliser. It could even be base oils from a complex GTL process. Associated gas offers an increasing number of opportunities and project development options for low CAPEX projects, particularly from all the stuff currently being burned off at the tip of the gas flare stacks littered across the Niger Delta.


We’d love to discuss, and advise on, these opportunities from soup to nuts. Do get in touch.

February 2021

February 2021

Bargate Update

Mining and metals

According to the World Bank, production of minerals like lithium and cobalt could grow by 500% in the next 30 years as demand for clean energy technologies continues to grow. For example, a 3MW- capacity wind turbine requires 4.7 tonnes of copper. It is evident that as the world continues its pursuit for cleaner energy, the importance of mining and metals cannot be overemphasized. Africa has a big part to play: Cobalt is one of the core components for the manufacture of batteries for electric vehicles (and those used to store solar power). Around 70% of the world’s cobalt supply is produced in the Democratic Republic of Congo (DRC). The Copperbelt, which lies between Zambia and DRC produces approximately two-thirds of the world’s copper.

Last month, our Managing Director, Ugo Isiadinso, joined Nouman Khalid Al Sayed of the High Aspirations podcast, where the pair discussed mining in sub-Saharan Africa with a focus on Nigeria. This light discussion is accessible to both mining and non-mining professionals. Watch the video here

Advisory board

We are pleased to welcome Nigel Walls as the newest member of Bargate's Advisory Board. Nigel joins with over 30 years' experience in the mining industry and will support Bargate's aggressive growth strategy into the mining industry in sub Saharan Africa. 

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