The Gold Rush in Burkina Faso
The Gold Rush – Burkina Faso
March 22, 2016
Primary Article Contributor – Talitha Cherer, Co-Leader Burkina Faso Team
Key Words: Gold, Canadian Mining, Burkina Faso
Burkina Faso possesses relatively few natural resources and, therefore, relies on a rather undiversified economy. In 2014, the main exports of Burkina Faso were gold, cotton, and livestock. However, these exports do not carry equal weight economically. In recent years, gold production has more than doubled, replacing cotton as the country’s biggest source of income. In fact, the country shipped 36.6 metric tons of gold last year, valued at approximately $1.4 billion. The growth rate and reliance on this resource is occurring at an alarming rate. According to the International Monetary Fund (IMF), gold mining accounted for three-quarters of exports within five years of the industry’s establishment. Data provided by the Extractive Industries Transparency Initiative (EITI) on the Evolution of Gold Production in Burkina Faso, reaffirms gold’s growing influence, revealing that its production increased from 0.70 tonnes in 2007 to 30.17 tonnes in 2012 alone. Monetarily, this has translated in to high profits. In 2013, only eight active mining sites generated US$390 million and profits continue to rise. Historically Burkina Faso has not been recognized as a relevant gold producer in the market, but now the small country is gaining increasing recognition as a major competitor. In fact, the 2015 Africa Research Bulletin ranked Burkina Faso as the fourth largest producer of gold in Africa, behind only South Africa, Ghana, and Mali respectively. Raw data on Burkina Faso’s annual GDP illustrates this massive growth. Burkina Faso’s GDP was US$5.463 billion in 2005, and just ten years later, it is estimated to be around $US15 billion. The explosion of gold mining and production has completely altered the Burkinabe economy and, consequently, their overall position internationally.
The long-term president of Burkina Faso, Blaise Compaore, favored fewer restrictions on trade and a reduction of tax burdens for entrepreneurs. In 2003, a gold rush was set off as the Compaore regime introduced sweeping reforms to mining regulations with the intention of opening Burkina Faso’s doors to international companies. Canada has been at the center of this gold rush, symbolically opening the country’s first mine. By 2010, Canadian companies owned half the gold mines countrywide. Today, Canada remains Burkina Faso’s largest source of foreign direct investment, with assets soon expected to reach $2 billion. Canada is certainly the major powerhouse in this region. In fact, based on a 2012 EITI Report, it was found that out of the twelve main foreign operators in Burkina Faso today, seven are Canadian. These Canadian companies are IAMGOLD, SEMAFO, Endeavour, True Gold, Volta Resources (now a B2Gold subsidiary), Orezone, and Avion Gold (now amalgamated by Endeavour).
