Bloomberg

***** HOLD FOR STORY ******* Villagers search for gold in discarded waste rock from the North Mara mine operated by African Barrick Gold Plc. in Nyangoto, Tanzania, on Saturday, July 31, 2010. For those living in the hills around Barrick Gold Corp.'s North Mara mine in Tanzania, where poverty rates are among the world's worst, the longest bull market for gold in at least 90 years is bringing both opportunity and deadly risks. Photographer: Trevor Snapp/Bloomberg

African countries are moving to grab a bigger slice of their commodity wealth as rivalry for the world’s remaining reserves of iron ore, uranium and gold saps the bargaining power of firms such as Anglo American.

Tanzania’s proposal to study a so-called super tax on mines sent African Barrick Gold, the east African nation’s biggest producer of the metal, to a record low in June. Ghana, Namibia, Guinea, Uganda, Mozambique and Gabon are also acting to raise their share of profits from mining.

The balance of power is swinging in favour of African governments as commodity prices soar and Brazil’s Vale and China’s Minmetals Resources join Western firms bidding for contracts. At the same time, policymakers are looking to finance investment in roads, rail links and power supplies that they say is essential to maintain growth that has averaged 5.7 percent across the continent over the past decade.

“The fact that Chinese, Brazilian and Indian companies are becoming much more involved in the African mining space means that Western mining companies are feeling squeezed,” Chris Melville, a London-based African mining consultant at Menas Associates, said last month.

“When you have more suitors, you can afford to be a little bit more selective and a little bit more demanding.”

Companies may have little choice but to pay more. The copper belt running through Zambia and the Democratic Republic of Congo (DRC) holds 10 percent of world copper reserves, while Congo alone has two-thirds of cobalt deposits. Botswana says it has 200 billion tons of coal reserves and Guinea is the world’s biggest exporter of bauxite, the ore used to make the main raw material in aluminium production. The continent also has some of the world’s richest seams of uranium, platinum and gold.

Shares in mining companies are suffering as governments begin to flex their new-found muscle, even as the Standard & Poor’s GSCI index of 24 commodities jumped 40 percent in the past 12 months.

Kenmare Resources, a Dublin-based producer of titanium minerals in Mozambique, dropped 8.1 percent on Wednesday after the government said it planned to revise the country’s mining law and would seek to give the state a share of projects in “strategic sectors” such as coal.

Kenmare’s managing director, Michael Carvill, said on Thursday that the plans would not affect its existing operation in Mozambique.

London-based African Barrick Gold slumped 7.8 percent on June 8 to the lowest price since the stock started trading in March 2010, after Tanzania’s planning commission recommended that the government consider a super tax. The company said last month that its tax obligations were fixed by existing contracts and could not be changed.

Australia’s Extract Resources, which is proposing a $1.7 billion (R11.43bn) uranium venture in Namibia, fell 20 percent on April 28-29 on concern that the government planned to give mining rights to a state-owned company.

Extract said last month that it was in talks to sell a stake in its Husab uranium project to state-owned Epangelo Mining “on a commercial basis”.

Shares in Aquarius Platinum, Impala Platinum Holdings (Implats) and Anglo American Platinum slid in March after Zimbabwe’s government said it would ensure foreign companies were “junior partners” in the country.

The drive for a greater share of mineral wealth may move to South Africa. The ANC agreed in September to study industry nationalisation.

“Investors, the traditional suppliers of risk capital to this industry, are getting cold feet,” Implats chief executive David Brown said last month. “The risk associated with future investment in South African mining has increased considerably as seen from the outside world.”

The nationalisation debate risked cutting the mine output that contributes 8.8 percent of South Africa’s gross domestic product, he said. Across the continent, talk of higher taxes may damp investment.

“Governments tempted to move in this direction convince themselves that necessary mining investments in their countries will continue unabated,” Anglo American chief executive Cynthia Carroll said last month. “They are wrong. International businesses have choices to make between investment opportunities in different jurisdictions.”

With so many of the world’s remaining mineral deposits in Africa, those options may be narrowing, just as Africa’s choices are widening.

Liberia’s President Ellen Johnson Sirleaf said last month that governments were being courted by more mining companies, particularly from China. The Chinese were “so …hungry for raw materials that they are penetrating in a way, and their processes and procedures are not as complicated”, she said. “We have also reached… maturity in how we negotiate.”

China Union Investment is developing a $2.6bn iron ore deposit in Liberia, while Cnooc is helping to exploit oil deposits in Uganda. China also has a $6bn deal with the DRC to build infrastructure in exchange for minerals.

Countries outside Africa are also raising taxes. Australia estimated that its plan to impose a 30 percent levy on iron ore and coal profits would earn A$7.7bn (R55.37bn) in its first two years, the country’s Treasury Department said last month. The tax, which will help pay for road and rail projects, is scheduled to start in July 2012 after the laws are passed by parliament.

Brazil is studying an additional tax on its most profitable mining projects, the newspaper Folha de S Paulo said last month, without saying where it got the information. – Bloomberg