As of February 4, more than 22 400 confirmed Ebola cases had been reported – with about 9 000 of these being fatal – mostly in the West African nations of Sierra Leone, Guinea and Liberia, reports the World Health Organisation.

The World Bank released a report in January, ‘The Economic Impact of Ebola on Sub-Saharan Africa: Updated Estimates for 2015’, which states that the Ebola epidemic continues to “cripple” the economies of Guinea, Liberia and Sierra Leone, and that, since mid-2014, there has been flat or negative income growth in these three countries.

The report further states that while these economies were growing briskly in the first half of 2014, full-year 2014 growth in Guinea was about 0.5%, significantly down from the 4.5% expected before the epidemic.

Full-year growth for 2014 in Liberia dropped to about 2.2% from the 5.9% expected before the outbreak, while Sierra Leone’s 2014 growth shrank to 4% from the 11.3% expected before the crisis.

These rates imply shrinking economies in the second half of 2014, with the total fiscal impact on the three countries in 2014 amounting to more than $500-million, which equates to nearly 5% of their combined gross domestic product (GDP), according to the report.

It also notes that so-called “second- round effects” and investor aversion provide for sombre 2015 growth estimates, with a contraction of 0.2% expected for Guinea, growth of 3% for Liberia and a contraction of 2% for Sierra Leone, down from pre-Ebola growth estimates of 4.3%, 6.8% and 8.9% respectively.

“These projections imply forgone income across the three countries in 2015 of about $1.6-billion (about $500-million for Guinea, $200-million for Liberia and $900-million for Sierra Leone), which equates to more than 12% of these countries’ combined GDPs.”

The report points out that many services in Guinea are closely tied to the mining sector, with most major players in the sector having evacuated foreign workers.

However, it notes that mining projects’ outputs have not yet been severely affected, as the largest mines are located outside the Ebola-affected areas, providing some firmness for overall GDP estimates.

The report notes that Liberia’s mining sector remains “resilient”, although investments to expand capacity remain on hold.

However, it says: “Slowdowns in China and Europe, as well as the decline in iron-ore prices, which fell by about half in 2014, pose a substantial challenge [to these mining operations].”

Additionally, the report highlights that, beyond the question of when the disease will be contained, the main source of uncertainty for Sierra Leone is this year’s dim outlook regarding iron-ore mining and related foreign direct investment initiatives.

“Insolvency and the shutdown in late 2014 of . . . the main iron-ore mines (London Mining’s Marampa and African Minerals’ Tonkolili), which account for nearly one-fifth of [Sierra Leone’s] GDP, are weighing heavily on economic prospects,” the report states, adding that one of the country’s main mining operators, African Minerals, currently exports only stockpiled ore while seeking new equity.

Ebola an Excuse?

However, Mining Weekly reported in January that, while acknowledging that Ebola was a “terrible” disease, corporate advisory firm SP Angel believed that the failure of certain mining companies’ operations in Ebola-affected African countries should not be attributed to the impact of the disease.

SP Angel stated that mining companies would have “undoubtedly” struggled at iron-ore prices of $70/t, and maintained that London Mining and African Minerals would have had a “much better” chance of restructuring and continuing operations if costs had been maintained and if no royalty or streaming instruments had been used.

In London Mining’s case, SP Angel asserted that the company’s liquidation was the result of inadequate cost control, the cost of royalties, offtake and streaming instruments, taking cash off the top line and the “excessive” debt required to start up the operation.

“Iron-ore prices did not have to fall far below most forecasts for last year for the company to close . . . and the use of top-line financial instruments made it, apparently, impossible for the banks to rescue the business,” SP Angel declared.

The firm also pointed out that West Africa-focused mineral sands miner Sierra Rutile announced in January that it had achieved its third-highest quarterly production of 31 025 t of rutile in the quarter ended December 31, 2014, despite having had to deal with Ebola-related challenges, which further highlighted the ability of a “well-run” company to continue operating effectively in Sierra Leone.

“. . . the failure of these companies has little or nothing to do with the emergence of Ebola in the region . . ., ” the advisory company emphasised.

Nonetheless, West Africa-focused gold and diamond exploration company Golden Saint Resources (GSR) executive chairperson Cyril D’Silva tells Mining Weekly that, owing to the health and safety concerns posed by Ebola, the company – which is developing three gold and diamond projects in Sierra Leone – had to evacuate its expatriate mining consultants and workers from Sierra Leone in October 2014.

“We are . . . running at 50% capacity, with the local teams working on their own, and this involves micromanaging them through weekly phone calls and regular email updates on work progress,” he explains.

Further, private investment holding company Jonah Capital CEO John Barton-Bridges tells Mining Weekly that the company’s Africa-focused iron-ore mining company, Cavalla Resources, which in August 2014 agreed to acquire all mining major BHP Billiton’s iron-ore interests in Liberia, is “very fortunate”, as it is not yet in production, therefore, making the impact of Ebola less significant, compared with operating companies.

However, Barton-Bridges highlights that the company has been negatively impacted on in other Ebola-related ways. For example, the epidemic has halted exploration activities on Cavalla’s exploration licences, and prevented not only face-to-face meetings in the country between Cavalla and various government agencies but also the possibility of prospective investors and partners of Cavalla travelling to the country to conduct due diligence studies.

He notes that the epidemic has generally created a negative sentiment about the potential of investing in West Africa.

“Cavalla’s expatriate staff have been moved to Accra, Ghana, and we have formulated an Ebola risk management and mitigation plan for our local staff,” Barton-Bridges says.

He states that the decline in iron-ore prices has probably had a greater impact on company operations than Ebola, but adds that the epidemic and the low commodity prices are relatively short-term events of one to two years, compared with the more than 20 years of mining that Cavalla expects to achieve at its Buchanan project, in Liberia.

“Cavalla is planning to be in production by [about] the second half of 2017, when conditions are likely to be different,” states Barton-Bridges.

He explains that while the market is at a historical low, the fundamental criteria for developing a mine have not changed and should be applied to the evaluation of an iron-ore operation, whatever the current market conditions might be.

“These criteria include low-cost production, superior-quality resources and product, minimal infrastructure and logistics risk, manageable capital cost and security of tenure,” says Barton-Bridges.

Eradication Efforts

Medical assistance, international healthcare and security services provider International SOS regional medical director for Southern Africa Dr Charl Van Loggerenberg tells Mining Weekly that Ebola remains a challenge in West Africa, particularly in Guinea, Liberia and Sierra Leone.

“However, our clients’ – mining companies’ – response has generally been excellent. All our clients have come forward to provide medical support for staff at their own operations and the surrounding communities in which they are based.”

Van Loggerenberg says this included heeding the advice of International SOS to move nonessential staff members out of the affected areas, responding to the various travel advisories and travel bans that were in place for extended periods and responding quickly to the large groups of “very anxious” expatriate workers at different project sites in Ebola-affected countries.

“International SOS was quite involved in moving hundreds of mine employees out of the affected areas, which indicated that companies were looking out for . . . their workers,” he highlights.

Further, D’Silva points out that, to date, GSR has donated about $5 000 directly to the Sierra Leone government to help combat the Ebola outbreak and funds have also been made available for the establishment of chlorine wash points and the purchase of chlorine and equipment to check body temperatures.

“We also ship colloidal silver regularly to our staff on the ground, as it is known for killing bacteria and has helped to increase the confidence of staff,” he adds.

Barton-Bridges also points out that Cavalla and Jonah Capital donated two 4 × 4 vehicles and several other pieces of equipment to Nimba County’s health services to assist in combating the virus.

Meanwhile, according to steel and mining company ArcelorMittal Liberia’s January press releases, it has donated about $50 000 in medical supplies to Liberia since the start of the Ebola outbreak.

The supplies include antibiotics, analgesics, antimalaria medication, intravenous fluids, antihypertensive medication, diuretics, haematinics, bronchodilators, blood bags, infusion sets and antihelmintics medication, as well as general materials such as needles, syringes and Foley’s catheters.