West African countries become contenders in attracting mining capital as SA loses favour with investors.
Many investors may be deterred by the raft of problems facing SA gold mining companies, but they aren't averse to gold miners elsewhere in Africa.
"At this stage there is so much uncertainty around SA's mining industry, not just employment issues but cost inflation, which is related to strikes but also to power, and strikes within the whole logistics chain," says John Meyer, an analyst at Fairfax in London.
"All this is making SA less competitive than other nations. From a mining point of view, SA was always the preferred destination over West Africa because it was much easier to raise finance to get projects built and there are more mining services and skills. But other African countries are keen to attract capital and the services are becoming available elsewhere."
SA still has some of the world's biggest and most comprehensively explored gold deposits, but they are at depths of 2km and more. Mining at those depths requires a large amount of capital and technical expertise and, because it can take 10 years to bring a deep-level mine to full production, investors need to have confidence in the country's future.
Elsewhere in Africa, deposits are generally lower grade but shallow, which means most can be accessed faster from open pits. There are other risks, though.
Randgold Resources has a track record of discovering substantial gold deposits in West Africa and converting them into profitable production.
Randgold Resources CEO Mark Bristow says West African mines producing 100000oz of gold a year are too small to be viable because of the capital costs of supplying mines with power, water and other infrastructure in undeveloped regions. In SA there are local contractors to call on, but not in West Africa.
The major attraction in West Africa is the Birimian gold belt, which extends through Ghana, Mali, Burkina Faso, Côte d'Ivoire and Guinea. About 178moz of gold have been discovered on this belt in the past century, according to Ampella Mining, which operates in Burkina Faso.
Ghana is the second-biggest gold-producing country in Africa, after SA. Its government is stable, though mining companies have complained recently about a revision to the tax system this year which raised corporate tax rates to 35% from 25%, made collection more stringent and eliminated many tax exemptions. Ghana's interior is still largely undeveloped and though it generates its own hydroelectric power from the Volta River system, it can be unreliable.
According to Ampella's website, Burkina Faso has been privatising state-owned resources since 1998 and since 2004 has revised its mining code, which has encouraged gold exploration and production. It has about 22% of the Birimian gold mining area. The government is implementing a US$360m World Bank programme to build infrastructure.
Côte d'Ivoire and Mali have both experienced some political turbulence in recent years. In Mali an interim government is still in place after the overthrow of the elected government in March.
"Political stability is relatively good in West Africa, excluding Mali for the moment," Meyer says. "Since the Cold War ended, many African nations are seen as more stable, while in SA the ANC has been destabilised by the strikes."
Some of the highest-rated West African gold miners operate in several countries, which diversifies their risk.
Randgold operates four gold mines in Mali and Côte d'Ivoire, and these have all been sizeable, such as the 7,5moz deposit on which Morila in Mali was built, and the 4moz deposit at Tongon mine in Côte d'Ivoire.
Bristow says the key to successful mining in emerging markets is partnerships. The Marikana disaster in SA showed a failure of partnerships and leadership, with government, industry and labour blaming each other. Bristow says the key to survival is to ensure all stakeholders benefit from mining. He wouldn't operate in SA because the gold industry is in long-term decline and needs support from all its stakeholders, which it is not getting. "You can't operate those deep, high-cost operations when you can't trust the legislation from day to day," he says.
Toronto- and Australian-listed Endeavour Mining has just expanded its focus from three countries, Burkina Faso, Ghana and Côte d'Ivoire, to four with the acquisition of Avion Gold Corp, which is also listed in Toronto.
Avion was expanding the Tabakoto gold mine in Mali, but the upgrade of its mill was deferred during political unrest in the country in May. The mill expansion has not yet resumed.
Tabakoto will add 100000oz of existing gold production annually to Endeavour's existing annual 200000oz. With other near-term opportunities, Endeavour is targeting 450000oz/year.
Endeavour CEO Neil Woodyer says the company has an organic growth pipeline and has sufficient cash resources to complete Tabakoto's expansion, start building the Agbaou mine in Côte d'Ivoire and take its next mine, Ouaré in Burkina Faso, through the project stage. "We have a big advantage in having four mines in different countries, and each country has its own opportunities," he says. "Ghana is more mature for mining than Côte d'Ivoire, where we are more central to the economy.
"We have a regional management centre in Ghana which is staffed with geologists and engineers and there is a pool of experienced middle management. All our new or current mines are or will be on the national grids of Ghana, Côte d'Ivoire and Burkina Faso and though Ghana does have brownouts [voltage reductions] there are no power cuts. All our mines except for Tabakoto are shallow, open-cut operations."
AngloGold Ashanti has stakes in six mines in Ghana, Guinea and Mali, together producing an attributable 1moz of gold a year. Its biggest mine in the region is Obuasi in Ghana, but for several years it has battled to make it profitable.
Gold Fields has two mines in Ghana, Tarkwa and Damang, and an advanced exploration project in Mali called Yanfolila.
Another SA company active in West Africa is Loucas Pouroulis's unlisted TransAfrika. TransAfrika is a partner in the Somaso joint venture, which is exploring for gold, iron and uranium in Mauritania as well as for gold in the Democratic Republic of Congo (DRC), but is looking to sell the DRC permits.
TransAfrika recently disposed of its interests in Mali, Rwanda and Senegal to Toronto-listed Desert Gold Adventures, in return for a 29% shareholding, and also intends to unbundle the Koauat iron ore property in Mali.
Other major international gold companies operating in West Africa include Iamgold, Newmont and Newcrest, and there are a number of Australian-, Toronto- and AIM-listed explorers or small-scale miners.