By George Obulutsa

NAIROBI(Reuters) – Kenya will appoint a company by December to conduct a year-long airborne survey to map its mineral deposits to attract mining explorers to the nascent sector, Mining Cabinet Secretary Dan Kazungu said on Wednesday.

Kazungu said the ministry has initial funding of 3 billion shillings ($29.64 million) from the Treasury in the 2016/17 (July-June) fiscal year to start the survey.

Kenya has proven deposits of titanium, gold and coal and is also understood to hold significant deposits of copper, niobium, manganese and rare earth minerals.

President Uhuru Kenyatta created the Mining Ministry in 2013 to try and diversify the east African economy which relies mainly on tourism and agriculture.

“In our forecast we believe we should be able to have that contractor through competitive bidding who will do the airborne survey,” Kazungu told reporters on the sidelines of a mining industry conference.

He said the ministry would hire a consultant in the next month or so to work with geologists to help the contractor with Kenya’s first such survey.

“As the process goes on, we should be able to find preliminary results as the mapping starts,” he said. “We have never surveyed our country to know what we have. We need to have credible data.”

He said the survey would start in western Kenya, where gold has been discovered.

Successive governments have had little success in trying to develop Kenya’s mining potential, with foreign exploration companies discouraged by poor infrastructure and an outdated legal framework.

In May a new law came into effect, which includes giving the government a 10 percent share, known as free carry interest, for projects that meet yet-to-be determined minimum investment thresholds.

It also sets the average rate of royalties for the government for various minerals at 6 percent, with miners paying a lower rate when they process the minerals locally.

Base Titanium, Kenya’s first large-scale international mining project, shipped the first consignment of minerals in February 2014 after years of delays.

Base Titanium, a unit of Australia’s Base Resources, said earlier this year it expects ilmenite output at its Kenyan mine to rise by up to 5 percent and rutile by up to 11 percent in the financial year to June 30, 2017.

The $305 million Base Resources project is seen as integral to Kenya’s plans to expand its mining sector.

($1 = 101.2000 Kenyan shillings)

(Reporting by George Obulutsa; editing by Elias Biryabarema and Susan Thomsa)

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JOHANNESBURG (Reuters) – South African fixed-income asset manager Futuregrowth has lifted a suspension on buying the bonds of state-run Land Bank subject to amendments, it said on Monday.

Futuregrowth, which manages client assets of around 170 billion rand ($12 bln), halted buying the debt of six state-owned firms (SOEs) – including power utility Eskom and logistics firm Transnet – last month, citing political uncertainty following investigations into Finance Minister Pravin Gordhan.

On Monday, it said its ban on buying the other five firms’ debt remained in place but it was in talks with the companies about the issue.

Its decision to lift its ban on buying the debt of Land Bank, a major lender to farmers, follows an “extensive review of the governance and investor protection mechanisms”, Futuregrowth said in a statement.

“Land Bank agreed to improve transparency and public disclosure of its governance structures within the organisation,” Futuregrowth said.

Another South African fund manager, Abax Investments, said this month that it had reduced purchasing bonds of state-owned firms in the past three years due to concerns over their weaker performance, but would not impose a blanket lending freeze.

Land Bank confirmed in a statement the lifting of Futuregrowth’s suspension with immediate effect.

“These enhancements are viewed in a positive light and have been welcomed by Land Bank,” it said.

“Futuregrowth continues to constructively engage with other SOEs as part of its ongoing investment process,” Futuregrowth spokeswomen Michele Usher said.

($1 = 13.6645 rand)

(Reporting by Tanisha Heiberg; Editing by Susan Fenton)

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By Hamid Ould Ahmed

ALGIERS (Reuters) – Algeria plans to allow its dominant state banks to list on the local stock exchange to help develop its financial markets and diversify sources of funding after the oil price slide, a senior financial official said.

The plan will open the door for foreign investors to acquire controlling stakes in banks, reversing a rule requiring Algerian firms to keep a majority shareholding in any partnership with foreigners, the official told Reuters.

Algeria’s six government-run banks account for most of the sector’s assets. French companies such as Societe Generale and BNP Paribas have the strongest presence among foreign-owned banks already working in the country.

OPEC member Algeria’s economy has been largely based on a state-run and centralised system since its independence from France in 1962 and it remains reliant on an energy sector that still provides 60 percent of its budget.

But the oil price drop since 2014 has put Algeria under financial pressure, forcing the government to trim spending and search for alternative financing sources.

“The era of $100 a barrel is over. We have no choice but to change our policy,” the official said, asking not to be named because they were not authorised to speak to the media.

“Reforms will move slowly, but there will be no step backwards.”

With more than $130 billion in foreign exchange reserves and little foreign debt, Algeria is in better shape than other oil producers such as Venezuela.

However, it has been forced to push up taxes and increase subsidised gasoline and diesel prices, scaling back a vast welfare system that has in the past helped ease social tensions.

Advocates of the 51/49 ownership rule and tight foreign exchange controls say they helps protect Algeria’s strategic sectors after an experimentation with privatisation in the 1990s. But critics say such curbs stifle growth and investment.

PAST FAILURE

Algeria is now far safer following the end of a war it fought with armed Islamists in the 1990s that killed 200,000 people.

Its government has been keen to promote the expansion of its agriculture, health, manufacturing and tourist sectors but cumbersome bureaucracy has put off investors.

It is also not the first attempt at selling off the banks. The government scrapped previous plans for a bank privatisation in 2007, just two days before the deadline for the submission of bids, citing an international banking crisis at the time.

That plan was to sell a majority state in Credit Populaire d’Algerie (CPA) — two years before the introduction of the new rule limiting ownership for foreign firms to 49 percent in any partnership deal.

The International Monetary Fund (IMF) and World Bank have since repeatedly urged Algeria to reform the underdeveloped banking sector and modernise its stock exchange to help attract investment.

However, it is not clear how much appetite there will be for the banks. Plans to float cement producer Societe des Ciments de Ain El Kebira were dropped in June because of a lack of demand for the shares on offer.

The new bank proposal is included in the 2017 budget law draft currently in parliament for debate and must be approved by lawmakers and by President Abdelaziz Bouteflika.

Under the new plan, state banks that want to list on the Algiers bourse will still have to get “prior green light” from the central bank before any step to sell a stake in excess of r 49 percent, the official said.

The other state banks consist of Banque Nationale d’Algerie, Banque Exterieure d’Algerie, Banque de Developpement Local, Banque de l’ Agriculture et du Developpement Rural, the largest in terms of its network, and the Caisse Nationale d’Epargne et de Prevoyance.

Officials have previously said Algeria is preparing to allow foreign investors to buy shares on its stock exchange, where authorities hope the number of listed companies will rise from five to 50 in the near future.

But the Algiers stock market, smaller than those in neighbouring Morocco and Tunisia, struggles with very low levels of liquidity.

(Editing by Patrick Markey and Keith Weir)

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ACCRA (Reuters) – The World Bank will provide up to $500 million to Ghana in the form of a partial risk guarantee for use if the country defaults on payments for gas from the Sankofa field, the state oil company said on Thursday.

The guarantee is the largest of its kind to be granted by the Bank and provides security to Ghana over gas expected to flow in 2018 from the $7.9 billion offshore oil and gas field being developed by Italy’s ENI.

The deal was signed with Ghana National Petroleum Corporation (GNPC). Chief Executive Alex Mould said the country would take 180 million standard cubic feet of gas from the field per day.

“This guarantee will also give investors the confidence that GNPC will have the wherewithal to deliver on the purchases from its partners,” Mould told Reuters after the deal was signed in Accra.

ENI holds a 44.4 percent stake in Sankofa, upstream trader Vitol holds 35.6 percent while GNPC holds a combined carried and participating interest of 20 percent. The World Bank will loan $200 million to the Sankofa partners.

The gas project is expected to generate about 1,000 megawatts of power to Ghana, Mould said. Ghana has yet to fully recover from a prolonged energy shortfall that crippled industry and angered voters ahead of an election in December.

Gas from Sankofa and two other new fields could eliminate the need for Ghana to import gas from Nigeria through the West African Gas Pipeline Company, said a report on Wednesday.

(Reporting by Kwasi Kpodo; Editing by Matthew Mpoke Bigg; Editing by Robin Pomeroy)

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