Sahara Natural Resources: Beau Nicholls Discusses Diversification from Mining and Exploration

Interview with Beau Nicholls, CEO at Sahara Natural Resources

What are the recent developments between Sahara Natural Resources and China in the sector?

Sahara has been engaging with China in the last six months. President Xi has pledged 60 billion dollars to be spent in Africa and that will be through Chinese companies engaging with African countries. At Sahara, we have started working with a number of serious Chinese groups. We have signed a number of MOU’s with Hunan Mining Association, and some very large “Engineering, Procurement, Construction and Commissioning” (EPCM) groups, with the strategy of becoming a local technical partner to these very big companies. Some of those groups have built the biggest suspension bridges in the world, the longest bridges over water including the 55km bridge from Hong Kong to mainland China. These companies have enormous capabilities, enormous potential, and many of them are Fortune 500 companies.

Do these companies currently have projects in Africa where you could participate?

There are a lot of opportunities in West Africa that we are looking at currently in the infrastructure space. There are large planned railway lines from Ghana up to Burkina Faso. There is refurbishment of rail from Senegal through to Mali. There are large port infrastructure projects. There are many solar energy projects. We have been working in the solar energy sector and we have engaged with Chinese companies in solar energy. China is moving ahead and beyond the rest of the world in many areas. There is a large commitment from the government of China to invest into Africa and we are a capable, local partner for those groups. We can cross the bridge of language and cultural differences. We have Chinese people working for Sahara that are fluent in French, English, and Chinese. We see that one of the biggest gaps between Chinese moving into Africa is culture and language. So, we are here to fill that void.

What is the timeframe for the turnaround for these MOU’s? Will some projects be done next year, or will it take several years?

We are actively looking at a number projects right now and a lot of these projects have an immediate need. The Chinese can and do act very quickly. They have the finance, they have the capabilities, they just need to mobilize the equipment that we need.

When we last spoke, we were engaged in one of the first solar wind farms in Ghana. Since then, we have actually done the geotechnical and survey works on this project. But what the Chinese groups can bring is that they can supply the wind farms along the coast, offshore, so that you do not interfere with the local people. You do not take any land away. It is offshore renewable energy. It is an exciting option. There is a lot of wind off the coast of West Africa.

I was in Australia last week for the Africa Down Under Conference, which is a conference between Australia and Africa. There is a lot of investment from Australia into Africa. One of the places I went to was Albany in the southwest of Western Australia. Albany is currently generating 80% of its electricity from offshore wind farms and has been for the last 15 years. This is something that can and will come to expect in West Africa.

Wind energy along with solar power are exciting opportunities for the future of West Africa.

What can Sahara offer to these projects?

We would like to see ourselves engaged in some very large engineering, EPCM project works that are two to five years in length. We would also like to continue to establish our local capabilities of our people.

We have 20 years of experience operating in West Africa. We are a West African company of about 200 employees. I am the only Australian. We have mostly professional West Africans working for us who are bilingual in French and English. We offer language, local logistics, technical support, and we provide professional surveying, geotechnical services, and any number of capabilities that go around that. Basically, we provide the local content that you need. You do not want to have 1,000 Chinese come in and do all the work and then leave, because there are no skills transfers to West Africans. We will transfer the skills from the Chinese to increase the skills of the local people here in West Africa which will provide a sustainable future for West Africa. You need to leave a sustainable impact. You cannot just go and build roads and then leave. You cannot go put up wind turbines and then leave. You need to train people because these projects need to be maintained over the lifespan of that infrastructure. Without local content, without local participation, you can invest as much money as you want but it will not benefit the country in the future.

What areas have you been in traditionally, and what new sectors are you looking to move into?

Traditionally, Sahara has been very strong in the exploration and mining sector in West Africa. We have worked in every major gold project in West Africa. We work in gold, iron ore and bauxite, we are also working in lithium projects, and some base metal operations in West Africa. We are very well established in those commodities and we have a very good client base across West Africa.

We are developing our capabilities into more of an engineering group along with the EPCM side which is also engaging with the very competent and qualified partners, such as many of these Chinese companies mentioned earlier. The EPCM is huge for West Africa because of the population growth and the infrastructural growth that is happening here. There are some major projects. We have traditionally been in the boom and bust cycle of the exploration of mining, which is traditionally five to seven years where you can be doing very well and then when the commodities crash, so does your business. You have to develop a sustainable business over the longer period. And we see long term infrastructure projects as how we can bridge that gap and make our growth and our revenue base much more stable.

We are also looking to engage in other parts of the world. We have strong connections to Australia and to Europe as well. We have offices in South America and we also work with the US on a lot of projects. There is a good amount of funding coming out of the US, with some solar projects that we have worked on in Burkina Faso having been funded by the US groups.

Diversification from a mining and exploration focused has provided us a relief from this boom and bust cycle that we all know and love when it is good times and hate when it is bad times.

You mentioned last time that you use drones to do topographic surveying. Can you explain further?

The applications for drones are unlimited. The space we are in now is traditional drones which is supplying high resolution topography for engineering and mining exploration purposes. But the development of drones is going into carrying specific tools that can help you discover new mineral deposits. So, you can now carry magnetometers and other geophysical tools that help you to find the minerals that are hidden, which has traditionally been carried out by expensive fixed wing aircraft. The drones are also being used in inspections. If you have railway lines or large, dangerous areas in oil and gas, you can actually fly around and check them using the drone. Drones are also being used in security, such as in a situation where you do not want to go into a place, you can send a drone in instead. There are obviously some sensitivities around that.

Can they be applied in different sectors or activities?

Yes. One of the main ways drones are used in Côte d’Ivoire and Ghana is for doing surveys across agricultural plantations. For example, you can determine the health of your cocoa plantations, where you need to apply more fertilizer, because of the infrared or the multispectral response of the trees. If they are yellow instead of green, then you know they are sick. It is quite a simple process and you can cover extremely large areas with high precision location, date, and time stamps on your drones, so you can manage your agriculture and your farming in real time and plan for the future.

What are the challenges that you foresee coming with these new technologies? Is there something that, for instance, only the developed world can do but in Africa it is not going to be possible?

There are not any restrictions on that. One of the first fully automated underground mines is actually being developed now in Mali with Resolute, an Australian company. It is going to be the biggest of its kind in the world. You can overcome any educational or other limitations with technology. The biggest challenge in much of West Africa is infrastructure, but this is where the Chinese are pledging the 60 billion. It is helping immensely. The other challenges that are not so easy to resolve are the security issues and recent terrorist activity that we are seeing coming into Burkina Faso, Mali, and Niger. We work with MS Risk out of the Isle of Man, who are specialists in security. There have been a number of recent events involving IED, improvised explosive devices or land mines, that have changed the playing field in the north and the Sahel. This is of extreme concern for all countries involved.

Is this a sector where you are also involved because you provide security for some firms?

We do not directly supply security serrvices, but we have a joint venture agreement with specialist groups. MS Risk is one and we support them because of our local content, our local knowledge, our language capabilities, and our network across West Africa. When you originate from exploration, you are the first ones to go anywhere. So, apart from the locals, as professional geologists, we are one of the biggest exploration groups for hire in Africa. We have around 65 geologists working for us at the moment and they are spread across ten plus countries. The big challenge for us is how to keep them safe when you have these new things like land mines being utilized, which is not a simple thing to resolve and needs special attention from the international community. It is not something that countries like Burkina can resolve on their own. Our primary concern in West Africa at this stage is the deteriation in the security situation.

Do you have any other projects or areas you are working in?

We do what we call mines for sale, which is where we have an extensive network of local vendors, local people that have projects in various countries in West Africa, and they need help developing and connecting with capital from outside. There is not a very developed stock exchange system here in West Africa, such as the Australian or Canadian stock exchange, which is where most funding comes from for West African projects. So, we have engaged, and we have a lot of local vendors that come to us and they have a piece of ground, or some very interesting projects, or they have found some interesting rocks, we can help them with the technical aspects and with connecting them to international investors. We have a lot of opportunities that come in, just by the nature of having 65 geologists in ten countries walking the ground. You come across a lot of interesting people. We have a lot of people come into the office and they want to do something with their projects. It is obviously the exciting part of the business cycle in exploration to mining. The discovery of a deposit is a thing that can often change countries. For a country like Burkina Faso, 40% of its GDP is coming from gold mining, which ten years ago was relatively undeveloped. Now, Burkina has 11 operating gold mines of an international standard. So, it is a great opportunity. One of the last frontiers in the world is Africa. In some of the sectors we are present in, we have started working in Sudan in the east. It is not well known, but Sudan is now the second largest gold producer in Africa. It has one international standard mine operating, so the rest is small scale mining, which is quite phenomenal. It produces ~110 tonnes, which is more than Ghana. Ghana comes in at third now, and Ghana has been operating at international standards for the last 20 years in gold mining.

How do you attract these people? How do they find out about you?

We have an office here in Accra, and offices around West Africa, we have a lot of people out on the ground. We have advertising, marketing on our vehicles, our people wear our uniforms and look professional. It is not a big industry. The mining industry internationally is quite small, you know people from everywhere. So, everyone knows us in this space.

Project yourself into the medium term, two years’ time, what will be your scope of operation? What will be your vision for the company for 2020?

We would like to see ourselves engaged in some very large engineering, EPCM project works that are two to five years in length. We would also like to continue to establish our local capabilities of our people. We have some excellent professionals, 60 plus geologists already, but we also have mining engineers, process engineers, surveying and geotechnical personnel. We want to increase our training and our capability in country so that investors coming into the country do not need to bring external support. That is always a work in progress, but we have come a long way. Two years ago, we were not doing drone surveys. We utilize Australian and Canadian mining professionals to get our locals trained up and we are providing that service with our West African personnel to an international standard. That is something that we are proud of and that is something that we will keep developing.

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