At the end of last year, I was proud to announce the launch of Seventy Ninth Global DMCC, our private equity offering registered with the Dubai Multi Commodities Centre (DMCC) in the United Arab Emirates (UAE).
Seventy Ninth Global DMCC gives our partners the opportunity to collaborate with us and benefit from the exceptional growth opportunities presented by the natural resources sector. This is a lucrative market, one in which many sophisticated institutional investors, including the Websters, have been working in for years.
There are several reasons we chose Dubai as the hub for our natural resources offerings. The DMCC is the global centre of commodities investing, serving as a commodities exchange for more than 21,000 registered members. The UAE has signed a multilateral tax treaty with West African countries to promote trade between the two regions. Under this treaty, businesses benefit from lower taxes on profits and dividends earned from partnerships in both regions.
There are many advantages to a DMCC structure, including the tax incentives for partners in DMCC-listed companies alongside the fact that they are eligible for certain exemptions from customs duties and value-added tax.
In an environment of rising inflation, sectors such as natural resources can have a positive correlation with inflation expectations. Natural resources are also a great way for people to diversify their portfolio with tangible material assets that have a concrete use value in the real world. As the demand for minerals and precious metals continues to rise, this piece will look at the reasons why this is and explain why now is the ideal time to delve into the world of natural resources.
The growing demand for natural resources
As the world recovers from the pandemic and looks to rebuild in more efficient and sustainable ways, the demand for natural resources, minerals and precious metals has never been greater.
Modern economies cannot function without natural resources. Resources have an integral part to play in the move towards a digitised, electrified and fossil-fuel-free future. Minerals such as iron ore are essential for the renewable energy industry and for digitisation. Metals are also playing a key role in the transition towards cleaner energy, and precious metals such as gold are an integral part of industrial processes, electronics, and chemical applications.
There is a growing demand for future energy sources that can only be met by the natural resources sector.[i] Through our natural resources division, we aim to help meet this growing demand for minerals.
To meet demand, the efficient mining of minerals must increase significantly. As Ernst & Young (EY) point out, there is “a gap between supply and demand, and miners will need to commission new projects and operations to support the expected demand”.[ii] Successful management of mineral supply chains, therefore, presents one of the most striking commercial opportunities of the next decade.
Certain places are crucial in the minerals supply chain, and one of these is West Africa. Guinea is rich in iron ore, gold, and diamond reserves and possesses a quarter of the world’s known bauxite reserves. Bauxite is the primary source of aluminium, and bauxite-derived aluminium has a range of different uses, including being an essential component for solar panels, vehicles, and aerospace technology, as well as playing a key role in construction.
Here at the Seventy Ninth Group, we aim to unlock the potential of Guinea, helping it to meet the growing demand for minerals globally by identifying the valuable resources that people across the world need. We have years of on-the-ground experience working in the natural resources sector. We’ve developed strong relationships with people across Guinea since we started operating there in 2011, which puts us in a strong position to undertake this operation.
The benefits of investing in natural resources
The Websters have long voiced their opinion that natural resources are a great partnership opportunity. Dave Webster, in particular, has been a strong supporter of natural resources, working in the sector for over a decade. In his most recent journal piece, he discussed how more people are realising that minerals are the basis for our society – something he has been saying for years.[iii]
Demand for minerals is only set to increase in the coming years, making now the ideal time to explore this market. We launched Seventy Ninth Global DMCC to give more people the opportunity to benefit from the increasing value of natural resources whilst we move to the next stage in the process towards the potential extraction of vital minerals.
Seventy Ninth Resources, a division of the Seventy Ninth Group dedicated to natural resources, has been operating in Guinea for many years. The Webster family have managed multiple concessions throughout Guinea and have been undertaking an extensive exploration across three of their gold-mining concessions. After the third phase of exploration was complete, and it showed substantially positive results, we are now moving onto the drilling stage.
There are many reasons why people have been investing in natural resources for years. They’re considered a strong inflation hedge because of their inherent characteristics. Historically, most natural resources have outperformed many financial assets during times of serious inflation.[iv]
Natural resources are a great way to diversify a portfolio due in part to their unusual return drivers. They have intrinsic value as they’re tangible material assets with concrete use value –for example, their necessity for use in the fast-growing digital economy.
Their tendency to hold and even grow in value despite the economic climate is also an attractive prospect for many. Mining concessions, for example, grow in value as they secure necessary permits and progress through the multiple stages of mine development, so if you’ve entered the process at an earlier stage, the value could increase significantly.
Environmental, social and governance in Guinea
A recent insight report about investing in natural resources, written by Mercer, noted how ESG considerations are an important topic among investors, who are increasingly demanding more standards and measurable ESG metrics when investing.[v]
Environmental, Social and Governance (ESG) is of huge importance to our company and to me personally, which is something I have written about previously.[vi] The fact that minerals will be playing a big role in the move toward a more sustainable, fossil-fuel-free future ties in well with our ESG ambitions.
Minimising our environmental impact
Working in the natural resources space, keeping stringent ethical practices is essential in an industry fraught with negative reputations due to the devastating effects mining operations could have on natural habitats and local wildlife.
Through a collection of internal policies, including a dedicated Climate Change and Biodiversity strategy, each of our mining concessions must undergo strict due diligence that accounts for environmental and physical climate change risk, energy and water efficiencies. We conduct ecological surveys and environmental impact risk assessments to assess the impact of potential harm on the natural environment to ensure that as a member of the United Nations, our operating principles align with their Sustainable Development Goals.
We are always seeking to minimise our impact on the environment wherever possible. Part of this involves seeking out sustainable and environmentally positive companies to work with, whose values align with our own. As we often work with a number of contractors and suppliers on our projects, we think it’s important to take the time to review them and understand their environmental policies. The nature of our company means that we choose to only work with the most trusted and well-respected brands to mitigate risks for both our company and our stakeholders.
Thorough due diligence is undertaken prior to working with a company to assess whether their ethos aligns with that of the Seventy Ninth Group. This is something we carried out in Guinea before any work was started. At every stage we have reviewed each potential supplier, most recently our drilling contractor, to ensure their environmental practises match our own. This ensures we can uphold our promise to protect the local people, wildlife, and the environment.
An ethical approach: adding value to the communities in which we operate
Alongside trying to be an environmentally conscious company, we also strive to provide an ethical approach to investment and always vow to add value to the communities in which we operate. As CEO, a core part of my role is to help prioritise the group’s ESG responsibilities, something which has been at the heart of our decision-making in Guinea.
This is why we have already undertaken an extensive fact-finding mission in Guinea, engaging with the local communities who live on and around our concessions to develop a deeper understanding of their challenges. The results of this mission have helped us to form our ESG policies in Guinea, tailoring our approach to the needs of the communities to start making real, measurable change.
The aim of our ESG work is to provide the villages situated within our concessions with support and training. We want to help these communities to be independent, building meaningful relationships where we can provide the support they need rather than just assuming what they may require.
To achieve this, we have opened a new office in Guinea, where we have based our community outreach team. The team has already started to form positive relations with local residents, so they can provide us with the information we need to transform their communities environmentally, socially, and financially.
Our partnership with several highly trusted firms within the natural resources and mining space, including SRK exploration, Ernst & Young, Fieldfisher LLP and Ardalan & Associates, ensures we adhere to the highest compliance standards in every stage of our operations. Ensuring we operate in an ethical and compliant way is important to us and to our investors, which is why we take these extra steps to maintain these high standards.
Invest now for the future
Successful ventures are all about supply and demand. With an ever-growing need for minerals such as iron ore, bauxite, and gold, compared to the current low supply of many of these minerals around the world, now is the ideal time to explore the opportunities in natural resources.
[i] https://www.janushenderson.com/en-gb/investor/article/the-surprising-case-for-natural-resources-updated-emea/
[ii] Critical minerals supply and demand issues | EY – US
[iii] https://the79thgroup.co.uk/forging-your-own-path-business-lessons-from-the-natural-resources-sector/
[iv] https://www.mercer.com/content/dam/mercer/attachments/global/gl-2022-investing-in-natural-resources-a-primer.pdf
[v] https://www.mercer.com/content/dam/mercer/attachments/global/gl-2022-investing-in-natural-resources-a-primer.pdf
[vi] https://the79thgroup.co.uk/the-importance-of-adding-value-how-esg-defines-our-activities-in-the-republic-of-guinea/
