Bauxite mined by Guinea’s biggest producer Compagnie des Bauxites de Guinee- a company owned by io Tinto Plc, Alcoa Inc., Dadco Alumina & Chemicals Ltd. and the government, has been the country’s steadiest source of income since it first produced the ore forty years ago.
The company is all set to lead a new wave of investment that may spur the West African nation’s economy and more than double bauxite output. Its $1 billion plan will almost double its annual production to 28.5 million metric tons within five years, Chief Executive Officer Namory Conde said. Four other developments would add a further 20 million tons to Guinea’s annual exports.
“There’s going to be a lot more bauxite coming out of Guinea,” Conde said at CBG’s headquarters in the town of Kamsar. “Our quality is much better than around the world. Our deposits are easily accessible. We know that aluminum demand will grow again. We’ll have dips, but it’ll grow.”
With aluminum close to the six-year low of $1,506 a ton reached last month due to ample supply from China, cheaper prices for the metal have spurred bauxite orders. An export ban since January 2014 by Indonesia, which was the third-largest miner of the material, has seen buyers looking for alternative sources.
"There is a definite need for more bauxite capacity,” Michael Insulan, an analyst at research firm CRU Group. “But with the many multi-million-ton projects out there, there is a risk of oversupply."
President Alpha since his winning of the first vote implemented a new mining code, started a review of old contracts, won $2.1 billion in debt relief and overseen construction of a Chinese-built hydropower dam that’s tripled energy output. While investment conditions have improved, the contract review and a lack of government experience in seeing major projects through have put off some investors.
However, there has been a spate of other investments in the mineral sector. Alufer Mining Ltd. is targeting 5 million tons of production at its Bel Air mine in the middle of 2017. China Hongqiao Group Ltd. is close to buying another 5 million tons annually from a $300 million operation that saw a river port built within months, with plans to double that amount. Alliance Mining Commodities Ltd. wants to add a further 5 million tons a year. Guinea Alumina Corp. has agreed to buy some of CBG’s product and invest $5 billion in building a mine, railway, bauxite terminal and, by 2022, an alumina refinery.
