24 MAY 2013Zawya.com
Guinea's bauxite market headed for an impasse
Edited by : AL CIRCLE
2 min read
Guinea’s ambitious bauxite market is set to be marred by the pull out of foreign investment and its own political unrest.
In March, president Alpha Conde pledged to triple production to 61 million metric tons by 2016-17 and account for a quarter of the world's bauxite production by 2020. But trouble in the global mining sector and the country's own political unrest could derail the country's ambitious plans.
On May 19, BHP Billiton and Global Alumina Corp. sold their share of the Guinea Alumina Corp. to Dubai Aluminium and Abu-Dhabi based Mubadala.
Rusal, Russian mining company has also suspended operations in the Guinea town of Friguia.
Reports also suggest the company is also scrapping plans for a USD 5 billion 240,000 tons per year alumina refinery project in Dian Dian, touted to be one of the largest bauxite sites in the world.
Worried about losing the prospect of USD 20 billion of potential investment in its mineral and mining sector, the Guinea government reacted quickly by slashing mining profit tax from 35% to 30%. It also reportedly reduced tax on bauxite from 0.55% to 0.15% of the international price and made efforts to reform the mining code.
The retrenchment by global players is already having an impact on the economy. GDP grew by 3.9%, as alumina production fell to 241,000 tons last year, less than half of the 586,000 tons produced in 2011. However, bauxite production surged 20% to reach 20 million tons, according to government estimates.
On the political front, after years of military dictatorship and instability, and a disastrous transition under military rule during 2009-10, Guinea's first democratically elected president assumed power in December 2010. However, the second phase of the transition remains stuck in limbo. Parliamentary elections were due in 2011, but the ruling party and its opponents have failed to agree on rules and regulations. The political tension could upset hard-earned economic gains.
Though the World Bank and the International Monetary Fund have extended support to Guinea, yet economic recovery calls for internal stability.
Guinea needs foreign investment in its mineral and mining sector to keep the momentum going and strengthen the fragile political set up.
The presence of deep-pocketed investors from the UAE is comforting, but the country will need international mining giants to reach its economic targets.
In March, president Alpha Conde pledged to triple production to 61 million metric tons by 2016-17 and account for a quarter of the world's bauxite production by 2020. But trouble in the global mining sector and the country's own political unrest could derail the country's ambitious plans.
On May 19, BHP Billiton and Global Alumina Corp. sold their share of the Guinea Alumina Corp. to Dubai Aluminium and Abu-Dhabi based Mubadala.
Rusal, Russian mining company has also suspended operations in the Guinea town of Friguia.
Reports also suggest the company is also scrapping plans for a USD 5 billion 240,000 tons per year alumina refinery project in Dian Dian, touted to be one of the largest bauxite sites in the world.
Worried about losing the prospect of USD 20 billion of potential investment in its mineral and mining sector, the Guinea government reacted quickly by slashing mining profit tax from 35% to 30%. It also reportedly reduced tax on bauxite from 0.55% to 0.15% of the international price and made efforts to reform the mining code.
The retrenchment by global players is already having an impact on the economy. GDP grew by 3.9%, as alumina production fell to 241,000 tons last year, less than half of the 586,000 tons produced in 2011. However, bauxite production surged 20% to reach 20 million tons, according to government estimates.
On the political front, after years of military dictatorship and instability, and a disastrous transition under military rule during 2009-10, Guinea's first democratically elected president assumed power in December 2010. However, the second phase of the transition remains stuck in limbo. Parliamentary elections were due in 2011, but the ruling party and its opponents have failed to agree on rules and regulations. The political tension could upset hard-earned economic gains.
Though the World Bank and the International Monetary Fund have extended support to Guinea, yet economic recovery calls for internal stability.
Guinea needs foreign investment in its mineral and mining sector to keep the momentum going and strengthen the fragile political set up.
The presence of deep-pocketed investors from the UAE is comforting, but the country will need international mining giants to reach its economic targets.
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