Guinea’s minerals and the coup

Breakdown of Guinea’s main minerals by product

BAUXITE

Guinea is the world’s second-largest producer of bauxite, the main ore source of aluminium, much of which is destined to be processed in China.

Guinea accounts for about 22% of the world’s production, producing 82 million tonnes of bauxite in 2020, according to the U.S. Geological Survey (USGS). Guinea is home to the world’s largest reserves of bauxite at 7.4 billion tonnes.

Societe Miniere de Boke (SMB) and Compagnie des Bauxites de Guinee (CBG) are Guinea’s top two bauxite producers.

SMB is owned by a consortium including Singapore shipping company Winning International Group, Shandong Weiqiao – a subsidiary of the world’s top private sector aluminium producer China Hongqiao (1378.HK) – and Guinea’s UMS International.

CBG is 51% owned by consortium Halco Mining Inc and 49% owned by the Guinean government. Rio Tinto (RIO.L) and Alcoa Corp (AA.N) each hold 45% of Halco, while Dadco Investments holds the rest.

Based on USGS data, four tonnes of dried bauxite is required to produce two tonnes of alumina, which in turn produces a tonne of aluminium.

Prices of Guinean bauxite for delivery to China are at a near 18-month high.

Guinea is China’s top source for bauxite that it uses to make aluminium, a big component in the making of automobiles and beverage cans.

The potential disruption to supply helped to extend a rally in aluminium prices to a new 10-year high.

Russia’s Rusal (RUAL.MM), , the world’s third largest aluminium producer behind China’s Chinalco (601600.SS) and Hongqiao (1378.HK), operates three bauxite mines and one alumina refinery in Guinea.

Those three bauxite mines account for 42% of Rusal’s total bauxite capacity.

IRON ORE

Guinea is home to the world’s largest reserves of iron ore but years of legal wrangling and alleged corruption over the largest project Simandou, have left the minerals untapped.

Simandou holds more than 2 billion tonnes of high-grade ore, the largest known deposit of its kind. Iron ore is used to make steel.

China-backed consortium SMB-Winning plans to bring blocks 1 and 2 of Simandou into production by 2025.

Blocks 3 and 4 of Simandou are owned 45.05% by Rio Tinto, with Chinalco holding 39.95% and Guinea’s government holding 15%.

GOLD

Guinea produced about 56.9 tonnes of gold in 2020, according to the World Gold Council and is the seventh-largest miner of the precious metal on the African continent.

Russia-focused producer Nordgold operates one gold mine in Guinea. Its Lefa mine, located 700 km northeast of Conakry, accounted for 17% of Nordgold’s total production in 2020.

“To date, Nordgold remains unaffected by the current political situation in Guinea and our mine site continue to operate as normal,” Nordgold said in a statement .

AngloGold Ashanti (ANGJ.J) also said its Siguiri gold mine, where it produced 214,000 ounces in 2020, was unaffected.

DIAMONDS

Guinea has proven reserves of 30 to 40 million carats and 500 million carats of probable reserves, according to a government website.

The country exported 270,157 carats of diamonds in 2018 with a value of $20 million, based on the latest available data, according to the Kimberley Process Certification Scheme. The Guinean government has said it exported 136,072 carats of diamonds in 2020.

****