Guinea’s large potential within the mining industry

By Dineo Phoshoko

Situated in the western parts of the African continent, Guinea is a country that is gifted with many minerals. Like many other countries in Africa, Guinea has experienced challenges which have had a significant impact on the mining industry. The country has worked and continues to work through these challenges to make most of the opportunities available in the mining industry. 

Minerals available in Guinea
The likes of bauxite, gold and iron ore are found in Guinea with bauxite the country’s major resource. A 2016 report by United States Commercial Service (USCS) provided an overview on what potential opportunities are available for doing business in Guinea. The report states that more than half of the world’s bauxite reserves are from Guinea. 

Bauxite, also known as aluminium ore is essential in the production of aluminium. Bauxite is more of a rock than it is a mineral and is the primary source of aluminium. The rock is primarily used in the production of aluminium. 

Mining 001 WEB
Gold mining is very significant in Guinea as it contributes to development of the economy and the country.
Image: Pixabay

According to an outlook on Guinea’s mining industry, published by the Nigerian Embassy, it states that Guinea was the sixth largest bauxite producer in the world in 2014. Statistically this means that about 30% of the world’s bauxite reserves were available in Guinea, which equated to 7.4 billion tons. There are high expectations that Guinea’s ranking in terms of bauxite will improve. According to Business Monitor International (BMI), Guinea’s bauxite production is expected to reach 40.7Mt in 2017, making the country the fourth-largest bauxite producer in the world. As a result, Guinea has become one of the top five bauxite producers in the world, as published by the US Geological Survey.

In addition to bauxite, Guinea also has gold mines, many them are situated in the north and north-eastern regions of the country. Some of the gold producing mines in Guinea include Kiniero, Lefa, and Siguiri open pit mines. Kiniero has been in operation since 2002 and is located 500km northeast of Conakry, which is Guinea’s capital. The mine has about 5.07t of gold resources available at an average of 3.12g/t grading. 

The Siguiri gold mine is owned by AnlgoGold Ashanti and it is the only mining operation in Guinea owned by the mine company. Siguiri’s gold mine is 1 500km2 and produced 130 000oz of gold at the end of 2016. A 3% increase of tonnes treated was also recorded, which was attributed to improvements on the mine plant.

The year 2008 saw the start of operations at Lefa gold mine, which is owned by Nordgold and activities typically consist of modern open pit operations. The year 2016 saw the mine produce about 194 7 000oz of gold. All these gold mine operations as well as others in the country reflect the opportunities that gold makes available for Guinea. KPMG’s Global Mining Institute reports that international exploration funding to the country was significantly increasing.

Another valuable resource found in Guinea is iron ore which, according to KPMG, is one of the largest untapped iron ore deposits in the world. The Simandou project is set to become the largest integrated iron ore mine and infrastructure venture of its kind in Africa at a cost of USD18.3-billion. The project will include includes a 670km and a new deep-water port south of the country’s capital, Conakry. The project has yet to get underway and is only expected to start once Guinea’s government approves the investment framework. 

Rio Tinto, which has ownership of controlling stake of the southern concession of Simandou, acquired mining rights for the project as far back as 1997. According to the Global Business Report, Rio immediately started developments for the project following the acquisition of the mining rights. Once it has reached full capacity, the project is expected to produce 2.4 billion tons of high-grade iron ore, at 50 to 70mt each year. 

Challenges affecting the mining industry 
As a developing country on the African continent, some areas in Guinea lack the necessary infrastructure to fully exploit the mineral resources in the country. One of the infrastructural challenges facing Guinea is transport. Its transport network is not enough to meet the demand. The network includes road, rail and port systems. 

The supply of electricity is also another area that needs a substantial amount of work as power cuts in Guinea are common. A sufficient and consistent supply of electricity is essential especially for the mining industry which requires a lot of power. 

Another area that needs improvement is Guinea’s information and communication technology. Even though this might come across as a disadvantage, it does reflect the countless opportunities for the investment in the country’s infrastructure to improve on infrastructure and therefore fully exploit all the mineral resources available. 

Guinea has the potential to become an economic leader in the extractive industry.

The unstable political climate has also had a negative impact on Guinea’s mining industry. The Global Business Report cited the country’s military rule under General Lansana Conté between 1984 and 2008. That type of governance scared away many potential investors. In addition, the political situation in Guinea would occasionally cause violent protests in the streets. It was only after 2010 when the country’s political situation began to stabilise as that was the year President Alpha Condé was democratically elected and inaugurated in Guinea. Another factor that affected the mining industry was the outbreak of Ebola in 2014, which created a lot of health scepticism around Guinea as a country. 

Mining industry and the economy
The USCS review claims that Guinea has the potential to become ‘an economic leader in the extractive industry’. The country’s mining sector is the biggest attractor of foreign investment than any other sector. 

According to the World Bank, the mining industry in Guinea contributed to about 80% of the country’s exports and 25% towards GDP. From the exports, more than half are from bauxite production. In addition, the industry also contributes to employment which then positively impacts on the economy as well. The KPMG report also states the over the past five years, an estimated USD2.5-billion was invested in the country over the past five years. This figure was considered relatively weak when compared to the country’s overall potential in the mining industry.

Although Guinea continues to face challenges of corruption, political violence and infrastructure, the country’s opportunities that lie within the mining industry are limitless. The democratic election of President Condé contributed to political stability which made the country ideal for foreign investment. This is a sign that there are growing interests in the country, which would hopefully contribute positively to the economy and overall wellbeing of the country and its citizens. 

Click below to read the July/August 2017 issue of Mining and Mineral Product review

MMPR JulAug017


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