Guinea — one of the world’s poorest countries — has become a crucial player in the ‘clean’ energy transition but must be careful that bauxite and iron ore mining do not destroy its natural habitats.

The West Africa country has 23% of the world’s reserves of bauxite, the primary aluminium ore, and accounts for 24% of global bauxite production (other major producers include Australia, China, Brazil and Indonesia). Bauxite is the most active mining sector in Guinea, accounting for 25.5% of its exports in 2020. The country exported around 86.5m metric tonnes (mt) of the ore in 2021, making it the world’s largest bauxite exporter. 

Guinea is the biggest supplier of bauxite to China, the world’s top producer of aluminium — around 80% of its bauxite exports were destined to China in 2022. China has invested heavily in Guinea’s inland logistics, as well as transhippers and floating terminals, to enable almost all the cargo to be carried by capesize tonnage. 

Most of Guinea’s bauxite is produced by two firms — Société Minière de Boké (SMB), a Sino-Singaporean conglomerate, and the Compagnie des Bauxites de Guinée (CBG), a joint venture between the Guinean government; Alcoa, a US aluminium producer; Rio Tinto, an Anglo-Australian mining major; and Dadco Investments, a supplier of alumina and alumina-based products based in the Channel Islands. SMB transports the ore along the Nunez River — which flows into the Atlantic Ocean — while CBG has a designated port at Kamsar, a port city located on the mouth of the Nunez River. Ships calling at Kamsar and going direct to CBG’s quay for the loading of bauxite are limited to length overall (LOA) of 229m. 

CBG retains the largest reserves, but SMB has surpassed it as the country’s biggest single producer of bauxite. New investments by SMB and CBG — as well as new market entrants — are expected to increase Guinea’s bauxite output considerably over the next five to 10 years.

Guinea also possesses over 20bn mt of high-grade iron ore reserves, significant gold and diamond reserves, undetermined amounts of uranium, as well as prospective offshore oil reserves. Artisanal and medium-sized industrial gold mining in the Siguiri region is a major contributor to the economy, but experts believe that a lot of the gold leaves the country clandestinely, without generating any government revenue. 

In 2021, Guinea exported just over $4.3bn of bauxite and $5.8bn of gold. In 2021, gold exports advanced 11% to 3.3m ounces against 2.9m the previous year. During the same year, iron ore exports amounted to 1.1mn mt and diamond exports from artisanal producers at 237,853 carats. 

Analysts expect global bauxite demand to jump over the next decade. Aluminium is essential for electric vehicles and global demand is expected to shoot by up to 40% to 119mn mt a year by the year 2030. Guinea’s northwestern region of Boké — at the epicentre of the bauxite fervour — has been transformed by a relentless stream of lorries and trains, hauling the ore along newly-built roads, and tracks to coastal ports.

The country also has commercially viable quantities of graphite, manganese, nickel and uranium, though many of these deposits have not yet been exploited commercially. 

Guinea is a coastal country located in West Africa, bordering the Atlantic Ocean to the west, Guinea-Bissau to the northwest, Senegal to the north, Mali to the northeast, Cote d'Ivoire to the southeast, and Sierra Leone and Liberia to the south. Its capital is Conakry, a port city with up to 2mn inhabitants. It has a $25.3bn economy and a population of 15.4mn people, according to IMF estimates. Income per head is estimated at around $1,640 a year. The economy expanded by around 5.9% last year and is forecast to grow at 5.6% this year. It is among the world’s least developed countries. 

Unfortunately, it is also a country that has experienced considerable political instability. On 5 September 2021, President Alpha Condé — who had been in power since 2010 — was deposed in a military coup. Special forces commander Mamady Doumbouya took over the reins of power and, on 1 October 2021, he was sworn in as the interim president. He still remained in charge in January 2024.

After a lot of negotiations with the Economic Community of West African States (Ecowas) — a regional political and economic union of 15 countries located in West Africa — the ruling junta reached an agreement on a transition timeline to return to a democratic constitutional order by 31 December 2024. Guinea has suffered three military coups (1984, 2008 and 2021) since it became independent from France in 1958. 

Condé made the mining sector a high priority — Guinea’s bauxite production increased fivefold between 2015 and 2020. However, while mining accounts for one-third of the country’s economy, many experts say that most Guineans have not benefited from it and that the country is a good example of the ‘resource curse’, the failure of many resource-rich countries to benefit fully from their natural resource wealth.

Under the recourse curse, revenue from extracting raw materials could be mismanaged or embezzled by government officials or siphoned off by foreign corporations. Many Guineans have had a negative experience from the mining sector’s impact on land availability and water supply, which has affected their agrarian livelihoods adversely. 

Nonetheless, the present military junta remains committed to further expansion of the mining sector, though weak infrastructure is a key barrier. Furthermore, the mining — which in many cases has not happened ‘responsibly’— has had a severe impact on the natural environment over several decades. Responsible mining is commonly defined as mining that involves and respects all stakeholders, minimises and takes account of its environmental impact, and prioritises a fair division of economic and financial benefits.

Hundreds of square kilometres once used for farming have been acquired by mining companies for their operations and associated roads, railways and ports. Rights activists say that villagers have received little or no compensation. According to a government study, during the next two decades, more than 80,000 ha of farmland and 450,000 ha of natural habitat will be destroyed by bauxite mining — an area almost the size of the US state of Delaware.

Guinea, like many African countries, would like to become a lot more involved in ‘beneficiation’ or value-added processing. It involves the transformation of a primary material (produced by mining and extraction processes) to a more finished product that has a higher export sales value. Bauxite refineries produce alumina (aluminium oxide), which is used to create aluminium metal. Bauxite is also used to manufacture other industrial products, such as abrasives, cement and chemicals.

The country’s amended 2013 Mining Code specifies that raw ore producers should begin processing raw ore into refined or processed products within a few years of development, depending on the terms of the individual investment and the mandate with the Ministry of Mines and Geology. 

However, the refining mandate has not been enforced and the junta is making a renewed effort to push bauxite exporters to build and operate alumina refineries in-country. It has set a number of deadlines for them to put forward their proposals but for the most part they have been missed. Aluminium oxide trades at six to seven times the price of bauxite itself. 

Currently, Guinea only has one alumina refinery — the Friguia refinery owned by Rusal, the Russian aluminium giant, which also operates two bauxite mines in the country (though it sources most of its ore from the Kimbo mine). The refinery is capable of refining less than only 3% of the country’s annual bauxite production. In 2021, alumina exports from the Friguia refinery dropped to 430,244 mt from 453,353 mt the previous year. 

Mining groups say that the country is likely to have more alumina refineries in coming years but that these projects are capital-intensive and complex. Refinery projects in Guinea mostly benefit from the presence of bauxite, as other raw material needs — such as energy and caustic soda — need to be imported. 

In June 2022, CRU, a commodity research house, estimated that six companies have alumina refinery plans in the country, for a total planned capacity of 11mn mt a year. However, most of these plans are at an early stage, according to CRU.

In June 2023, Aluminum Corporation of China (also known as Chalco) — a multinational aluminium company headquartered in Beijing — agreed to explore cooperation with Guinea Alumina Corporation (GAC) — a unit of Emirates Global Aluminium, the aluminium producer based in Abu Dhabi — to develop alumina refining in Guinea.

The tie-up — which began with the signing of a Memorandum of Understanding in March 2023 — brings together the alumina refining experience of both firms. GAC has already made the largest greenfield mining investment in Guinea over four decades and began to export bauxite in 2019. In 2022, GAC mined and shipped 14m wet mt of bauxite ore to customers worldwide.

In September 2023, Technip Energies, a French engineering and technology company, also secured an alumina refinery contract from the Guinean government. Following completion, the refinery would supply French and European markets with smelter-grade alumina and alumina trihydrate.

Meanwhile, in March 2022, West Africa LNG, a US-based liquified natural gas (LNG) provider, signed a $300mn investment agreement with the transition government. It would provide the country with the energy to operate refineries through LNG. It is also reported that China is offering coal-based solutions to meet the potential energy demand.

In July 2022, the junta instituted a reference price for bauxite, which the Ministry of Mines and Geology expected to generate $1bn in government revenue in 2023.

Furthermore, the country’s iron ore exports are expected to rocket within the next three to five years, as large new mines are constructed in the country’s east, along the borders with Sierra Leone and Liberia. The two most important projects are Simandou and Mount Nimba. 

Simandou is the largest untapped iron ore deposit in the world and is expected to be the biggest greenfield project ever developed in Africa. Rio Tinto owns two of the four Simandou mining blocks as part of its Simfer joint venture with Chalco Iron Ore Holdings (CIOH) and the Guinean government. The other two blocks are being developed by Winning Consortium Simandou (WCS), made up of Singapore-based Winning International Group, Weiqiao Aluminium – part of the China Hongqiao Group – and United Mining Suppliers.

Project development requires initial funding of about $11.6bn, including deep water port and rail infrastructure, according to Rio Tinto. Construction restarted on the project in 2023 and the mine is expected to have an annualised iron ore capacity of 60mn mt per year. The mine will make Guinea one of the world’s biggest iron ore producers and the largest in Africa. It will add around 5% to global seaborne iron ore supply when it comes on line in 2025, a year earlier than expected.

Meanwhile, the Mount Nimba mine is a large iron mine located in southern Guinea in the Nzérékoré region. It represents one of the world’s largest iron ore reserves, having estimated reserves of 6bn mt of ore grading 68% iron metal. It is operated by High Power Exploration (HPX), a Canadian metals-focused exploration company, and its subsidiary, Société des Mines de Fer de Guinée (SMFG). 

There are opportunities for exporting machinery and equipment to Guinea, particularly in the mining sector. A number of mining companies are in the early exploration or construction phases of their contracts and are expected to make substantial investments in machinery and construction equipment in the upcoming years.

Bauxite and iron ore mining have the potential to transform the economy of Guinea, one of the world’s poorest countries. However, it is not clear that local communities have benefitted from mining in the past and it is important that the miners and the government ensure that the financial rewards are distributed more evenly in the future. Furthermore, it is essential that Guinea’s mining industry operates in a ‘responsible’ way, so that the country’s natural habitats are not completely destroyed. 

— Jason Mitchell is a British financial journalist, based in Africa, who writes about emerging markets, including Africa, the Middle East and Latin America. He specialises in topics related to wealth creation, mining, capital markets, banking and conservation.