On 2 December, six West African heads of state stood up to the IMF at a conference it organised, arguing that development will come to a standstill if the Bretton Woods institutions do not change their approach.
Bounteous soil, glittering subsoil
Mining and farming are the lungs of the Guinean economy, and while both have promise, the potential is far greater than current production levels may suggest
Some statistics are astonishing, like the $24bn of investment announced by mining companies for Guinea’s mining sector between 2008-2010, which could multiply the country’s GDP fourfold. Most of this investment is for iron ore mine development and aluminium refineries. Iron has recently been of special interest, with the potential to overshadow bauxite production, although Chinese appetite is already receding.
The growth of the mining sector has meant little to Guineans who have yet to see any trickle-down of wealth. Mining zones are impermeable enclaves that have little positive impact on the local population. Where there are links with the local community, the results are not always beneficial. In October, the population of Boké, the location of Compagnie des Bauxites de Guinea’s (CBG) mine staged protests against the lack of electricity and drinking water which left one dead. There were protests at RusAl’s and other plants too with similar demands.
Before its concession was cancelled in August, mining giant Rio Tinto had tried to provide reassurance, working with the authorities to balance the needs of the state and local authorities, with part of the royalties set aside for regional development. In early September, Rio Tinto’s managers hinted that Guinean authorities might allow the company to continue with its licence at the $6bn Simandou iron ore deposit.
There are huge infrastructure requirements for the industry, in energy and transport, as well as the need for well qualified personnel. Local human resources lack the necessary skills base, so a programme has been launched to train Guineans. The legal framework is also being brought into line with international norms and, in an effort to limit the damage, the country has signed the Extractive Industries Transparency Initiative. Given the commodities super-cycle initiated by China’s and India’s huge urbanisation programmes, demand for Guinea’s riches might survive a softening of prices.
China may soon play a more direct role in the development of Guinea’s natural resources. A team from the mines department is expected to arrive in Beijing soon with a plan for the Chinese to invest $21bn in infrastructure in exchange for access to iron ore, bauxite and diamond deposits. The Chinese are unlikely to go for such a large amount because of concerns about instability.
With 15m tonnes of bauxite mined annually, Guinea is the second-largest world producer. The ore provides 85% of national export receipts and 15% of GDP. Three operators reign, first of which is CBG – made up of the state (49%) and a consortium of Alcoa/Alcan and Dadco – with 12m tonnes, from the Sangaredi mine. Far behind, with just 2.4m tonnes, Compagnie de Bauxite de Kindia (CBK), owned by RusAl and 15% by the state, operates the Kindia-Débélé mine. The smallest is ACG/Fria, also owned by RusAl, which exploits the Fria deposits, but is the only operator to transform the totality of its production into alumina. In 2009 its capacity will be doubled to over 1.5m tonnes.?
The port of Conakry: key to trade
A face-lift is on its way.
Full transformation of bauxite into alumina has been demanded by the government, and four projects are now in the works. The largest will be at Sangaredi, the Guinea Alumina Corporation refinery, owned by Global Alumina, BHP Billiton and two United Arab Emirate companies (Dubai Aluminium and Mubadala). The refinery should produce 3.8m tonnes by 2011, growing to 5.4m, and swallowing $4bn in investment. Alcoa/Alcan, RusAl and the Chinese operators Chalco and Synohydro are following suit with smaller projects, taking advantage of the hydro-electric potential of the country’s waterways.
Delayed action on iron ore?
The iron ore that has been talked about for 20 years is finally making an appearance. There are huge deposits in Guinée Forestière, but also around Conakry, Forécariah and Faranah. Two projects are underway in Guinée Forestière, one led by the Société des Mines de Fer de Guinée, a joint venture between the government and the Euronimba consortium (BHP Billiton, Newmont and Sumimoto). The company is focused on deposits around Mount Nimba, running to 500m tonnes. Scheduled for 2013, production should reach 30m tonnes annually. Environmental questions remain, as Mount Nimba is classified as a protected zone by the UN Education, Scientific and Cultural Organisation.
A more advanced project is the Simfer mine, under Mount Simandou, where a consortium of the International Finance Corporation and a Rio Tinto subsidiary hope to exploit 2bn tonnes of high-grade ore (65%). The objective is to produce 100m tonnes a year, using opencast mining. To get the ore to the coast, Rio Tinto is planning a railway from the west of Mount Simandou to reach Matakang, where a deepwater port will be built. A total of $6bn will be required, creating a reported 10,000-15,000 jobs during construction, and 8,000 thereafter.
After iron and bauxite come Guinea’s gold and diamonds. AngloGold Ashanti Guinea produced 270,000 oz of gold in 2007, while Crew Gold’s Société Minière de Dinguiraye is boosting production at its Léro mine in Haute Guinée to a similar amount. In Siguiri, Banora Sankarani and Nianda, artisanal miners search the rivers for alluvial deposits, some 50,000 panhandlers producing over 3.5 tonnes a year. Diamonds are also present in the Guinean subsoil in Basse Guinée and Guinée Forestière, also attracting artisanal miners, who took over after the government’s 2005 order to close Aredor’s activities at the Gbenko mine.
Where precious metals and stones are, uranium is sometimes present: Australian miner Murchison certainly thinks so, especially near Firawa, and exploratory drilling has begun. Oil is another possibility, but US firm Hyperdynamics has put $120m into test drills but has not made a discovery. Until 2006 it owned the right to explore the entire offshore seabed, but has been forced to hand back 64% and renegotiate a new contract which has been delayed by mining minister Louncény Labé.
While the wealth below the soil is plentiful, the potential for farming is just as rich. Everything can grow: rice, millet, sorghum, cassava, yam, taro, palm oil, rubber, coffee, bananas, mangoes and cotton. Growing conditions may be good, but Guinea still imports huge amounts of food. Only 1.2m hectares are farmed, out of a possible 6.5m ha, and agricultural techniques are antiquated, limiting the possibilities for intensifying yields. While 88% of the rural population are involved in agriculture, the sector represents just 10% of exports and only a quarter of GDP. But the current global climate of higher food prices can make it an essential part of the fight against rural poverty.
The rise in food prices has made the 2007 national agricultural plan a matter of urgency. Rice is a staple, so plans are underway to boost productivity by extending credit and helping farmers to access the market. Some 420,000 rice farmers exploit 720,000 ha, mostly in small paddy fields. The 500,000 tonnes of rice are insufficient for the country’s needs, and so a further 300,000 tonnes are imported annually. To improve the harvest, new techniques for rainwater-fed rice culture are being put in place, along with irrigation systems.
Food security measures do not, however, rule out growing for export. After their vertiginous drop during the rule of former president Sékou Touré, agricultural exports are only now returning, thanks to the 1990s restructuring. The subregional market is the first target, then further afield. At independence, Guinea exported a great deal more bananas, mangoes and pineapples than did Côte d’Ivoire, so possibilities are there. There are also challenges: improving the seed stock, accessibility of entrants, the lack of decent rural roads, and punitive freight charges at customs.
Work in progress
Recent years have seen higher output levels: 75,000-100,000 tonnes of mangoes; 15,000 tonnes of pineapples; 150,000 tonnes of plantains. The internal market has been evolving, with the population adapting to different staple foods when rice becomes expensive. Local value-added is still lagging, with large amounts of mangoes rotting on the trees.
Coffee is also making a comeback. Production has hit 30,000 tonnes a year, cultivated on over 100,000ha. Quality and quantity have a way to go, but a new clonal variety of robusta created by the Sérédou research centre provides new opportunities. Despite the efforts made, the agricultural sector in Guinea is still a story of under-exploited potential, not to mention the sad story of the northern cotton farmers, undermined by the collapse of the Compagnie Guinéenne de Coton ginning company in Kankan. Those hoping for an agricultural revolution, like those waiting for many things in Guinea, will have to be patient, as transformation comes at a very slow pace indeed.