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Guinean coup sparks global worries over aluminum supply

Guinean coup sparks global worries over aluminum supply
Experts say while military junta did not hinder extraction of ores, looming sanctions may change game

By James Tasamba

KIGALI, Rwanda (AA) – The coup in Guinea which toppled President Alpha Conde earlier this month has sparked global worries about the supply of bauxite, the main ingredient in aluminum, say analysts.

The West African country Guinea has the world's largest, roughly 7.4 billion tons of bauxite reserves or about one-quarter of the global total, according to US Geological Survey (USGS).

The reddish or grey rock that is extracted into aluminum oxide is then smelted into aluminum, which is used to manufacture a variety of products including cans, foils, kitchen utensils, window frames, beer kegs, and airplane parts.

With calls for imposing sanctions against the military regime, reports indicate that aluminum prices were already soaring well before the coup.

Russian aluminum giant Rusal, which produces half of its bauxite output in Guinea, is considering evacuating Guinea-based staff if the situation escalates, according to the Kommersant, a Russian newspaper devoted to politics and business.

With the military junta given six months by regional bloc Economic Community of West African States (ECOWAS) to return to constitutional order, this has only added to the uncertainty.

The coup leader, Col. Mamady Doumbouya, the head of the National Committee for Rally and Development (CNRD), has assured that existing contracts with international companies for mineral exports would remain valid.

Speaking to Anadolu Agency Teddy Kaberuka, a Rwanda-based economist said the military junta’s steps like letting ports open for export even when borders were closed and lifting a curfew in mining areas to ensure continuity in production are indications that rulers were taking the issue of mineral revenues seriously.

“It is an indication that the mineral business is core to the rulers, the national economy and they could not afford to interrupt that cash flow,” he said.

- Mining sector accounts 15% of GDP

Eric Humphery-Smith, Africa analyst at Verisk Maplecroft, a risk intelligence company said miners will be able to continue operating, despite a lack of clarity on the direction of the country's mining policy and who will manage the government's portfolio.

Besides bauxite, the mining sector in Guinea includes the extraction of gold and diamonds.

The country’s mining sector accounts for some 15% of gross domestic product and about 80% of exports, according to the World Bank's Macro Poverty Outlook.

Last year, Guinea’s domestic and foreign firms produced 82 million tons of bauxite, only surpassed by Australia, which has the world's second-largest reserves ahead of Vietnam and Brazil.

China, with about seven times fewer reserves than Guinea, is heavily dependent on imported bauxite, according to CRU Group -- a privately owned business intelligence company.

On whether the country’s policy towards China could change, Kaberuka said he does not see any change in the short term, because Beijing remains a big buyer of bauxite and other raw material.

source: News Feed
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