Mining industry of Guinea

The mining industry of Guinea was developed during colonial rule. The minerals extracted consisted of iron, gold, diamond, and bauxite.^[1] Guinea ranks first in the world in bauxite reserves and 6th in the extraction of high-grade bauxite, the aluminium ore.^[2][3][4] The mining industry and exports of mining products accounted for 17% of Guinea's gross domestic product (GDP) in 2010. Mining accounts for over 50% of its exports.^[5] The country accounts for 94% of Africa's mining production of bauxite.^[6] The large mineral reserve, which has mostly remained untapped, is of immense interest for international firms.^[7]

In recent years, the mining industry in Guinea has suffered from controversy, specifically with respect to the iron ore mining industry and the block of mines in Northern Guinea.^[8]

In 2019, the country was the world's 3rd largest producer of bauxite. ^[9]

History

The mining tradition of Guinea is ancient and can be traced to a period before the Middle Ages, when gold and salt were trading commodities between Guinea and Ghana. Following the independence of Guinea from colonial rule, the economy of the country was largely dependent on the mining industry, in spite of political turmoil racking the country since 2011.^[1][4] The 1986 Mining Code was revised in 1995.^[6]

In September 2011 the Mining Code was reviewed once more and a new code implemented that took effect in 2012.^[10] Changes to the code included increases in state ownership in joint ventures from 15% to 35%.^[11]

In 2008, former model, Tigui Camara bought a 28% share in a mining company, and began her career in the sector. She established the Camara Diamond Traiding Network in 2009, and a holding company Tigui Mining Group (TMG) in 2012, and is the first woman in Guinea to own a mining company.^[12] In a 2018 interview, Camara discussed how: "... in the USA ... I worked as a model and representative of many jewelry houses. Which led me to ask quite a few questions about the origin of the jewelry, the practices, the impact that mining can have on local communities. The answers I got pushed me to get involved in this sector."^[13]

Production and impact

Guinea's bauxite reserve is 7.4 billion metric tons, which is 26.4 percent of global reserves.^[2] High-grade iron ore reserves account for more than 4 billion tonnes. Diamond and gold deposits, as well as uranium, have also been reported.^[3] The mineral industry has provided job opportunities to 10,000 people. In the export sector, mining has contributed to as much as 90% of earnings from foreign exchange. Guinea now ranks sixth globally in the production of bauxite.^[1] Despite holding large mineral resources, Guinea, with more than 12,000,000 people, has a low income level, with the average wage less than one dollar a day.^[14]

There are two dozen international companies associated with mining operations in Guinea. The domestic agencies involved with mining are the Association pour la recherche et l'Exploitation du Diamant et de l'Or, Friguia Sal, Siguri Gold,^[15] and Société AMIG Mining International SARL.^[16]

Commodities

Minerals extracted in the country by private-public

Guinea has large reserves of iron ore with high potential for extraction. These largely remains untapped, and its quality grade is more than 60%. Rio Tinto's joint sector enterprise in the iron ore sector is the Simandou mine project, with a value estimated at $6 billion.^[3][20] In 2012, Simandou mine was projected to produce 90 million tons of iron ore annually.^[21] The Mount Nimba mine, also in the iron ore sector, is located in the Nzérékoré Region,^[22] while the Kalia mine is in the Faranah Region.^[23]

Diamond potential is estimated at 40 million carats. In 2012, production was 266,800 carats as per the Kimberley Process Certification Scheme, and it is listed as the 13th-largest producer.^[24]

A large number of gold mines are located in northeastern Guinea; the estimated production in 2011 was 15,695 kilograms.^[24] One of the country's largest gold mines is the Lefa mine in the Faranah Region.^[25] The Kalia Mine is owned by Bellzone Mining.^[26]

Controversies and corruption in the mining industry

Dispute Involving Rio Tinto and BSGR

In 2008, the government revoked the Rio Tinto licence for the Simandou mine, awarding it instead to BSGR, a company associated with Beny Steinmetz. After the election of President Alpha Condé in 2010, investigations were launched into several allegations of corruption within the mining industry and the government of Guinea expropriated BSGR's rights to mine at Simandou.^[27] But in November 2016, Rio Tinto came under fire for alleged corruption, involving a $10.5 million bribe paid to an aide and close advisor of President Condé^[28] to influence him to give the Simandou licence back to Rio Tinto.^[29] Rio Tinto admitted making the payment and fired two senior executives.^[30][27] In February 2019, President Condé and BSGR reached an agreement to withdraw the mutual allegations of corruption.^[31] The agreement had BSGR relinquish its rights to Simandou and to the smaller Zogota deposit while allowing Niron Metals head Mick Davis to develop Zogota.

Dispute Involving Vale and BSGR

On the sidelines of this affair, Vale filed a claim against BSGR in 2014 at the London Court of International Arbitration to recover an upfront payment it had made to BSGR and money it invested in Guinea. The court decided in favor of Vale and awarded it $2 billion.^[32] In May 2020, BSGR filed discovery request documents at the court in New York based on transcripts of conversations with former Vale executives that were obtained by the Black Cube private intelligence company.^[33] BSGR claims that the documents prove that Vale was aware of potential problems with how the rights to develop Simandou had been obtained, but chose to ignore them and proceeded to buy 51% of the iron-ore licenses. This could undermine Vale's claims to compensation.^[34]

Accusations Against Och-Ziff and Government of Alpha Condé

There have been further corruption allegations levelled at President Condé's government involving bribery from the U.S.

In September 2015, an investigation was launched into Mohamed Alpha Condé, the President's son.[41] The French Financial Public Prosecutor charged him with embezzling public funds and receiving benefits from French firms that are involved in the Guinean mining industry.^[42]

Accusations Against Sable Mining

Another case of alleged corruption in the country's mining industry is based on the findings of an NGO called Global Witness. According to their report Sable Mining, an AIM-listed company, got close to President Condé prior to the elections and bribed his son in order to receive iron ore mining rights to the Mount Nimba mine.^[43][44] These allegations have been under investigation by Guinean authorities since March 2016.^[45]

See also

References

Bibliography

• KPMG Global Mining Institute (2014). "Guinea: Country Mining Guide" (PDF). Strategy Series. KPMG International. Retrieved 25 May 2015.
• Soumah, Ibrahima (1 January 2009). The future of Mining Industry in Guinea. Editions L'Harmattan.
  ISBN 978-2-296-21573-3
  .