Guinea - Mining
Richly endowed with minerals, Guinea possesses over 25 billion metric tons (MT) of bauxite--and perhaps up to one half of the worlds reserves. In addition, Guineas mineral wealth includes more than 4 billion tons of high-grade iron ore, significant diamond and gold deposits, and undetermined quantities of uranium. Guinea has considerable potential for growth in the agricultural and fishing sectors. Soil, water, and climatic conditions provide opportunities for large-scale irrigated farming and agro industry. Possibilities for investment and commercial activities exist in all these areas, but Guineas poorly developed infrastructure and rampant corruption continue to present obstacles to large-scale investment projects.
Diamonds and gold also are mined, though Guinea’s potential in these two industries has been historically underdeveloped. By far, most diamonds are mined artisanally. The largest gold mining operation in Guinea is a joint venture between the government and Ashanti Gold Fields of Ghana. Societé Miniere de Dinguiraye (SMD) also has a large gold mining facility in Lero near the Malian border as does SEMAFO, a Canadian-based gold mining company.
In 2013, Guinea was estimated to be among the world’s top five producers of bauxite and to account for nearly 7% of world bauxite output. Bauxite also accounted for 96% of the country’s total exports in 2013. In addition to bauxite, Guinea also produced alumina, cement, diamond, and gold. Although the country also produced iron ore, salt, and modest quantities of crude construction materials, such as clay, gravel, sand, and stone, information was inadequate to make reliable estimates of output for 2013.
Bauxite in Guinea was produced from the Debele, Friguia, and the Sangaredi Mines located in the northern part of the country. Cement was manufactured in the capital city of Conakry, diamond was produced throughout the country by artisanal miners in more than 10 prefectures, and gold was produced from the Kiniero, the Lefa, and the Siguiri open pit mines in the northern and northeastern parts of the country. The Friguia alumina refinery, which was closed temporarily in April 2012 as a result of a dispute over wages between the country’s trade unions and United Company RUSAL plc, remained closed in 2013.
In December 2013, Semafo Inc. of Canada placed the Kiniero Mine on care-and-maintenance status as it sought potential buyers to acquire its interest in the mine. The Kiniero Mine produced 569 kilograms (kg) of gold in 2013. Gold production at the Lefa Mine decreased by 5.4% to 5,061 kg owing to the recovery of lower ore grades. Netherlands-based Nordgold N.V., which was the operator of the mine, planned to conduct an infill drilling program at the Lefa Mine in 2014, and invest about $4.6 million in exploration. The Lefa Mine employed a total of 1,852 people in 2013. The Siguiri Mine produced 9,798 kg of gold during the year and employed 3,674 people.
Joint venture bauxite mining and alumina operations in northwest Guinea historically provided about 80% of Guineas foreign exchange. The Compagnie des Bauxites de Guinea (CBG) is the main player in the bauxite industry. CBG is a joint venture, in which 49% of the shares are owned by the Guinean Government and 51% by an international consortium led by Alcoa and Rio Tinto-Alcan. CBG exports about 14 million MT of high-grade bauxite every year. The Compagnie des Bauxites de Kindia (CBK), a joint venture between the Government of Guinea and Russki Alumina (Rusal), produces some 2.5 million MT annually, nearly all of which is exported to Russia and Eastern Europe.
Dian Dian, a Guinean/Ukrainian joint bauxite venture, has a projected production rate of 1 million MT per year, but was not expected to begin operations for several years. The Alumina Compagnie de Guinée (ACG), a subsidiary of Rusal which took over the former Friguia Consortium, produced about 2.4 million MT of bauxite in 2004, which is used as raw material for its alumina refinery. The refinery supplies about 750,000 MT of alumina for export to world markets. Both the Alcoa-Rio Tinto-Alcan consortium and the Guinea Alumina Corporation (GAC), whose stakeholders include BHP-Billiton, the Global Alumina Corporation, the Dubai Alumina Corporation, and the Mubadala Development Company, have signed conventions with the Government of Guinea to build large alumina refineries with a combined capacity of about 4 million MT per year.
In 2004, the Guinea Alumina (GAC) joint venture (with investments by Global Alumina, BHP Billiton, Dubai Aluminum, and Abu Dhabi’s Mubadala Development) began feasibility studies on a 650 sq. km bauxite mining site. In 2008, the company started the “early works” phase of their project which includes infrastructure construction on the mining site, the refinery facility, and a transportation network. Alcoa and Rio Tinto-Alcan are also in the early construction phase of a smaller refinery in the area. Taken together, they represent the largest private investment in sub-Saharan Africa since the Chad-Cameroun oil pipeline, and could see a 40% increase in Guinea’s bauxite production upon completion. The $5 billion GAC project is currently moving slowly due to falling commodity prices and massive government intervention. Though production from the site was originally scheduled to commence in mid-2012, it is not likely to reach the production stage until 2014 or 2015. GAC announced in November 2009 that they planned to continue with the construction of their refining plant in 2011.
Rio Tinto signed an agreement with the Government of Guinea in 2003 to develop an 110 sq. km iron mine in Simandou. The company has invested nearly $500 million to date in feasibility studies and early development of their mining site. In December 2008, the government announced that it would be revoking part of Rio Tinto’s Simandou contract. The case is still under consideration in Guinean court. Due to the security situation, government interference, and global commodity prices, Rio Tinto has temporarily slowed its operations at Simandou.
Iron ore projects pending development in 2013 included the Simandou North (Blocks 1 and 2), the Simandou South (Blocks 3 and 4), the Simandou South (Zogota), the Forécariah, and the Kalia projects. In February 2013, the Government approved a social and environmental impact assessment for the Simandou South (Blocks 3 and 4) project. An investment framework for the project was expected to be completed by the first half of 2014. The development of the Simandou South (Zogota) and the Simandou North (Blocks 1 and 2) projects remained on hold pending the resolution of a mining rights dispute between the Government and joint-venture partners BSG Resources Ltd. of the United Kingdom and Vale S.A. of Brazil.
Bellzone Mining plc. of the United Kingdom, which had announced its first preproduction of iron ore from the Forécariah Mine in December 2012, reported that it would not proceed with further development of the mine in 2013. The company announced it would instead shift its priorities to the development of its other iron ore asset in Guinea, the Kalia project, which it deemed had better prospects for development given the recent decrease in the international price of iron ore. A bankable feasibility study for the Kalia project was completed in September. The study yielded an updated Joint Ore Reserves Committee (JORC) reserve estimate for the Kalia project of 59.8 million metric tons (Mt) at 54.1% iron and estimated resources (inclusive of the 59.8 Mt of reserves) of 124.2 Mt at 53.5% iron. The development plan for Kalia envisioned the construction of a mine with the capacity to produce about 7 million metric tons per year of iron ore at a grade of 58% iron. Capital costs were estimated to be $865 million.
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