Consortium wants to help Guinea do more with its huge bauxite reserves

Asian-Guinean consortium Société Minière de Boké-Winning Africa (SMB-WAP), represented by Société Minière de Boké (SMB), has signed three agreements with the Government of the Republic of Guinea for the execution of a comprehensive project for the Boké region where the consortium currently mines bauxite before transporting same to China, the top producer of aluminium and the biggest importer of bauxite globally. Guinea holds 26.9 percent of the world’s total bauxite reserves.

The project agreed by the consortium, which consist of four international entities, include the construction of a 135 km railway line in a corridor from the Boffa to the Boké region, the production and industrial exploitation of bauxite resources in the new mining areas of Santou II and Houda, and the construction and operation of an alumina refinery in the Boké Special Economic Zone.

The new mining deposits are expected to come on stream in 2022, with a projected production of 10 million tons in the first year. Production is expected to reach 20 million tons in 2023 and 30 million tons in 2024. The bauxite will be evacuated by the railway that will link the mining areas of Santou and Houda (Télimélé Préfecture) to the Dapilon river terminal (Boké Préfecture). It will require the construction of six bridges and two long tunnels for a total investment of $1.2 billion. The technical studies will be completed by the end of 2018. Construction will begin in 2019 and operations in 2022.

Building the value chain

With a capacity of up to 1 million tons per year, the refinery will be powered by a dedicated power plant equipped with advanced slag processing technology in compliance with applicable environmental standards. During the construction phase, the refinery is expected to create several thousand jobs and mobilize local companies with expertise in civil engineering, quarrying, construction and services. The total cost of the investment is estimated between $700 million and $900 million.

The Consortium has also committed to a large-scale agricultural development project along the railway corridor, with a total investment for the whole project estimated at $3 billion.

The SMB-Winning consortium which was founded in 2014 leverages the experience of three partners in the fields of bauxite mining, production and transportation: Singaporean shipping company Winning Shipping Ltd, UMS, a French owned transport and logistics company that has been in Guinea for over 20 years, and Shandong Weiqiao, a leading Chinese company in aluminum production.

The consortium exported about 30 million tons of bauxite in 2017, making Guinea the world’s largest exporter of bauxite. The country may even end 2018 better, with local miner La Guineenne des Mines (GDM) exporting its first shipment of 174,000 tonnes earlier in the year. But the SMB family remains the biggest winners in the Guinean bauxite industry; even GDM’s exports, which the miner hopes to grow to 2-4 million tonnes by the end of 2018 is transported to China via ships operated by Winning Shipping and Shadong Weiqiao, both part of the SMB Consortium, after the companies negotiated rights to purchase and export GDM’s production.

The Compagnie des Bauxites de Guinee (CBG) jointly owned by the Guinean government, Alcoa, Rio Tinto Alcan and Dadco, is another major exporter of bauxite in Guinea, produced around 15 million tonnes of bauxite in 2017.

Rich Guinea, Poor Guineans

Guinea’s mineral wealth goes beyond bauxite; the country also has more than 4-billion tonnes of high-grade iron ore, as well as significant diamond and gold deposits. Oil exploration companies are also checking out prospects in the country. However, despite its mineral wealth, and high per capita income — the highest in Africa — Guinea is one of the poorest countries in the world, with more than 55 percent of its population living below the poverty line. Widespread corruption in the West African country, especially among government officials, explains why the country has not benefited enough from its mineral wealth. It is also worthy of note that the 2014-15 Ebola crisis affected the economy but corruption has done worse. According to The Borgen Project, a nonprofit fighting against poverty and hunger, the government invests heavily in sketchy infrastructure projects with inflated prices and little social value.

“To put it into perspective, the government of Guinea spends $80 out of every $100 in its budget on construction projects, but only dedicates $2-3 to health and education. Thus, the citizens continue to suffer from illiteracy and poor health and have no way to escape poverty,” the nonprofit noted.

Until 2015, only CBG, partly owned by the state, and Russia’s Rusal were exporting bauxite from Guinea but with President Alpha Conde increasing in influence following his ascent to power on December 21 2010, a new major exporter in SMB surfaced in 2014. According to a 2012 article by Africa Intelligence, Condé exercises direct control of mineral resources via a number of carefully constructed networks. He has been named in several mining related corruption scandals together with his son Mohammed, who Africa Intelligence claims sit atop the networks through which the president controls mineral resources in Guinea. In 2016, FRANCE 24 released audio recordings that appear to prove that Rio Tinto paid a Guinean government official, and close acquaintance of the president, a sum of $10.5 million for mining rights in the large iron mine Simandou. The mining company admitted to the payment in November 2016.

SMB’s success in Guinea has also been rumoured to be a result of President Conde’s influence. However, Fadi Wazni, Chairman of the SMB Board of Directors, dismisses the rumours anytime it comes up. In a 2016 interview with, Wazni stated that it was normal that he had frequent interactions with the Government and the Prime Minister of the country, the President of the Republic due to his status as an important business leader in the country. He said that SMB has not benefited from any largesse from the government or President Condé.

“It was after demonstrating our ability to export bauxite in record time that some resources were diverted from our commitment to dramatically increase our bauxite investments and exports,” he said.

Wazni’s company has also always tried to give back to the community where it operates, either by building bridges or providing generators, among other things.

Speaking about the three agreements signed with the government of Guinea, Wazni said they are a strong signal for the industrial and commercial development of the Boké region and even the whole country.

“Beyond industrial investments, the agricultural project associated with the new rail corridor and our actions in favour of communities testify to our objective of transforming our mining operations into a real pillar of national socio-economic development. We aim to integrate our activities into the territories to be a long term partner of the country,” Wazni said.