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Miners in Guinea have until May 31 to present their bauxite refinery project with a timeline. An ultimatum which signals the end of recess, but which will not be easy to enforce.
For the miners, this ultimatum is a cold shower and announces a new era which they welcome with excitement. Because until then, the country had turned a blind eye to the implementation of contracts that provided for the construction of refineries. ” The authorities demanded very little on this point, the priority was to bring in investors “, explains Hervé Lado, the Director of West Africa and the French-speaking Center of the Institute of Governance of Natural Resources (NRGI).
But today, Mamadi Doumbouya has decided to remind everyone of their commitments: since 2016, in fact, the main contracts contain an obligation to transform. And for some, these provisions are even earlier. The idea being for the country to create value, and to be less exposed to the enormous risks of volatility in the commodity market. The suspension a few weeks ago of bauxite purchases from the Rusal plant in Ukraine reminded Guinea of its great dependence on foreign crude purchases.
Companies reluctant to refine on site
The problem is that companies basically have no interest in embarking on refining locally, explains the NRGI expert and this is certainly what explains why they are dragging their feet. Because the particularity of bauxite is to be bought by industries, that is to say processors who produce alumina which will be transformed into aluminium. They therefore come to look for a raw product in Guinea, to run their existing factories.
Processing on site would be very costly for them, as it would involve training the workforce, building transport infrastructure, and having a network of subcontractors at their fingertips. Not to mention the energy challenge: the bauxite processing industry is very energy intensive.
The lack of electrical capacity is one of the brakes
On the feasibility studies in progress, one of them, that of the Mining Company of Boké (SMB) is also based on a coal-fired power plant, knowing that the coal would have to be imported. Because even if the country has invested to develop its hydroelectric potential in recent years, this will never be enough to run all the refineries that the Guinean State would like to see emerge from the ground.
At best, according to Hervé Lado, two refineries – in addition to the one operated by Rusal, inherited from the Péchiney group and which has existed for several decades – could be supplied with the Guinean electricity capacity currently being developed.
The lack of energy is Guinea’s great weakness, and what has so far prevented the development of heavy industry, particularly metallurgy.
It is impossible at this stage to know whether the ten companies concerned will have a sufficiently mature project to present on May 31, negotiations on a case-by-case basis to obtain an additional period, or even a moratorium for some, could soon begin!