Guinea possesses the world’s leading reserves of iron ore and bauxite, closely linked to the global supply chain. Last week’s coup is pushing the West African country’s mining industry into a gray area.

Last weekend, an elite special forces unit led by Colonel Mamady Doumbouya (41 years old) staged a coup in the “mineral powerhouse” of Guinea. It is the latest in a series of power struggles in the region over the years, previously occurring in Mali and Chad.

Colonel Doubouya said the military was forced to act amid rampant corruption, human rights abuses and economic mismanagement under President Alpha Conde. However, the move was condemned by the United Nations, the African Union and the regional governing body ECOWAS.

According to many experts, the coup in Guinea is hindering mining and mineral production as this is an extremely important industry for the West African country’s economy and global supply chains.

Iron Ore

Guinea’s 110km-long Simandou Range is home to one of the world’s largest untapped iron ore deposits. Guinea’s National Statistics Institute estimates that Simandou contains more than 8.6 billion tons of iron ore  with an average iron content of 65%.

The Simandou mining project is currently backed by mining group Rio Tinto Group and Chinese steel giant Baowu Steel Group. China sees Simandou as a bargain that can help it reduce its dependence on iron ore supplies from Brazil and Australia.

According to  CNBC, Simandou is located deep in the southeastern hinterland of Guinea, a great distance from the capital Conakry and the west coast. To bring iron ore supplies to the world market by sea, miners are forced to ship goods to the west coast.

Andrew Gadd, steel industry analyst at CRU Group, said: “The infrastructure needs of the Simandou mine are extremely large, complex and expensive, far exceeding the costs that were once poured into its construction. bauxite ore export industry of this country years ago.

“So far, geopolitical risk has been one of the many barriers hindering the progress of the Simandou mine. The recent military coup in Guinea is significantly reducing the prospect of mining in this iron ore mine. “, Mr. Gadd emphasized.

Due to political instability, disputes over mining rights, and concerns about costs, the Simandou project has been largely stalled since the mine was discovered in the 1990s, CNBC more info.

According to the International Monetary Fund (IMF), the Simandou mine requires huge rail and wharf infrastructure, while Guinea is a less developed country, ranking 160 out of 186 countries in terms of GDP per capita. .

Elsewhere, in

vestors are also quite cautious and do not want to pour capital heavily into the Simandou mine in the context that the price of raw materials may fall deeply at any time. Despite recent progress in preparatory work, the researchers have not yet been able to determine the feasibility of the project.

“Financing for Simandou is very difficult and the recent coup will create additional challenges, making interested parties in the project hesitant to participate,” warned analyst Gadd.

bauxite ore

In addition to iron ore – the main raw material for steelmaking, Guinea also has the largest bauxite reserves in the world and   bauxite ore is the main ingredient for processing aluminum metal.

On September 6, on the London Metal Exchange, aluminum prices jumped to the highest level in more than 10 years as the market worried about a disruption in the global supply of bauxite ore.

“For Guinea’s booming mining industry, the coup comes at an unlikely time,” said Eric Humphery-Smith, senior analyst at risk assessment firm Verisk Maplecroft. Mining companies have little choice but to stand still and wait for the transition of power…”.

“The coup will cause major supply disruptions to the global bauxite market, as mining will likely be closed for the next several days or even weeks,” warned Humphery-Smith. .