Mining industry of Guinea

History

The mining tradition of Guinea is ancient and is 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. Revision of the 1986 Mining Code was done in 1995.

In September 2011 the Mining Code was reviewed once more and a new code implemented that took effect in 2012. Changes to the code include increases of state ownership in joint venture from 15% to 35%.

Production and impact

Guinea's bauxite reserve is 7.4 billion metric tons, which is 26.4 percent of global reserves. High-grade iron ore reserves account for more than 4 billion tonnes. Diamond and gold deposits, as well as uranium, have also been reported. The mineral industry has provided job opportunities to 10,000 people. In the export sector, mining has contributed to as high as 90% in earnings from foreign exchange. It now ranks sixth in global standing in the production of bauxite. Despite holding large mineral resources, Guinea, with 9,000,000 people, has a low income level, with the average wage less than one dollar a day.

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 Property, and Societe AMIG Mining International SARL.

Commodities

Minerals extracted in the country by private-public joint enterprises in collaboration with the Government of Guinea include bauxite, iron ore, and diamond. Other resources mined are cement, gold, salt, graphite, limestone, manganese, nickel, and uranium. A major developer in the field of bauxite mining is the Alumina Company of Guinea (ACG-Fria), which is located in Fria; the Government of Guinea holds a 49% share while the Reynolds Metals Company holds the 51% balance in this enterprise. Another partner in bauxite mining is Cie des Bauxites de Guinée's (CBG). It is a joint venture of Alcoa, Rio Tinto, and Dado Mining holding a 51% share, and the Guinean government holding a 49% share. Its exports of bauxite are the largest in the world, reportedly in excess of 13.5 million tonnes in 2008.

Guinea has large reserves of iron ore, which have high potential for extraction. This 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. In 2012, Simandou mine was projected to produce 90 million tons of iron ore annually. The Mount Nimba mine, also in the iron ore sector, is located in the Nzérékoré Region, while the Kalia mine is in the Faranah Region.

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.

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

Controversies and Corruption in the Mining Industry

In 2008, the government revoked the Rio Tinto licence in the Simnadou Mine, awarding it instead to BSGR. After the election of President Alpha Conde 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. 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 Conde in order to influence him to give the Simandou licence back to Rio Tinto. Rio Tinto admitted to the payment and fired 2 senior executives in this regard.

There have been further corruption allegations levelled at President Conde’s government involving bribery from the U.S. hedge fund Och-Ziff. In August 2016, Samuel Mebiame, who worked for the company, was arrested and charged in the U.S. with bribing Guinean and other African officials on behalf of Och Ziff in order to receive mining rights and access to secret information.  According to the U.S. prosecutors, Mebiame was also part of a conspiracy to form a Guinean state-owned mining company and involved in rewriting Guinea’s mining code. Mebiame pleaded guilty to conspiring to make corrupt payments to African members of government in December 2016.

In September 2015, an investigation was launched into Mohamed Alpha Conde, the President's son. 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.

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