"Life on Mars" - Bauxite in Guinea

Published by MAC on 2018-11-27
Source: The Economist

Guinea’s bauxite boom is helping China but failing locals

China has promised the west African state a loan double the size of its GDP

The Economist

3 November 2018

BOKÉ - IN THE SMALL village of Lasanayah, Mamadou Kalissa looks out over his ancestral home. Last year it was farmland but now bauxite mining has turned it into a Martian landscape that extends as far as the eye can see. Guinea’s red gold is the main ore used to make aluminium. The Boké region in western Guinea has some of the world’s richest reserves. A mining lorry rolls past, kicking up dust and causing Mr Kalissa to cough and spit saliva with a reddish tinge.

Every day hundreds of these lorries tear past the surrounding villages, bearing loads destined for China. There is nothing new about China’s interest in African raw materials. Both Chinese and Western commodities companies have long looked to the continent’s mineral wealth as a way to meet surging demand from China.

But difficulties building infrastructure and negotiating mineral rights have stymied many projects. As a result of years of squabbling over mining rights, for example, not one tonne of ore has been extracted from Simandou, a vast iron-ore deposit in south-east Guinea. Extracting Boké’s bauxite has met with less resistance.

Bauxite is used in many things from power lines and planes to phones and cooking pots. China is by far the world’s largest consumer. But in 2014, the country’s aluminium giants ran into a big problem acquiring bauxite. Indonesia, a large producer, stopped exports because of the damage that mining causes—it requires stripping vast amounts of topsoil and battering the ground beneath. Two years later, Malaysia ended bauxite mining for the same reason. Guinea, with the largest untapped iron and bauxite reserves in the world (see chart), offered an alternative.

In 2014 Winning Shipping, a Singaporean maritime firm, and UMS, a Guinean logistics firm, teamed up with Shandong Weiqiao, China’s leading aluminium producer, in a joint venture called La Société Minière de Boké (SMB). Guinea’s government also holds a 10% stake. SMB obtained rights to mine two areas in Boké, producing the first bauxite in 2015. SMB alone will produce 35m tonnes in 2018, almost double Guinea’s total exports five years earlier. Everything goes to China; almost half of its bauxite imports come from Guinea.

“The stars were aligned,” is how Frédéric Bouzigues, SMB’s director-general, describes the firm’s expansion. Other bauxite miners are based further inland and are constrained by a lack of railway lines to the coast. SMB’s sites are less than 50km from the sea; the company built two ports and roads and transports everything by land on lorries.

The importance of Guinea to China is clear. The authorities in Beijing have promised the government a $20bn loan—twice the country’s GDP—to be paid to Guinea in instalments over 20 years, to secure access to its bauxite. But SMB’s rapid expansion has come at a cost. A report published in October by Human Rights Watch, an international advocacy group, said that the Guinean government has allowed SMB to bypass environmental safeguards. “The focus on growth has been at the expense of the local peoples’ environment and livelihoods,” says Jim Wormington, one of the group’s researchers. Although SMB employs more than 17,000 people directly or indirectly, many locals say the new job opportunities are not enough to compensate for the environmental damage. SMB says it has paid all its taxes and done the proper environmental checks.

The situation around the mines is nonetheless grim. SMB gave hundreds of villagers a one-off payment for access to their land but many villages are perilously perched near wide roads over which lorries pass day and night. Many villagers say they lack proper access to clean water because the mining operations have blocked or polluted rivers. SMB says it builds wells for the villages, and supplies water in tankers until they are completed. But a government-commissioned audit in May 2018 said that SMB conducted “no monitoring of the environment” and that the consortium lacks equipment to monitor air or water quality.

There are some signs of improvement: SMB says that it began an environmental-monitoring programme this year. But little of the money SMB pays in charges and taxes is reinvested locally by the central government. Mr Bouzigues says that when the consortium built a health centre it took the government about two years to send a doctor to man it. In an interview with The Economist in April he admitted that SMB itself could do more to improve locals’ lives and that he personally wants to do better.

Guinea could in theory industrialise if it moved to processing bauxite instead of exporting it raw. SMB does have plans to build Guinea’s first refinery, by 2022. Whatever happens, Boké’s residents will find themselves at the mercy of the search for this prized material. “We can’t just leave. We have nowhere to go,” says Mr Kalissa, looking out over the red earth.