Guinea in turmoil

Guinea in turmoil

Protests in Bauxite-Rich Country Could Affect Aluminum Production

By Anthony Vaccaro, The Northern Miner

5th February 2007

Drills at Cassidy Gold's Kouroussa project have kept turning despite political instability in Guinea. Much of the country's worst violence is occurring in the capital, Conakry -- some 570 km west of Kouroussa.

The corpses of protesters have been cleared off the streets of Conakry -- Guinea's capital city. The dead totalled at least 30 after the military opened fire on unarmed crowds, whose numbers had swelled to roughly 30,000 in connection with a week-long general strike that halted a significant chunk of the country's bauxite exports.

And while the loss of life -- and the dire economic conditions that initially inspired the protests -- is foremost on the minds of the international community, experts are also trying to sort through the severity of the impact on Guinea's bauxite industry.

With almost half of the world's bauxite reserves (bauxite is refined to make alumina, which is then smelted to make aluminum), Guinea stands second only to Australia in terms of bauxite production. But the West African nation is the largest exporter of the ore, due to Australia's refining capabilities.

Those exports took a heavy hit when the country's largest bauxite company -- Compagnie des Bauxites de Guinea (CBG) -- was effectively shut down by striking workers and then cut off from its supply chain in late January.

"It's a country-wide work stoppage. The issues are bigger than just bauxite mining," says Kevin Lowery, director of corporate communications for Alcoa (AA-N) -- a partner in CBG. "We understand that and we're keeping an eye on things."

After the work stoppage was reported, Alcoa said shipments would continue, using stockpiles. But that plan was thwarted when railcars carrying stockpiles to port came under attack from rock-throwing protestors.

Asked if shipments from stockpiles could begin sooner than operations, Lowery offers: "If something can be done in a safe manner on an interim basis, we would explore doing that."

CBG is 49% owned by the Guinean government and 51% owned by Halco -- a consortium in which Alcoa has a 45% stake, Alcan, a 45% stake, and privately held Dadco, 10%. Alcoa is the operator of the facility, which produces 14 million tonnes of wet bauxite a year.

Also hit by the strike is St. John, N.B.-based Global Alumina . The company is developing a US$2.8-billion bauxite refinery in the country, in line with the government's plan to keep more downstream production in Guinea.

But not all bauxite-related industry in the country has stopped. Guinea's two other bauxite mines -- both controlled by Moscow-based Russian Aluminum Group -- are continuing with operations. Combined, the two operations produce roughly 6 million tonnes of bauxite per year.

Supply chain

For its part, Alcan says its bauxite supply chain hasn't been significantly disturbed.

"We're okay," says Alcan spokesperson Alexander Christen. "We have a contingency plan in place and we're sourcing from other places in the world. At this time, there's been minimal impact, but that could change if the situation deteriorates further."

Christen estimates that such an impact would be felt if operations were hindered for another "week to a month or two."

Traders in London were reported as saying fears of a supply squeeze were pushing alumina prices higher.

With the mining sector accounting for over 70% of exports in 2004, and bauxite alone making up 17% of the country's gross domestic product, the loss of revenue is clearly an impetus for the government to resolve the situation.

But thus far, the government's response has been largely limited to banning protests and then sending in the military when its decrees are not obeyed. Negotiations with union leaders have been short and unfruitful.

Experts say the critical mass of protesters isn't yet large enough to topple a military of 8,000 strong, but the growing discontent is an indication of a change in the national psyche.

"What these strikes tell me is that people in Guinea have been tipped over the edge," Bram Posthumus, a West African analyst, told the IRIN news organization. "The strike will continue. People have been scared (of the government) for a long time, and for them to go out on the street like this is an enormous change in attitude."

While the military might of President Lansana Conté isn't being questioned, the leader's physical health and mental stability are.

Conté -- who is estimated to be 76 years old -- has become increasingly reclusive in recent years, as his diabetes and kidney problems worsen. He has ruled the country since seizing power in 1984.

Situated on the coast of West Africa, between Sierra Leone and Guinea-Bissau, Guinea's population of 10 million had already seen two popular strikes against Conté in 2006.

The previous strikes were organized by the National Confederation of Guinean Workers (CNTG) and the Guinean Workers Union (USTG) to protest a 30% inflation rate, tripling fuel prices, worsening standards of living and endemic corruption. Transparency International ranked Guinea as the second most corrupt nation in the world in 2006.

Union role

The unions have taken a central role in the protests. Experts say self-serving attitudes have given all political parties a bad name in the country, whereas the unions are seen as being more closely aligned with the population's true interests, and more legitimate than rival political parties.

That standing was partly earned by the key role unions played in winning the country's independence and installing President Ahmed Sékou Touré in 1960. They were, however, later banned when Touré came to see them as a threat to his one-party rule.

Touré's authoritarian rule didn't end until his death in 1984, after which Conté rose to power.

Conté's tenure has been marked by early promise and recent decay.

Beyond persisting social and economic woes, the latest strike was triggered by union outrage at Conté's visit to a prison where two of his compatriots had been incarcerated for corruption. Conté personally had the convicted felons set free.

While the incident occurred in December, the indignation of the union spread to the population, so that by the end of January, the scope of the protest was so broad that even union leaders admitted they no longer had control of it.

Finding a resolution to the violence within Guinea's own borders is seen as being especially urgent because of fears that troubles there could spill over into neighbouring countries. With its long borders and central position, experts fear that the fragile peace of neighbouring Sierra Leone, Liberia and Côte D'Ivoire could be in jeopardy.

Despite a new round of negotiations between Conté and union leaders, at press time, rhetoric remained strong, and hopes for reconciliation were dim.

"The strike will continue until the final victory," Ibrahima Fofana, leader of the Guinean Workers Union told IRIN. "Almost no solutions have been found to the problems we have posed."