( 3 minutes read)
- The military upheaval in Guinea led by coup’s leader, Mamady Doumbouya, has sent shockwaves through global bauxite markets
- The political turmoil has deep economic impact since it would disrupt the flow of bauxite to the importing countries and of course the country’s revenues
- The SMB-Winning was to bring blocks 1 and 2 of Simandou into production by 2025. Now, it seems the project may be delayed indefinitely
The military upheaval in Guinea led by coup’s leader, Mamady Doumbouya, has sent shockwaves through global bauxite markets. The political turmoil has a deep economic impact since it would disrupt the flow of bauxite to the importing countries and of course the country’s revenues.
Guinea has more than 2 billion tonnes of high-grade ore used to make steel. It has remained largely untapped due to political wrangling and disputes over its ownership. In 2020, the China-backed and SMB-Winning consortium signed a deal to develop the site. However, the project has faced several years of delays. The SMB-Winning was to bring blocks 1 and 2 of Simandou into production by 2025. Now, it seems the project may be delayed indefinitely.
Guinea supplies 20% of the world’s bauxite and is the second largest producer of bauxite. It exports the ore to Russia and China. Revenues from the sale of ore estimated at $26.5billion in 2025accounted for around 35% of the West African nation’s GDP, in 2020.
Beijing imported almost half (47%) of its bauxite from Guinea last year. Now China fears disruptions to its aluminum supply-chain, which is used for many upstream industries. China now will have to turn to Australia for bauxite and eventually iron ore. That is the last thing China would like to do. The bilateral relations strained when Australia had become the first country to ban China’s Huawei from its 5G network. Australia has also called for an enquiry into the origins of the coronavirus, which had irked China, which thought it was aligning with the US in their efforts to isolate China. Guinea is the third country in West Africa destabilized by coup, the other two were Mali and Chad.The coup has caused considerable consternation in the diplomatic circles.
