PARIS — The latest coup in bauxite-rich Guinea is
reverberating across the market for aluminium, although for now it appears the
global production chain is not under threat, analysts say.
اضافة اعلان
Aluminium prices, already buoyed by a gradual economic
recovery, topped $2,800 a tonne to reach a 13-year high on Wednesday after the
coup.
Here's why Guinea is such a big market factor:
Massive reserves
A country of 13 million inhabitants, Guinea possesses the
world's largest reserves of bauxite, the reddish or grey rock that is extracted
into aluminium oxide, which is then smelted into aluminium.
The West African state holds estimated bauxite reserves of
7.4 billion tonnes, or around one quarter of the global total, US Geological Survey
(USGS) said last year.
Domestic and foreign firms last year produced 82 million
tonnes of bauxite in Guinea.
They were surpassed only by Australia, which has the world's
second-largest reserves ahead of Vietnam and Brazil.
China — with around seven times less reserves than Guinea —
imports around half its needs from there, according to raw materials
consultancy CRU, increasingly upping purchases in recent years "following
the deterioration in quantity and quality of domestic bauxite reserve."
The mining sector in Guinea, which includes gold and
diamonds, is crucial to the national economy, accounting for some 15 percent of
GDP and around 80 percent of exports, according to the World Bank's Macro
Poverty Outlook.
Cause for concern?
Beyond potential short term supply wobbles, observers are
confident the coup will not have lasting effects.
"It remains most likely that miners will be able to
continue operating, even though we lack clarity on the direction of the
country's mining policy and who will manage the government's portfolio,"
notes Eric Humphery-Smith, Africa analyst at risk intelligence company Verisk
Maplecroft.
In one of his first declarations after the weekend takeover,
coup leader Lt. Col. Mamady Doumbouya sought to reassure business partners and
foreign investors.
Guinea will "uphold all its undertakings (and) mining
agreements" and "maritime borders will remain open for export
activities," he said on Monday.
"The new leadership declared that bauxite production is
very important to the country and should continue as usual. I would not expect
severe disruptions to production and exports if safety can be guaranteed,"
Commerzbank analyst Daniel Briesemann told AFP.
Even so, Humphery-Smith warned there is some risk, albeit
"remote", that a future Guinean government may push through a
renegotiation of contracts or expropriate foreign-owned mine assets.
Foreign caution
Despite Doumbouya's promises, foreign operators in Guinea
are keeping a close eye on the turbulence, although they say that for now their
operations have not suffered any impact.
Russian aluminium giant Rusal, which produces half of its
bauxite output in Guinea — 7.3 million tonnes according to the journal
Kommersant — said Monday it was considering evacuating Guinea-based staff
should the situation "escalate."
Kremlin spokesman Dmitri Peskov said Tuesday he was waiting
to see that "the interests of our businessmen and firms are not affected
and that their interests are guaranteed."
South African gold firm AngloGold Ashanti said Monday
operations at its Siguiri mine were functioning "normally."
Big stockpiles
Aluminium prices had already been soaring well before the
coup, rising by about 40 percent since January as global economic activity
bounces back from the COVID-19 trough.
Also pushing prices higher are rising electricity prices in
China, which has led to a sag in production at a number of foundries in its
western
Xinjiang region — aluminium smelting consumes voracious quantities of
energy.
According to CRU, Guinea's political crisis ought not to
weigh unduly heavily on the production chain — the consultancy notes Beijing
presides over healthy stocks.
"CRU currently estimates cumulative bauxite stockpiles
to exceed 50 million tons in China, and so be equivalent to around six months
of imported bauxite consumption."
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