Guinea - Mining

Guinea had the world's largest bauxite reserves and ranked second in production in 2001, behind Australia. Mining was the most dynamic sector of the Guinean economy, accounting for 16% of GDP in 2001 (down from 25% in 1996) and 90% of exports, 90% of which were from bauxite. Alumina, gold, and diamonds were the next leading export commodities in 2002, and bauxite, gold, diamond, and alumina refining were the country's top four industries. Rapid expansion, particularly of bauxite (aluminum ore) and alumina (aluminum oxide) production, occurred in the 1970s; production subsequently declined and has since remained somewhat constant. Declining bauxite prices have led the mineral industry to diversify. Guinea also had significant deposits of iron ore and granite.

The government has claimed that Guinea had 20 billion tons of bauxite reserves, with proven reserves of 18 billion tons. In 2001, Guinea's mine output was 17.95 million tons wet-basis bauxite (metallurgical plus calcinable ore estimated to be 13% water), 15.7 million tons dry-basis bauxite (wet-basis ore reduced to dry-basis, estimated to be 3% water), and 100,000 tons calcined bauxite, down from 660,000 in 1997. The government has encouraged foreign participation in the bauxite sector. Bauxite mining began in 1952 at Kassa, but these deposits were exhausted by 1962. In 1960, the Fria International Co. for the Production of Aluminum (later renamed Friguia), an international consortium of several Western aluminum producers, began construction of a major mining and processing complex at the large Fria deposit. Friguia was 49% government owned, and the government took 65% of the profits, as it did from the other bauxite producers. In 2001, the Alumina Co. of Guinea announced that it had increased alumina production at its Friguia refinery by 150,000 tons per year, to 700,000. In 1966, the Guinea Bauxite Co. (Compagnie des Bauxite de Guinée, or CBG), the world's largest bauxite producer, was formed—49% owned by the government and 51% by an international consortium—to develop the Boké reserves at Sangarèdi. Some $339 million was spent on development of the site, including a railroad to the port of Kamsar. The company began exporting bauxite in 1973 and produced 10.6 million tons in 1991. CBG operated a number of open-pit mines, including Bidikou, Sangarèdi, and Silidara, and had a capacity of 14 million tons per year. CBG's foreign partner became Halco Mining, a consortium of Alcan, of Canada, Pechiney, of France, and Alcoa, of the United States. CBG had additional resources at the Boundou Waade, N'danga, and Paravi deposits, with estimated total reserves of more than 300 million tons. Production at the Debélé bauxite mine—developed with a $100 million investment from the former USSR and owned by the state's Société de Bauxite de Kindia (SBK)—was expected to grow from 1.5 million tons per year to 2.5million tons per year during the years 2002–2004.

In 2001, Guinea produced 13,000 kg of gold, including artisanal production, up from 7,835 in 1998; 370,000 carats of diamond, including artisanal production (70%–80% gem quality), down from the average 381,000 recorded in 1998– 2000, following 1997's output of 205,000; and 550,000 tons of hydrate alumina and 550,000 tons of calcined alumina. The country also produced cement, clays, salt, sand and gravel, and stone.

Société Ashanti de Guinée, owners of the Siguiri gold mine, the largest in the country, reported a 7% decrease in production in 2001, to 8,808 kg. The Société Aurifère de Guinée (SAG), 49% owned by the state and 51% by the multinational Chevaning Mining Co., was established in 1985, and operated a placer mine near Siguiri. Artisanal gold production from the Siguiri and Dinguiraye areas was estimated at 3,000 kg, most of which was smuggled out of the country, as the government offered less than the market price for gold mined by individuals. Gold reserves in the northeast were estimated at 200–1,000 tons. Semafo, Inc., of Canada—awarded a 10-year license for the Jean Gobele gold project in 2000—began construction of the Kiniero open-pit gold mine in 2001, opened it in 2002, and expected to produce 1,900 kg per year of gold. Semafo also had a join-venture agreement with Rio Tinto PLC, of the United Kingdom, to explore the Mont Kakoulima property, where initial studies indicated a one-meter-thick horizontal layer of massive sulfides containing cobalt, copper, nickel, palladium, and platinum.

Guinea possessed high-quality, unusually large gemstone diamonds that were found in alluvial deposits in the Baoule and Bimoko River Valleys. Small-scale operators produced the majority of diamonds, according to the government; they were allowed to lease plots from the government to then turn over production to the central bank for export. In reality, a considerable share of production was smuggled out of the country, so such production was banned in 1985. The practice continued illegally in 1996, with all production smuggled out of the country. In 1996, the Aredor concession was purchased by Canadian and South African interests, which began pilot-plant operations the same year, recovering 3,828 carats of diamond. In 2001, Aredor was the largest producer of diamonds in the country, at 40,000 carats, and 85% owner Trivalence Mining Corp., of Canada, estimated indicated resources at 461,282 carats. Aredor, which previously was 50% owned by the state and 50% by foreign investors (mainly Bridge Oil Co., of Australia), opened in 1984 but closed its diamond mine at Gbenko in 1994 because of the continued presence of artisanal miners squatting and prospecting the mine.

Iron ore was mined at Kaloum until 1967. Larger, richer deposits have been found in the Mount Nimba and Simandou mountain areas, along the Liberian border. In 1974, the Mifergui-Simandou and Mifergui-Nimba mining companies were formed to exploit the deposits, with the government retaining half interest in the firms. Reserves were estimated at 300–600 million tons; producers hoped political stability would be rapidly restored to Liberia, so that shipments could be made to the port of Buchanan.

The less-than-expected foreign investment was attributed to the country's perceived political and economic risks and decreased availability of financing for junior mining companies, as well as civil disturbances in neighboring countries Guinea-Bissau, Senegal, and Sierra Leone.