(Ecofin Agency) – If Guinea, 2th world producer of bauxite, realizes its ambition to develop a local industry for transforming ore into alumina, its revenues should increase. According to IMF data dating from 2021, Mines represent more than 90% of exports and 21% of the country’s GDP.
The American bank Goldman Sachs has revised upwards its aluminum price forecasts for 2025, from $2,540 to $2,700 per tonne. This revision, justified by a potential increase in Chinese demand stimulated by recent economic recovery measures, can support Guinea in its plans to develop a local bauxite processing industry (the raw material).
Rising prices on the market
According to Goldman Sachs, the impact of recent economic stimulus measures in China will be particularly felt on metals due to the country’s dominant share of global demand. A report dating from 2023 produced by CRU International for the International Aluminum Institute (IAI) helps to understand the weight of the Middle Kingdom with regard to aluminum. According to the details of the said report read by Ecofin Agencyglobal demand for aluminum will increase by almost 40% by 2030 and the industry will need to produce an additional 33.3 million tonnes of the metal to meet this growth in demand coming mainly from the transport, construction sectors , packaging and electricity. The authors specify that two thirds of this growth should come from China.
It should be noted that Goldman Sachs’ new forecasts come in a context of rising prices across the entire aluminum value chain, which recently traded around $2,715 per tonne, its highest for the month. of May.
At the same time, Ecofin Agency reported last week that the price of alumina, a product resulting from the refining of bauxite and used to produce aluminum, has increased by more than 20% since the beginning of October 2024. If we are to believe Fastmarkets analysts , alumina is approaching its record price of $707.75 set in 2018, while the supply of bauxite has been restricted in Guinea for several weeks. Furthermore, the price of bauxite in Asia continues to rise according to Steelnews.biz which reported on October 25 a record of 70 dollars/tonne (cost, insurance and freight included), up 17% since the start of the year.
A stimulus for Guinea’s plans
The upward momentum on the aluminum market and the good prospects announced should encourage Guinea in its plans to develop a local bauxite refining industry. In 2022, President Mamadi Doumbouya issued an ultimatum to bauxite producers to submit plans to build refineries.
Last March, a project to build a refinery for the production of alumina in Boké was announced in partnership with the company Alteo. In June 2024, an agreement to build a bauxite refinery was announced between Emirates Global Aluminum (whose Guinean subsidiary accounted for 14% of Guinea’s bauxite exports in 2022) and the government, for an investment of $4 billion intended to produce 1.2 million tonnes of alumina per year.
The world’s second largest producer of bauxite, Guinea wants to increase revenues from this sector by positioning itself on other links in the value chain which also includes alumina and aluminum. Currently, only one bauxite refinery is in operation in Guinea, in this case the Friguia refinery of the Russian company Rusal. To realize its plans, the country will nevertheless have to address several challenges, including that of energy availability. According to a report published in 2022 by the ADB, “the rate of access to electricity in Guinea still remains relatively modest, [44,1 % pour seulement 19,3 % en milieu rural] ».
As a reminder, Guinean bauxite is currently processed mainly in factories in China. Guinea is China’s leading supplier of bauxite.
Louis-Nino Kansoun
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