Guinea+Strategic+Minerals

=China Power Investment Group (CPI) and Aluminum Corporation of China (Chalco) Likely to Continue Large-Scale Investment Into Guinean Mining Industry In The Next Five Years=

Executive Summary:
It is highly likely that Chinese Companies, most notably state-owned CPI and Chalco, will continue their significant investments into iron ore and bauxite mining within Guinea. In 2011, the government of Guinea and China Power Investment Company signed an agreement in which China Power Investment would trade Guinea approximately USD 5.8 billion worth of infrastructure projects, including a coal power plant, deep water port, and bauxite refinery, in exchange for digging rights outside Conakry, Guinea's capital. In 2012, Chalco purchased a 44.65 percent stake in the Simandou iron ore project for an amount of USD 1.35 billion. The project will be jointly developed by Chalco and other Chinese companies, including China Railway Construction Corporation and China Communications Construction Group.

Discussion:
Guinea's mining industry currently contributes to around 25 percent of the nation's income. The majority of this income comes from bauxite mining and production, accounting for around 20 percent of the nation's GDP. Guinea is estimated to hold 24 percent of bauxite reserves world wide.Guinea also has potential for commercially exploitable reserves in other minerals such as iron ore and diamonds, however the nation is largely unexplored at this point.

In 2011, China Power Investment Company signed an agreement with the government of Guinea. This agreement would have China Power Investment fund approximately USD 5.8 billion worth of infrastructure projects in the Boffa region, including a 270-megawatt coal power plant, a deep water port in Bel Air, and two refineries, in exchange for digging rights. The facilities will produce 12 million tons of bauxite and 4 million tons of alumina yearly. Guinea currently only has one refinery, a 640,000-ton-a-year plant in Friguia.

In 2012, Chalco purchased a 44.65 percent stake in the Simandou iron ore project from Rio Tinto for an amount of USD 1.35 billion. Stakes in the project are currently held by three companies: Rio Tinto (50.35 percent), Chalco (44.65 percent), and the International Finance Corporation (5 percent). The Guinean government has an option to purchase as large as a 20 percent stake in the project. The Simandou project consists of a 95 million ton per year-capacity iron ore mine in the Simandou range, a Trans-Guinean railway approximately 650 km long stretching from the mine to the coast, and a deepwater port located in the Forecariah prefecture. The project is long-term and is expected to cost over USD 20 billion over the next 15 to 20 years. Chalco has partnered with other Chinese companies, such as China Railway Construction Corporation and China Communications Group, in the development of the Simandou project.

Analytic Confidence:
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, did not use a structured analytic method, worked alone, and collaborated with a team. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst****:** Jared DeTal