Conakry — In the first agreement of its kind in the Republic of Guinea, a public/private partnership pact has been signed between the United Nations Development Programme (UNDP) and Global Alumina. The New York-based company is making the largest foreign direct investment to date in the West African nation to build a refinery for processing bauxite into alumina for export to the world market.
A memorandum of understanding was initialed in Conakry on Thursday by Mbaranga Gasarabwe, the UNDP resident representative, and Global Alumina Senior Vice President Haskell Ward. The UN agency and the company plan to cooperate on economic projects that will contribute to the achievement in Guinea of the UN's Millennium Development Goals to halve extreme poverty in the world by 2015.
Guinea's people are among the world's poorest. The country ranks 156 out of 177 nations on UNDP's Human Development Index 2005, which incorporates life expectancy and educational attainment as well as standard of living. Ruled for more than two decades by former general Lansana Conte, who was elected president in 1993 and reelected in 1998 and 2003, Guinea has suffered from surrounding turmoil. Conflicts in neighboring Liberia and Sierra Leone have spilled fighting, refugees and humanitarian emergencies into Guinea, which also borders Cote d'Ivoire, Guinea-Bissau, Senegal and Mali.
Yet Guinea has vast and largely unexploited mineral resources, including gold, diamonds, uranium and high-grade iron ore. The country is the world's second largest bauxite producer after Australia, with estimated reserves of 25 billion metric tons, accounting for a third of known world reserves. Guinea's bauxite supplies nearly 50 percent of the U.S. and Canadian import markets.
Since independence from France in 1958, the country has seen most of its bauxite output exported to foreign refineries. Near its mine at Fria, in the bauxite-rich northwest, Alumina Compagnie de Guinée operates a refinery with an output of one million metric tons per year, processing about 15 percent of the bauxite mined annually in the country. Refining bauxite increases the earnings of the producing country as much as ten fold, as does smelting alumina into finished aluminum products, a process done almost exclusively in developed countries.
The country's biggest bauxite mining operation is Compagnie des Bauxites de Guinea (CBG), owned 49 percent by the Guinea government and 51 percent by Halco, controlled by the world's two largest aluminum producers, Alcoa and Alcan. CBG accounts for some 80 percent of the country's foreign earnings. Last year, Halco announced plans to study the feasibility of building a 1.5 million metric-ton-per-year refinery in the country. The report is expected to be completed by the end of 2005. A joint venture between the government and Russki Alumina produces bauxite mainly for the Russian and Eastern European market.
Global Alumina's operational agreement was ratified unanimously by Guinea's National Assembly in May and endorsed by President Conté in July. The agreement grants the company a bauxite mining concession, the right to construct and operate the planned refinery, and access to existing road, rail and port facilities, as well as investment protections and other financial incentives. Construction of the 2.8 million metric-ton-per-annum refinery in Kamsar, about 200 miles north of Conakry, is expected to take three years for the first phase and another year for completion of a second processing line.
Global Alumina, which is traded on the Toronto Stock Exchange, is a signatory to the Global Compact, a United Nations effort initiated by Secretary General Kofi Annan "to challenge businesses around the world to take greater responsibility in society and act upon a set of universally recognized principles in the areas of human rights, labor rights and the environment."
The company's mission statement says the Global Alumina refinery "will assist Guinea to improve its citizens' quality of life by unlocking the country's most abundant and valuable natural resource" and will "enhance Guinea's transportation, communications, and other infrastructure while adhering to the highest world standards of environmental responsibility."
The September 22 memorandum signed by Global Alumina and UNDP designates four areas of cooperation - vocational training, support for business incubation facilities, small business development services and financing for micro and small enterprises. Global Alumina committed $75,000 for the first six months, "to be followed by other contributions as deemed necessary and feasible for the period 2006 - 2011". UNDP has agreed to provide at least $50,000 initially and to seek additional funding "as commensurable to its own resources and to the commitments made by Global Alumina".
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Global Alumina's involvement in Guinea has been challenged by Alcan and Alcoa, who control most of the country's bauxite output through Halco's majority ownership of CBG. In March, however, Halco agreed to hold talks about supplying bauxite to Global Alumina's refinery. Last week, the government set an end-of-September deadline for a decision.
"Guinea remains firm in its desire to have Global Alumina operating on its territory," a senior official at the Ministry of Mines told Reuters on condition of anonymity. "If Halco does not react in time, the authorities will take the necessary measures," said the official, who provided no details on what actions were being considered.
