The coup in Guinea that shook the aluminium market

 

Guinea’s first elected president came to power more than a decade ago promising to stand up to global mining giants and improve the lives of the poor in the resource-rich west African country.

But this week, people celebrated on the street as the one-time political exile and democratic activist Alpha Condé was ousted in a military coup. Their charge: Guinea had become a mining powerhouse on his watch but their lives had barely changed. To cap it all, he had tried to extend his rule for a third term.

“I didn’t know him very well, but I knew [him as a] political leader who seemed like a man who in his heart wanted to turn Guinea into a real democracy,” said Cellou Dalein Diallo, the opposition leader who lost to Condé in three elections, which were rife with irregularities. “So I was very disappointed when I saw how he acted because it was the opposite of what I expected.

“Alpha Condé himself created the crisis that swept him away,” Diallo added. “[He] would not have met such a tragic end” if he had not changed the constitution last year in order to run for a third term.

The push by Condé, 83, to cling to power prompted widespread protests. International powers, including the African Union and the UN, condemned the coup. But the strongest reaction came from the commodities market, where the price of aluminium rose to its highest level in a decade out of fear supply would be disrupted.

Condé in 2010 inherited a dysfunctional state, ruled for decades by Lansana Conté, its mineral wealth exploited in a haphazard fashion and the source of political and legal strife. Over the next decade, he oversaw Guinea’s transition into a major producer, producing a fifth of the world’s bauxite and attracting billions of dollars in investment from China and Russia.

“For [the] global aluminium industry, interruptions of bauxite supply from Guinea could have a devastating impact,” said a mining executive. The disruption could be particularly fraught for Russia and China, which rely heavily on Guinean bauxite.

The explosive growth of the country’s bauxite industry can be traced back to Indonesia’s decision to ban exports of unprocessed minerals in 2014. That forced China’s vast aluminium industry to scour the globe for other sources of supply, eventually settling on Guinea. 

Analysts estimate that about half of China’s bauxite comes from Guinea. Bauxite production soared from 16.3m tonnes in 2015 to 82m tonnes in 2019, according to US geological survey data. 

Bauxite exports rose from $597m in 2015 to $3.3bn in 2019, according to US trade data. Over that period its ranking on the UN’s Human Development Index rose just five slots, from 182 out of 188 countries to 178 out of 189 countries.

Guinea’s importance to China, its biggest trading partner, was underscored when Beijing, which has a long-held policy of not commenting on the domestic affairs of other countries, issued a rare public rebuke of the coup. And Oleg Deripaska, the founder of Rusal, in a Telegram post warned that “this situation may seriously shake up the aluminium market”.