Guinea continues to improve its mining regulations.
KY: Based on recent internal assessments, we have concluded that we need to improve the management of the Ministry of Mines and, more generally speaking, of Guinea’s mining sector. We are trying to send a better image of the industry to all the key stakeholders, because the mining sector is supposed to be the key pillar of the country’s economy. We found that people were more or less demoralized about the state of the industry and we are trying to provide new energy to our staff, and, implicitly, to the sector’s companies. At the moment, there is a sort of a mining standstill, which has been generated by two main factors: the country’s political situation, and the ongoing review of major mining contracts. The elections of 2013 naturally caused some anxiety in the market, as companies were reluctant to making big decisions before the political outlook was defined. As to the mining contract review process, we are aware of the fact that is has taken too much time to be completed. Now, the elections are behind us and, in the same time, we are trying to speed up the review procedures. The sooner we can put this process to an end, the sooner we will instil new energy, both to mining companies already here in Guinea, and to potential investors looking to come to our country.
In April 2013, Guinea revised its Mining Code. What were the main changes and how did these positively impact the mining sector?
KY: Last year’s revision of the Mining Code was based on three key pillars: stability, transparency, and win-win relationships between the government and the private sector. There was a stringent need to ensure the transparency of our interaction with mining companies; to that end, we have now made it mandatory to publish all the contracts online, creating a level-playing field for everyone. Moreover, we are looking to create a functional relationship with the civil society, and to explain what we are doing and that we are committed to the EITI procedures. The mining sector is expected to contribute to the development of our country, but this needs happen within the framework of a win-win process. We want to send out a positive signal to mining companies: we will create an investor-friendly environment, allowing them to make profits, but, in the same time, we require their help in developing our economy. Here, we are talking not only about taxes, but also about social acceptability and local development. However, the Ministry is perfectly aware of the global competition that Guinea is facing: we have iron ore and bauxite reserves, but we are far away from the main end-market, China. Countries like Indonesia and Australia are far closer so we have to somehow narrow that competitive gap for the mining companies operating in Guinea. To achieve that, we are drafting a tax system which will take into account these factors, and which should allow us to thrive on the global market.
The ability to involve national SMEs into large-scale mining activities is essential for the development of the economy. What are the local content policies that you are adopting and how are you building local capacity?
KY: We are presently organizing specialized local content workshops in partnership with the IFC: we want to ensure that the mining activities also bring benefit to local SMEs. However, we first need to make sure that there is good enough local capacity, as we do not wish to force miners to have contracts with unprofessional companies. The Ministry of Mines is collaborating with the Ministry of Vocational Training to increase the number of programs that can help develop the skills needed to work in the mining sector. We are aware that there are jobs that cannot be filled by Guinea’s local labor market but certain mining works should be allocated to indigenous businesses because that is the only way in which the national mining service sector will develop. We are putting in place incentives for collaborating with Guinean companies, and we are preparing these local players so that when the mining industry will pick up again in the country, they will be ready.
Power supply has been one of Guinea’s major issues over the past years. What is being done to improve the current situation?
KY: Energy is an issue in Guinea, however we must not forget that this country is the water tower of West Africa. We have more than 150 sites that are suitable for hydro dams and we are currently building the Kaleta hydropower station, in collaboration with our Chinese partners. The project should be completed by mid-2015, thus offering more power supply options for mining companies. We also have plans for two other major sites, which, once completed, will provide energy not only to our domestic market, but also to neighboring countries. The nexus that involves mining, energy, and infrastructure could then be developed at a fast pace, so that Guinea will be able to also process minerals domestically.
What are the factors that make Guinea an attractive mining destination, in comparison to some of its sub-regional neighbors, such as Ghana, Mali, or Sierra Leone?
KY: The quality and quantity of Guinea’s resources is indubitable. We have almost one third of the world’s bauxite deposits and we also possess the largest undeveloped iron ore project, Simandou. Additionally, as more power supply comes online, we will be able to leverage our energetic potential so as to develop a variety of activities linked to the mining sector: export not only raw materials, but also processed ores. In the same time, we are now living in a time of political stability, and we have a respected and visionary administration. These factors combined make Guinea a very interesting investment destination.
Guinea’s recent mining history has had its share of controversies. What is the Condé administration doing to restore investor confidence and what does the future look like for Guinea’s mining sector?
KY: We do recognize that mistakes have been made by previous governments, but we have been working hard to re-stabilize the country. When I came into office as the Minister of Economy and Finance, inflation was at 23% to 25%, and we had a fiscal deficit of more than 10%. Three years later, inflation is now below 10%, while our fiscal deficit has gone down to below 3%. This macro-stability is very important. So are the country’s political stability and regulatory framework (new Mining Code). We are the last frontier of the Wild West in Africa and we are trying to get out of that zone; we believe we have succeeded to a large extent to stabilize the country. Last year, we signed a contract with Chinese investors for more than $6 billion; in parallel, we also signed a bauxite/alumina contract with an Abu-Dhabi consortium for $5 billion. Furthermore, our undeveloped Simandou project is worth approximately $25 billion. All this investment means that people believe in Guinea and that they are willing to come here. As a government, we are working hard on completing the mining contract reviews with the likes of Rio Tinto and by the end of 2014 we should have put an end to this process. If that happens, 2015 will be an extremely productive year for Guinea. We hope that the mining sector will contribute more to the country’s economic and political stability and that it will provide the base for domestic industrial diversification. To all those interested to invest, Guinea is open for business.
This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Second Official Mining in Africa Country Investment Guide, will be launched next February 2015, as the only official publication providing country-specific information at Africa’s top mining event, the 2015 Investing in Africa Mining Indaba™ held in Cape Town, South Africa. You can view the 2014 Official Mining in Africa Country Investment Guide here