Eurasian Resources speaks to GBR about its bauxite operations in Guinea.
Eurasian Resources first arrived in Guinea in 2010 and currently has preliminary offtake agreements for 5 million tonnes of bauxite. Can you provide a brief overview of the project’s history?
The project is divided into four stages. The first stage is the exploration. It was completed in 2012. 130,000 meters were drilled in accordance with the license that covered 2,000 square kilometers — the size of some small countries. The exploration was done under the supervision of SRK Consulting – the company with strong expertise in bauxite. It took two years to finalize the exploration, and once Eurasian Resources received the resource report, it became clear that the resources base consisted of 5 billion tonnes of bauxite with a grade of 40% and 2 billion tonnes with an average grade of 44% Al2O3 and 2% SiO2. The second stage is the initiation of a pre-feasibility study to begin the construction of an alumina plant. However, after two years of work, the Company decided to put the project on hold due to the alumina price drop that was considered to be a challenge to find funding for the refinery. The third stage is DSO and final stage is the infrastructure.
Given that your project is remotely located, how have you overcome challenges in infrastructure and logistics?
Eurasian Resources conducted an investigation to determine the best location for a port, as well as looking into road and rail construction. The studies included all possible options to transport the ore, including pipeline, ropeway system, railway and conveyor belt, as well as all possible geographic locations for bauxite export (Conakry, Dubreka, Boffa, Cap Verga, Kamsar). It became clear that railway was going to be the most efficient in terms of operational costs. Kokaya (Boffa region) was selected as the best placement for a river port. In the interim, a dirt road will be built in order to transport ore by trucks. The road puts Eurasian Resources into operation in less than 12 months, which allows us to obtain a cash flow to fund the company itself. The next issue is to minimize the initial stage CAPEX for the commencing of the project, which requires initial investment of about US$150 million.
What measures have you taken to make the project a more attractive investment?
Eurasian Resources examined available properties along the route to decrease the initial CAPEX, as well as several MOUs with independent companies along the road have been signed to minimize initial capex from US$150 million to US$50 million and construction time from 12 to 3-6 months. The US$50 million investment includes the cost to construct the port and road, and to start the first exportation of ore at 5 million tonnes per year. During talks with different independent companies along the road the idea of multiuser infrastructure corridor appeared. Eurasian Resources will develop both the mining project and the infrastructure project simultaneously, including the recently secured lease for a port that will be capable of exporting up to 40 million tonnes of bauxite and 1.2 million tonnes of alumina and importing of petroleum products and other goods through an oil-tanker terminal and container terminal respectively. Through these efforts, the project will benefit and the company will also be able to service other companies.
How would you describe the political stability of Guinea and its openness to foreign investment?
CBG, Friguia, and CBK are examples of three large-scale bauxite and alumina projects that have been operating continuously in the country for tens of years. To Eurasian Resources, this is an illustration of the country’s stability. The country has strong leadership in place — President Alpha Condé appointed a Mamady Youla, a businessman from the mining industry, to Prime Minster and Abdoulaye Magassouba, the current Minister of Mines, is a relatively young and energetic force. They are making a concerted effort to present the country to the international community as an attractive destination for investment.
What developments need to take place in order for Guinea to achieve greater capacity in terms of local beneficiation?
The major bottleneck for any project development is the infrastructure. All the existing railways and ports belong to companies that are not interested in providing an access for other users. I strongly believe that the development of real multiuser corridors will help other companies to develop their projects, including alumina refineries, and consequently for Guinea to succeed.
In general, what is your outlook for the market in Guinea and how has Eurasian Resources adapted to the conditions here in order to be successful?
There is still work that needs to be done, but it is time to invest in Guinea. The alumina market and industry are both changing. Not long ago, there were few independent producers of bauxite because everything was vertically integrated. Now, new players are emerging to take advantage of the high price of bauxite. This is the time to join the game and Guinea only requires infrastructure to become a significant leader in the market. Eurasian Resources had its start here in mining, and now we have an infrastructure company that will not only help to achieve the objective of exporting 15-20 million tonnes, but will also contribute to the development of Guinea.