COVID-19 will not block Guinean bauxite production and export
----Interview with Mr. Mamady Fofana
General Manager
SOGUIPAMI
- SOGUIPAMI is a commercial company regulated by the Organization for the Harmonization of Business Law in Africa (OHADA) with the sole shareholder being the Guinean State.SOGUIPAMI is responsible for the management of the State’s shareholdings in mining companies, the development of mining permits and establish partnership with investors to facilitate investment in the mining sector. It also participates in the negotiations on strategic mining contracts between the State and the investors (model analysis) as well as the negotiations on the development of mining infrastructures; while developing the attractiveness and bankability of major infrastructure projects. The company is also mandated by the State to commercialize its share of production of ore from mines in production and transport up to 50 % of this production on a reliable logistical basis.
- Asian Metal: Thanks for the time joining this interview.
- Mamady Fofana: Thanks for calling and the opportunity.
- Asian Metal: Would you please give a brief introduction on SOGUIPAMI?
- Mamady Fofana: SOGUIPAMI is the Guinean State Mining Company regulated by the OHADA. We are a 100% commercial company, privately managed with a board of Directors, regularly audited with financial accounts advertised in our internet site.
- SOGUIPAMI has become a major player in the Guinean mining sector as we are dedicated to B-to-B commercial transactions, which means that we facilitate the acquisition of mining assets. Serious investors looking for major investments in the Guinean mining sector should contact SOGUIPAMI. Our business model is to cater for administrative work, so the investor/operator focus on mining operations.
- SOGUIPAMI has become a very well-known powerhouse as we started to trade commodities on behalf of the state. Any refiners, investor exploring the acquisition of bauxite or any other ores should also contact us as we create stock of ore.
- Asian Metal: Will SOGUIPAMI export bauxite directly from this year? What is the planned quantity and quality for 2020?
- Mamady Fofana: From this year, we would export bauxite directly to end clients in different markets (Europe, China and India). As you know quality remains high and we are aiming at 3 million tons this year.
- Asian Metal: Do you prefer end users or traders from China?
- Mamady Fofana: This is a very good question. We tend to prefer end users or refineries, because they are less price sensitive than traders in addition to the opportunity of enjoying long-term contracts as opposed to spot transactions which are by definition market volatile. In conclusion, we are inclined to end users.
- Asian Metal: Based on China Customs, China imported around 44 million tons of bauxite from Guinea in 2019, up by 16.3% YOY. Will the supply continue to rise in 2020? How about the total production in Guinea last year and what is your opinion for 2020?
- Mamady Fofana: Thank you. You are absolutely right. China is importing from Guinea close to 4 million tons per month and this number had been increasing since 2017. The bauxite quantity from Guinea became No. 1 in China from 2017, surpassing Australia, our competitor. Australia has around 2 million tonnes per month. Chinese appetite for imported bauxite now is closed to 120 million tons per year and this number will continue to increase. I expect that the demand increase for Guinean bauxite will remain strong for different reasons. This year, we will have new mines, which will increase market share in China.
- Basically, in 2018, we had close to 57 million tons of bauxite and around 63 million tons in 2019. In 2020, we expect very easily 80 million tons. By 2023, we commit to reach 100 million tons.
- Asian Metal: How many bauxite producers in operation now in Guinea? Will there be any new producers in 2020?
- Mamady Fofana: We have eight (8) mining companies, which are currently producing bauxite. In 2020, close to thirteen (13) mines in production thanks to the commissioning of new mines, including Chalco, SOGUIPAMI/Ashapura, SBG, Eurasian, etc…Logistics for evacuation is being built with new ports and mining roads available sustaining the Guinean production sharp growth. More and more Guinean entrepreneurs are also participating to mining infrastructure EPCs through subcontracting.
- Asian Metal: From 2019, more and more Chinese alumina refineries started importing bauxite from Guinea. How do you think of the reason?
- Mamady Fofana: Thanks for asking this question. There are two main reasons. First reason is exogenous due to a very favorable market and demand. Since early of 2017, Guinea bauxite had benefited from different country embargos on raw mineral export. Traditionally, Chinese alumina refineries used to suit Indian, Indonesian and Malaysian bauxite. Now, there are many investments done by Chinese producers in Guinea. Because of the external market, many Chinese refineries decided to focus on Guinea, where the environment is very stable. In Guinea, we have very talented people at both SOGUIPAMI and the Minister of Mines and Geology, who are very well connected to Chinese investors.
- Secondly, the endogenous reason is primary linked to the high quality of the bauxite; Guinean bauxite has a very low silica rate. From an industrial perspective you have to consume more caustic soda with a low grade-high silica rate bauxite. For this specific reason, all traditional Chinese refineries switched their supply to Guinean bauxite due to the high grade- low silica rate bauxite. Besides, moisture is traditionally low and Chinese refineries see the high Value- In- use (VIU) when supplying their refineries with Guinean bauxite.
- Asian Metal: For the novel corona virus outbreak in China, many inland Chinese alumina refineries cut production from early this month. Will that affect the demand for Guinean bauxite?
- Mamady Fofana: First of all, we are very sorry about what is happening in China. Every week, we call our partners in China to make sure they are well. China is our first and main market, but I don't think it will affect Guinean bauxite export too much. In Guinea we have a welcoming tradition so we have no exceptional containing measures; the bauxite is still going out as our end users keep pushing the demand. We are still producing, and business is as usual in Guinea. We expect that everything will recover quickly in China so we can keep improving our market share.
- Asian Metal: Are there any policies or regulations on Chinese people or vessels coming back to Guinea?
- Mamady Fofana: Absolutely not. Guinea is very investor friendly and China remains a key partner to Guinea. You need to remember that China remains beside Guinea during Ebola crisis period, so we remain grateful for the support provided. As any other country we applied preventive detection measures at airports and other ports to check everybody's temperature. We learned a lot from Ebola and our healthy system can react quickly. We welcome any investors including our Chinese partners.
- Asian Metal: Guinean government also encourages alumina refineries construction. Will there be any progress in the coming two years?
- Mamady Fofana: Traditionally, Guinea has been producing alumina and maybe few people are aware of it. For example, in 2019, we produce close to 170,000 tons of alumina from Rusal refinery at Friguia. In the next 2-3 years, there will be up to four (4) more refineries. In the next three years, we expect to produce up to one (1) million tons of new alumina in the market. We strongly encourage mining companies producing more than twenty (20) millions of tons of bauxite to consider moving to alumina production. Clearly transformation is our long-term strategy.
- Asian Metal: Asian Metal will organize 11th World Aluminum Raw Materials Summit on May 14-15, 2020, in Hangzhou of China. Welcome to join the summit to promote your bauxite.
- Mamady Fofana: Thanks for the reminder. We will do.
- Asian Metal: I believe Guinea will have a good development in aluminum industry in the near future years.
- Mamady Fofana: Thank you.
