A 20 Billion Dollar Trade Agreement Between China and Guinea Raises Concerns

Meeting between President Xi Jinping and the Guinean delegation, via CGTN Africa.

Leaders of BRICS nations (Brazil, Russia, India, China and South Africa) gathered in Xiamen, China as the five rising emerging economies for the ninth annual summit held from 3-5 September 2017. Alongside this conference, Ibrahim Kassory Fofana, Guinean Minister of State in charge of public-private partnerships, announced a framework trade agreement between China and Guinea.

This 20 billion dollar agreement will finance significant infrastructure projects over a 20 year period from 2017 until 2036. The deal constitutes an agreement through which Chinese investment will be repaid in exchange for allowing Chinese companies to undertake mining projects in Guinea, raising concerns among Guineans about its terms.

The Office of the President in Guinea has published a press release in an attempt to clarify the terms of the agreement; however, as noted by Diallo Boubacar on the site Africaguinee.com, details have not yet been made known. Several opposition leaders, including François Bourouno voiced their concern:

L’accord de financement (20 milliards de dollars Us) signé mardi dernier entre la Guinée et la Chine suscite des interrogations ! Alors qu’il prévoit notamment des financements pour la construction d’infrastructures contre des ressources minières couvrant une période de 20 ans, dans les rangs de l’opposition on s’interroge.

“On apprend que c’est un accord mixte qui contient des prêts et des dons. Mais on ne sait ce qui représente des prêts, quelles sont les conditionnalités, le taux et les modalités de remboursement ainsi que tous les éléments de contrepartie. Les dons non plus,  on ne sait pas la définition qu’on leur donne. Il y a autant d’interrogations comme ça”

The trade deal (worth 20 billion USD) signed last Tuesday between Guinea and China has raised some concerns. Although it is anticipated that this deal will, for the most part, finance infrastructure projects in exchange for mining resources over a 20 year period, we, in the opposition party, have our doubts.

“We understand it is a mixed agreement, consisting of loans and gifts. However what we don't know is what the loans will entail, such as the repayment rates, the terms and conditions, as well as the compensation details. Nor do we know how the gifts will be defined. As such, there are many questions we need to ask.”

In 2016, the mining sector accounted for 98.97% of Guinea's exports (compared to 84.12% in 2015). Trains carrying ore can comprise up to 120 cars, emitting an infernal noise as well as dust clouds stretching from the extraction site all the way to the port.

Nevertheless, Guineans hope this sector will bring improvements to their living conditions, unlike the farming sector, which has been almost totally neglected. While Guinea has vast agricultural potential due to its varied climate and many rivers, the country is known as a “geological scandal” due to the disparity between the wealth of untapped resources and the poverty of its citizens.

Guinean blogger Jeanne Fofana from kababachir.com has raised doubts regarding additional debt representing more than 50% of the national debt, which already constitutes 48% of the gross domestic product (GDP). She concludes:

Les Guinéens veulent une amélioration substantielle de leurs conditions de vie. Avancer des milliards USD et vanter les mérites d’Alpha Condé frise tout bonnement de la démagogie : « On parle de ces montants, le Guinéen reste sceptique et il a raison ! Parce que cela ne se traduit pas dans l’amélioration de son quotidien. La seule manière de traduire cela dans l’amélioration de sa vie, est qu’il ait du travail. » Les Guinéens se sentent floués.

Guineans want to see a marked improvement in their living conditions. Simply providing billions of dollars and extolling the virtues of Alpha Condé [The Guinean President], quite frankly, borders on populism: “when talking about these kinds of amounts of money, the average Guinean remains sceptical, and with good cause! Because for them, this does not translate to an improvement in their daily life. The only way to convert this into bettering their lives is by providing employment.” Guineans are feeling deceived.

In an article by Radio France Internationale, RFI, Amadou Bah from the non-governmental organization (N.G.O.) Action Mine Guinée expresses his concerns:

Mais aucune précision n’est faite sur la quantité de ressources attribuée…

Est-ce que ça ne va décourager les autres investisseurs des autres multinationales qui veulent avoir des concessions en Guinée ? Est-ce que ça ne serait pas de gré à gré ? Est-ce que la valeur des infrastructures va refléter la valeur du minerai qui sera exporté ? Pour le moment, nous restons suspendus aux lèvres du gouvernement qui a négocié cela, sans beaucoup donner de détails.

However there has not been, as of yet, any clarification as to the quantity of the resources allocated.

Will this not just discourage investors from other multinationals from seeking concessions in Guinea? Will this be by mutual agreement? Will the value of the infrastructure be equal to that of the minerals to be exported? At the moment, we are hanging on the government's every word as they negotiate this without providing many details.

Guinean netizens speak out

Guinean citizens have taken to Facebook to voice their doubts. The first bauxite exploitation in Guinea took place in 1937, but Guineans are still amongst the poorest in West Africa. Siradiou Paraya Bah, a resident of Conakry  joins the debate by posting on the wall of influential Guinean blogger Sidikiba Keita to ask what lessons can be learned from the past:

Peut-on avoir connaissance du contenu exact de ces accords de financement Chine-Guinée?
Quel bilan faire des décennies d'exploitation de la bauxite en Guinée?
Quelles leçons pourra-t-on en tirer?

Can we know exactly what these trade agreements between China and Guinea entail?
What can we learn from previous decades of bauxite exploitation in Guinea?
What lessons can we take away from this?

What concerns Demba Thez Mara, a Guinan netizen in Boké, is the need to process the minerals before exportation:

Je souhaiterais qu'on installe des usines minéralurgique et métallurgique pour la transformation de nos produits bruits sur place. En matière d'enrichissement de l'Al2O3 [l'alumine], la Chine a la meilleure technologies d'enrichissement par flottation donc pour un développement en matière de mines il faut transformation sur place et pour ce il faut aussi une production énergétique suffisante.

I would like to see us put in place metallurgical and ore dressing plants so that we can process our unrefined products on site. In terms of the enrichment of AI203 (aluminium), China has the best flotation technologies; therefore in order to better develop our mines, we need on site processing, which will also require sufficient energy production.

Law enforcement officers have clashed with protesters at the centre of the main bauxite extraction site in Boké, Guinea in response to the adverse environmental impact of extraction and lack of economic benefits, particularly in terms of employment. Against this backdrop, blogger Sidikiba Keita responds to active Guinean Facebook user Ibrahim Ghussein's message and warns Guineans:

1. Ne nous berçons pas d'illusion. Les opérations actuelles de SMB sont la petite échelle de ce qui nous attend car on passera de 30.000T/j à 300.000T/j, C'est à dire un décuplement. Les chinois ont un agenda très clair: la compression tous azimuts des coûts de production, de l'extraction à la mise à FOB. Le dernier rapport de l'ITIE atteste que le revenu moyen perçu par l'État guinéen est de 4$/T de bauxite, alors que la CBG en paie plus que le double du fait de ses mesures de protection de l'environnement. La phase de décapage et de dynamitage provoquent déjà une pollution peu maîtrisable. Il faut y rajouter la phase de transport qui sera probablement faite par camion comme ils le font actuellement.
2.  De toutes les façons au vu de l'expérience traumatisante subie par les populations riveraines de SMB nous sommes dans l'impossibilité matérielle de tenir cette cadence sauf si on envisage un déménagement massif des populations.

1. Let's not delude ourselves. SMB [Société Minière de Boké, in English: Boké Mining Company]'s current operations are on a small scale compared to what we are expecting, as this should increase tenfold, from 30,000 tons/day (t/d) to 300,000 tons/day. The Chinese have a very clear agenda: an all-out reduction in production costs, from extraction to FOB delivery. The EITI [Extractive Industries Transparency Initiative]'s latest report confirms that the Guinean government expects an average return of $4/t of bauxite, whereas CBG [Cie de Bauxites de Guinée] pay more than double that amount, due to their environmental protection measures. The stripping and blasting phases already create a barely manageable pollution issue. On top of this, the transportation phase will undoubtedly be via lorry, as it is currently.

2. In any case, in light of the traumatic experiences endured by the population who live near to the SMB site, this is simply unsustainable, unless the local population are to be moved out in droves.

In terms of the environmental impact, Tidiane Sylla highlights the potential consequences of over-exporting, which risks flooding the market and causing the price to fall:

Exporter de forte quantité de banco de bauxite pourrait faire chuter les prix du dit produit sur le marché international. Dans la zone de Boke, Boffa, telimele, plus de 10 sociétés sont engagées dans la production de bauxite. Diversifions et innovons pour ne saturer le marché. 

Exporting large quantities of bauxite could cause the price to fall on the international market. In the Boké, Boffa and Télimélé regions, more than ten companies are involved in bauxite production. We need to diversify and innovate so as not to saturate the market.

Guinea's history of public distrust

A lack of public trust around national mining deals emanates from unfair contracts signed by Guinean Mining Minster Mamoudou Thiam during his term in 2009-10. Thiam has been in prison in the United States (U.S.) since December 2016 after U.S. courts found him guilty of laundering 8.5 million dollars in backhanders.

The Africa Center for Strategic Studies, an academic institution created by the U.S. Department of Defense and financed by Congress to study security issues in Africa, published a study in May 2015 entitled The Anatomy of the Resource Curse: Predatory Investment in in Africa's Extractive Industries, which analyses problems caused by mineral wealth in certain African countries. In the chapter dedicated to Guinea entitled Exploiting a State on the Brink of Failure: The Case of Guinea, the study details how Mr. Thiam was able to illegally line his pockets while in power.

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