Why What Happens in Guinea Matters to China

Guinea may be small and far away, but what happens there is critically important to metals manufacturers in China who depend on key ingredients from this West African country to produce huge quantities of aluminum and, eventually, steel.

• BAUXITE: China relies on Guinea for more than half of its total bauxite imports needed to produce aluminum. That dependence is unlikely to change any time soon given that 99% of China’s bauxite supplies come from just three countries: Guinea, Australia and Indonesia. Given Beijing’s deteriorating ties with Canberra, it’s unlikely Chinese buyers would willingly turn to Aussie bauxite suppliers unless they had no other recourse. (BLOOMBERG)

• IRON ORE: Guinea is home to the world’s largest reserves of iron ore, a critical ingredient needed to manufacture steel. China sees huge potential for its investments there to help break its current dependence on Australian suppliers. The big bet that Chinese state-owned companies are placing is on the $15 billion Simandou mine that holds more than 8 billion tons of high-grade iron ore, more than anywhere else in the world. Construction of a new railway and port are finally underway after years of delays. (REUTERS)

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