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  • A coup which took place in a coastal country in West Africa may hit closer to home than

  • you think - with your favorite smartphone and even power lines potentially affected.

  • Why? These items all contain aluminum, and the world’s primary source of aluminum is

  • bauxite ore.

  • And it so happens that Guinea, the country where this coup occurred, has the world’s

  • largest reserves of bauxite.

  • After years of stability under the previous regime, for the first time really since Guinea's

  • independence, all of that certainty, all of that stability, that predictability of the

  • market was suddenly removed, and aluminum prices spiked to 13-year highs.

  • The main concerns were around whether the interim regime would raise taxes,

  • whether there would be contract renegotiations with mining firms.

  • And in a worst-case scenario, commercially, whether renationalization was on the cards.

  • On the morning of September 5th, 2021, gunshots broke out in Guinea’s capital, Conakry.

  • Soldiers from the country’s special forces had ousted president Alpha Conde, citing corruption as their motivation.

  • In the process, the coup disrupted nearly a decade of political stability in the mineral-rich nation.

  • Days after, prices of aluminum spiked to a 10-year high on the London Metal Exchange.

  • Markets were rattled by the possible disruption to global supply chains.

  • With these international networks already in crisis, what does this latest blow mean

  • for consumers and businesses around the world?

  • To better understand the impact of the coup and the significance of Guinea’s resources,

  • I called up CNBC’s Global Markets reporter, Elliot Smith.

  • Hi Elliot.

  • Hi Timo.

  • So, Elliot. Tell me the role this country of just 13.1 million people plays on the global stage.

  • So, for a country of 13 million people, Guinea has a disproportionate impact on the global

  • supply chain in that regard.

  • Mining accounts for about 35% of Guinea's GDP. Guinea actually hosts 7.4 billion tons of bauxite.

  • It's about a quarter of the world's total content.

  • And then we look at iron ore. In the southeast, Guinea’s Simandou region is about 110 kilometers

  • and is host to one of the largest untapped iron ore reserves in the world.

  • The key thing about this iron ore reserve though is that it is over 65% iron content.

  • However, much of these reserves remain untapped because of the country’s history of political instability.

  • So, Elliot, how has the country's past contributed to this moment in time?

  • Since Guinea gained independence from France, you've had decades of political instability.

  • Those post-colonial scars politically have never really been relieved and

  • President Alpha Conde was Guinea’s first democratically elected leader in 2010.

  • The stability that then ensued enabled Guinea to finally find its place in terms of trade

  • and to start a period of sustained economic growth.

  • Initially, Condé’s term appeared promising for Guinea’s economy as exports of the country’s

  • prized mineral, bauxite, grew.

  • In 2020, the West African country exported 82.4 million tons of bauxite, an increase

  • of more than 300% since 2015.

  • Under Condé, the country also maintained a trading relationship with China and Russia,

  • two major importers of its iron and bauxite minerals.

  • In fact, in 2020, Guinea’s trading bauxite relationship with both countries was worth

  • an estimated $26.5 billion, 35% of Guinea’s GDP.

  • Conde really set out when he was elected in 2010 to give Guinea legitimacy on the world stage.

  • He'd spent decades fighting the previous tyrannical regimes.

  • He enlisted the likes of Tony Blair and George Soros as advisors

  • when he set out to revolutionize Guinea’s economy.

  • Conde built very close alliances with China, with Russia and with international bodies.

  • China has a pretty immense presence in the country through the Belt and Road initiative.

  • China is reliant on bauxite exports and iron ore projects in the country.

  • Russia's Rusal has three bauxite mines and an alumina refinery in the country

  • and accounts for about 42% of Rusal’s bauxite production.

  • If we look over the last five years, Guinea has consistently produced more than 5% GDP growth.

  • So, on a headline level, the country was heading in the right direction economically.

  • A lot of people were not necessarily feeling this at the ground level.

  • The new mining code that Conde developed was on the face of it, a reform that helps with

  • transparency on revenues. It aims to hold companies accountable.

  • And the World Bank later published a report accusing the mining code of being a front

  • for personal enrichment and rewards to benefactors. So, there are two sides to this.

  • In 2020, Alpha Condé announced he was amending the constitution so he could pursue a third term.

  • This announcement disgruntled many Guineans, who did not reap the benefits of the country‘s

  • growing mining sector.

  • He had a pretty consistent record of security forces cracking down on protesters,

  • allegedly killing dozens in multiple instances, especially during the protests against the third term

  • that he was seeking, which in itself was a radical amendment to the constitution that

  • the public rose up against, and they were met with bloody force.

  • And that was a factor that helped to rile up the resentment that galvanized

  • the public behind a military overthrow if that was what was necessary.

  • When news of this coup broke, it sent ripples through the rest of the world.

  • Prices of aluminum reached $2,776 per ton.

  • The coup’s leader and interim president, 41-year-old Colonel Mamady Doumbouya,

  • tried to insulate the mining industry from the destabilization brought on by the coup.

  • He exempted miners from a nationwide curfew his army imposed.

  • The rising aluminum costs have already started to hit shipbuilding and various other parts

  • of the manufacturing industry.

  • So will we see the relationship Guinea has with China and Russia change

  • because of this coup?

  • Based on some analysts that I’ve spoken to it wouldn't necessarily be in China or

  • Russia's interest to go any further than they have already done, which is,

  • theyve both denounced the coup but as far as imposing sanctions or do anything to jeopardize

  • the relationship with the current interim administration, it wouldn't suit China or

  • Russia's commercial interests to distance themselves too much.

  • One of the main concerns analysts believe Beijing will have is if the supply chain is

  • affected in a sustained fashion from Guinea, then Australia is the main alternative.

  • And given the sort of frosty relations between Beijing and Canberra, in the light of the

  • cyber-attack allegations, and, months and months of wrangling over trade deals,

  • that increased reliance in Australia is probably not something that Beijing is going to want

  • to pursue unless it's an absolute last resort.

  • The military has promised to rewrite the constitution, form a transitional government

  • and leave power by March 2023. But will it stay true to its word?

  • Some think that we can't really do anything but take Colonel Doumbouya and the military

  • leaders at their word at the moment.

  • Theyre saying the right things and they are actioning them in the short term.

  • If the junta doesn't stay true to its word, what impacts on the global markets could we see?

  • I think that's when to paraphrase Bad Boys: Things get real.

  • So far, the only sanctions have come from ECOWAS, the regional body

  • against the coup leaders themselves. ECOWAS is demanding

  • a return to civilian rule within six months.

  • The return to constitutional order is not forthcoming, there will be extreme

  • concerns about the power that has given the unconstitutional way in which power was seized,

  • that also whether international sanctions will come from other countries, from trading partners.

  • And that's when you start to see a bite on supply chains.

  • One of analystskey concerns are the social and economic grievances that provide a fertile

  • ground for this coup won’t go away overnight.

  • Obviously, the junta has promised radical reforms, elimination of corruption, filtration

  • of the economic benefits of the mining industry to the wider public.

  • If they don't deliver on those promises quickly, or if they don't deliver on the promise of civilian rule quickly,

  • the risk of social unrest spiking again, and jeopardizing economic stability

  • is higher than it was before the coup happened.

A coup which took place in a coastal country in West Africa may hit closer to home than

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Why a coup in Guinea was felt around the world

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    Summer 發佈於 2021 年 09 月 28 日
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