Aluminum prices hit decade highs yesterday on the back of the coup news coming out of Guinea, a key supplier of bauxite, a raw material used to make the metal. However, analysts are confident that bauxite shipments will continue to flow relatively unscathed, with operations at the port of Conakry, an important export hub, already having resumed.
Colonel Mamady Doumbouya, the leader of the coup which ousted Guinea’s President Alpha Condé, has said a new “union” government would be formed in weeks.
Mining companies in Guinea have been permitted to work through the curfews imposed by military coup leaders and vessel tracking data shows ships are moving in and out of local ports.
According to research from brokers Arrow, Guinea exported 44.7m tonnes in H1 2021 with 70% of it heading to China. Capes account for 80% of total bauxite shipments out of Guinea. As of yesterday, there were 14 dry bulk ships waiting to load off Guinean ports.
Guinea accounts of 60% of global bauxite shipments, supplying 2.5 times more volumes to the seaborne market than the next biggest supplier, Australia. “Given that bauxite accounts for practically 100% of Guinea’s seaborne dry bulk exports, no government – military or otherwise – can afford to jeopardize their major source of income,” Arrow suggested in a note to clients.
The country shipped a record 86.4 MMT of bauxite last year and was on track to surpass this figure this year. “For the Capesize market specifically, these volumes have become extremely important. Cargoes are loaded relatively slowly offshore via transhipper and almost entirely bound for China, employing vessels for long periods of time,” a report from Braemar ACM noted.
Cape shipments of Guinean bauxite have grown from virtually nothing in 2015 to 64.1 MMT last year with huge mine and port expansion projects underway. The route from Guinea to China directly accounted for 4.7% of total capesize employment in 2020, according to Braemar ACM.