Aluminium/Guinea coup: political instability portends problems for some producers

Investors should note supply chain risks invariably increase when coups occur

Eco-tourists visit west Africa’s Guinea to spot primates up in the trees. Economic tourists, such as miners, seek out what is underground: primary minerals such as aluminium raw material bauxite.

The military coup that has reportedly toppled octogenarian leader Alpha Condé has given an added boost to aluminium prices. The country boasts the largest reserves of bauxite, supplying one-quarter of the world’s needs.

Bauxite contains alumina, itself processed into aluminium. Guinea’s bauxite is prized for its low levels of impurities, such as silica. China and Russian aluminium makers have pounced. Hongqiao and Rusal — the largest in their respective countries — both depend on Guinea. China’s industry sources more than half its needs from that country, reflecting the poorer quality of its domestic sources.

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