The Executive Board of the International Monetary Fund (IMF) approved on December 9, 2020, a disbursement of $ 49.47 million (SDR 34.43 million) for Guinea in assisting countries facing stabilization challenges. of their balance of payments. The government of President Alpha Condé has rightly welcomed the continuation of the program so vital for guinea's economic survival, especially in these difficult times of pandemic.

The IMF wonders about the income from mines... 

Buried in bureaucratic language in its staff report, the IMF questions the mismatch between mining production and tax revenues in Guinea. "It is  the second largest exporter of bauxite in the world just behind Australia, the IMF writes in its report.

" While overall growth has been supported by a vibrant mining sector, the covid-19 pandemic has had a significant impact on the non-mining economy. Real growth is expected to reach 5.2 per cent this year, but non-mining activity is expected to grow by only 2.4 per cent, about half of pre-pandemic projections. Improved mining production has not translated into higher tax revenues.  . The situation of the most vulnerable and households and workers in the informal sector has also worsened. »

In good French, the IMF publicly insinuates that Guinea must do better so that mining production can benefit the population. A criticism that the residents of the mining areas of Boké – Boffa and Fria have been making since the start of mining work in the area.

Several international NGOs in addition to accusations of pollution have also sounded the alarm on the growing gap between the wealth of subcontracting mining companies in which some senior executives would have interests and the destitution and pollution suffered by local residents. International ONG have even filed complaints against multinationals and donors for " complicity in the violation of environmental rights" in rural areas.

Aware of the danger of being an " island of prosperity in an ocean of misery ", mining companies are multiplying community support operations to calm the frustration of local residents. Schools, clinics, wells, mosques are regularly " offered " with great publicity to communities in mining areas. This does not prevent the riots for jobs and the lack of basic services such as electricity. But there is a limit to what these commercial enterprises can do to counter the equitable distribution of mineral wealth to the population. This is the role of the state through taxation and the allocation of public funds to the needs of the populations, insist development experts.

How did we get here?

Guinea's mines, especially bauxite, are extremely rich and above all easy to access, located near the maritime coast and are the subject of several desires. This is how several mining concessions have been granted to Chinese, Russian, Qatari companies and of course the North American giants Rio Tinto, Alcoa already present in Sangarédi through CBG. Not to mention the mining permits offered to " well-placed Guineans " who sometimes resell them at gold prices or become passive shareholders.

 The exploitation of the deposits of GAC (a subsidiary of emirate Global Alumina) and SMB was one of the important turning points in mining production in Guinea. These two companies have almost doubled Guinea's bauxite production, which was previously confined to SBK and CBG.

After an investment of $1.4 billion financed in part by the World Bank and the AfDB,  it is in 2019 that the GAC begins its bauxite export using CBG's redeveloped infrastructure. Production is rapidly rising to 12 million tons per year.

According to the report  of the Ministry of Mines, Guinean bauxite production which was 17 million tons in 2010, 21 million in 2015 jumped to a record level of 70.2 million tons in 2019 the year of the launch of the mines of GAC, COBAD. The US Geological Survey estimates Guinean bauxite production at 57 million tons in 2018 and forecast 62 million tons for 2019.

The other mineral exported by Guinea is gold which is mined artisanally by gold miners and industrially by Ashanti Gold, SMD and other Chinese and Moroccan companies etc. Recorded artisanal production increased from 4.9 tons in 2012 to 14.3 tons, after a level of 24.9 tons in 2017, according to official sources of the Ministry of Mines. Industrial production remains on average at 10 tons per year.

Even so, government-reported mining revenues are difficult to pin down. Deciphering the announcements of the Ministry of Mines, we can clearly read that  " From 115 million in 2011, the average during the first term of President Alpha Condé, mining public revenues will remain around 394 million annually boosted by the transactional agreement with Rio Tinto of 700 million. During the second term from 2015 to 2017 the average will be $277 million.

And the Ministry of Mines contradicting the IMF states that: " the period from 2017 to 2019 is marked by a sharp increase in the State's mining revenues which gradually increased from 310 million dollars in 2017 to 397 million dollars in 2019, 1.4 times their level of 2016 and 3.4 times the revenues of 2010, thanks in particular to the entry into production of several bauxite companies." 

The mining transparency NGO, EITI (Initiative for Transparency in Active Industries) in its 2019 report on Guinea also provides details on production: "  Partly impacted by socio-political movements, mining activities ended 2019 with a relatively good dynamic. The total production of Bauxite is 70,173,326 tonnes. Cumulative exports of Bauxite amounted to 66,279,526 tonnes. Similarly, the cumulative volume of Gold exports is 892,178 ounces and the cumulative production of Gold is 892,178 ounces. The cumulative export of the Diamond is  203,279 carats while the cumulative production of the Diamond is 203,277 carats." 

Why can an increase in production lead to a decrease in tax revenues?

Interviewed by Guinéenews, experts give several explanations:

• Drastic drop in material prices. An option ruled out out of hand because the price of gold rose from $ 1,160 per ounce in 2015 to $ 1,393 in 2019 and bauxite increased slightly from $ 28 per ton in 2015 to $ 32 in 2019
• Erroneous statistics. In each of these reports, the Bretton Woods institutions (IMF and WB) deplored the weakness of the collection and dissemination of economic statistics in Guinea. A  funding has even been granted to Guinea for a better data collection but the results are slow to materialize. In addition, some mining companies benefiting from support " at the highest level " do not comply with the obligation of statistical declarations without the National Institute being able to oblige them to comply with  the Law. But one fact is indisputable: mining production in Guinea has literally exploded in recent years, as explained above.
• Excessive exemptions. One of the most plausible explanations, according to some experts. In order to exploit the deposits that had been sleeping on the Guinean subsoil for years, the government of President Alpha Condé has signed agreements at all costs by granting companies exemptions sometimes not provided for in the mining code. A situation whose consequences are beginning to be seen in the revenues of the State. The IMF clearly addresses this flaw: " it is essential to apply the provisions of the mining code, in order to ensure that Guinea can benefit duly from its wealth of mineral resources." 

Asked by Guinéenews about the difference between the conclusions of the IMF and the government, the Ministries of Mines and Finance did not answer Guineenews' questions as we go to press.