Profiting from Bauxite? – Obstacles and Implications for Guinea

Although Guinea has great economic potential on paper due to its mineral resources and enormous water reserves, it has not yet been able to develop this potential and even lags behind other African countries with no or significantly fewer natural resources in terms of economic development. In examining the mechanisms behind the resource bauxite and operations in Guinea directly, several obstacles were discovered that are or may be responsible for Guinea's low profitability. Contrary to prevailing assumptions in the resource curse debate, Guinea's economic problems appear to depend not only on institutional quality, corruption, and economic mismanagement, but also on the unequal power relations of the Guinean government vis-à-vis foreign mining companies and powerful states. This thesis examines potential constraints for Guinea arising from the aluminum value chain, as well as those, arising directly from bauxite operations in Guinea. For this purpose, the operations of three major...Show moreAlthough Guinea has great economic potential on paper due to its mineral resources and enormous water reserves, it has not yet been able to develop this potential and even lags behind other African countries with no or significantly fewer natural resources in terms of economic development. In examining the mechanisms behind the resource bauxite and operations in Guinea directly, several obstacles were discovered that are or may be responsible for Guinea's low profitability. Contrary to prevailing assumptions in the resource curse debate, Guinea's economic problems appear to depend not only on institutional quality, corruption, and economic mismanagement, but also on the unequal power relations of the Guinean government vis-à-vis foreign mining companies and powerful states. This thesis examines potential constraints for Guinea arising from the aluminum value chain, as well as those, arising directly from bauxite operations in Guinea. For this purpose, the operations of three major bauxite companies in Guinea were studied in detail: CBG (Compagnie des Bauxite des Guinée), headquartered in the USA, Great Britain and the Channel Islands as well as SMB, headquartered in China and CBK, headquartered in Russia. The mechanisms behind the aluminum value chain, bauxite mining, and its importance to Guinea were examined through a qualitative secondary analysis.Show less

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Profiting from Bauxite? – Obstacles and Implications for Guinea