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GUINEA: Winners and losers in Guinea’s bauxite industry

CONAKRY, 9 June 2008 (IRIN) - With half of the world’s known bauxite reserves, Guinea’s mining sector is seen as the country’s most important engine of growth. But some civil society groups fear the hundreds of thousands of dollars companies should be paying in taxes to support development in villages on mined land does not always get through to the right people.

“Companies have been mining here for 36 years and we have never once in that time received taxes from them for using our land,” said Helage Suriba Sylla, president of the rural development committee (CRD) which regulates community development in Mambia, which lies in Kindia prefecture, 80 km from the capital Conakry.

“Rather than making people richer, mining has made them poorer,” said Akoumba Diallo, a mining sector researcher. “It polluted their environments so they can’t grow crops or let animals feed near mining sites. And it is hard to get water anywhere because it’s contaminated.”

With mining contributing to 85 percent of the country’s external revenue, and the World Bank estimating investments of up to US$20 billion in bauxite mining in Guinea over the next decade, the government is currently rewriting and renegotiating its mining contracts - unchanged for 25 years - with 15 companies to ensure Guineans are more likely to benefit from the wealth they spawn.

But that is just part of the puzzle. The government too must better scrutinise its own financial flows and tax systems to ensure money is not ‘lost’ in the system, analysts told IRIN.

Money ‘lost’ in the system

Mining companies are legally obliged to pay taxes to owners of the land they mine, as well as being encouraged to support additional local development projects that will improve people’s lives.

Anatoly Panthchenko, director-general of RUSAL the holding company of the Compagnie Bauxite de Kindia (CBK) which mines Mambia’s land, says they have been doing just this since starting mining in the region in 2003.

“We have been paying US$100,000 in annual taxes directly to the Kindia prefecture,” he told IRIN. “The distribution of the money rests with them according to the needs they have identified in Mambia.”

But Sylla told IRIN Mambia’s 25,000 citizens have only ever received one payment from the prefecture in 2006, which they used to build a secondary school.

And there is little evidence of any development money having been spent in Mambia. Most of the houses are crumbling, there is no electricity, and no well so residents collect their water from a muddy puddle on the ground, which is linked to an open-source spring in the forest. 

''...Mining here has impoverished us. They took our fertile land so we have to grow our crops here and there between the rocks...''
“Mining here has impoverished us. They took our fertile land for the mining so we have to grow our crops here and there between rocks,” said Sylla.

“We have tried many times to find out where the money is - we even went to the interior ministry in Conakry - but the Prefecture doesn’t seem to want to give it to us. We have no idea where it goes – we imagine most of it ends up in someone’s pocket.”

Seeing this for themselves, the CBK became concerned that the money was not being well spent, according to Cirra Dieng, communications officer at the CBK, and withdrew its payments in 2007 awaiting some explanation.

They are still waiting.

IRIN was unable to get an interview with the Kindia prefecture to find out more.

Better government scrutiny

According to Siaka Bakayoko, programme director at the World Bank in Guinea, these financial accounting glitches are just the kinds of problems that the government needs to address if the benefits from mining are to be spread more equitably in the future.

“There are still ‘vulnerability points’ in this sector – from the award of the contracts to mining companies, collecting taxes and royalties, allocating budgets, distributing revenues and using them in sustainable development projects,” Bakayoko told IRIN. “In the past companies have said ‘we gave this much money to the state’ but it wasn’t properly scrutinised. These flows must now be audited.”

To improve accounting, he added, “The government needs to strengthen governance systems to track financial flows in this sector. And the transfer of funds to people needs to be tracked at the prefecture level.”

This also involves strengthening the government’s central Public Accounts Committee, according to Bakayoko.


Photo: Anna Jefferys/IRIN
Inhabitants of Mambia collect their drinking water from this open puddle on the ground because they have no well
And he thinks the government has little time to lose. “The companies are already here and a lot of money is about to be invested,” he pointed out. “We need [government] investment in the mining sector now. The government tax code should be aligned with international best practices and a better collection and tracking system should be implemented.”

But to achieve this everyone needs to improve their practices from the upper echelons of the ministry of finance to the workings of rural development committees. The World Bank is helping 330 CRDs track financial flows, giving them US$17 million alongside US$15 million from the International Fund for Agricultural Development (IFAD) to do so.

“Stronger accountability in the mining sector goes beyond the government setting controls. Communities also need to articulate their needs better - otherwise companies can come in and say ‘We’ll build a stadium’ when what they actually need is a school or a health clinic.” 

Accountability of companies

Mohamed Nabé, director of the Extractive Industries Transparency Initiative (EITI) pointed out companies are doing a fair amount, but they could do better, both in terms of community development and working conditions. Compagnie des Bauxites of Guinea is tarring roads and constructing health centres, while another, ACG-Rusal, is building training centres for youths, and several companies are planting trees where they have denuded the environment.

“Bauxite companies are willing to invest a lot in development,” said an analyst, “because they don’t want end up in a Niger Delta situation, where despite its oil wealth it is one of the poorest regions of Nigeria.”

On 2 June miners from ACG-Friguia mine 160km north of Conakry went on indefinite strike because of the “indifference of the administration of the mine” to their living and working conditions. The administration had agreed to give US$30 per worker to compensate for cost of living when they had asked for US$85.

In the meantime, some organisations are trying to help the government improve its scrutiny of the business. The EITI has set up a monitoring committee made up of government representatives, mining companies and civil society to push mining companies to publish what they pay and the government to disclose what it receives at the state, prefecture and CRD level. So far it has done so for six mining companies, including the CBK.

But despite these efforts, it is still unclear what has happened to the money owed year after year to the people of Mambia. And no one seems to be in a hurry to tell them.

aj/mc/nr

Theme (s): Economy, Governance,

[This report does not necessarily reflect the views of the United Nations]

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