On calls it “the mountain of iron”. Simandou is probably the richest deposit of this metal in the world. But it is far away, in the depths of Guinea, with no major access road. The tranquility of its forests should soon be disturbed by the din of construction machinery. This Friday, March 25, the head of the new junta in power in Conakry, Mamadi Doumbouya, signed an agreement with the operators to begin this gigantic and constantly postponed project.
For more than fifteen years this magic mountain, which would contain nearly eight billion tons of iron, is above all a cursed mountain. Disputes over mineral rights, corruption and political unrest have repeatedly delayed the start of mining. Many of the players in this imbroglio are now in prison or on trial.
Westerners close their eyes and hold their noses
The setbacks of Simandou illustrate the double curse of raw materials, which from Moscow to Conakry falls so easily on men when it comes to iron, gold or oil. A curse for producers first of all, which pushes them to speculate on future incomes, to succumb to the temptations of corruption and easy money and leads to short-term policies consisting of spending and going into debt when prices are at their peak and falling into over-indebtedness and budgetary difficulties as soon as they plunge. Few have the wisdom to save and diversify for tough times.
Guinea has the world’s largest reserves of bauxite for aluminum and yet remains one of the poorest countries on the planet. Difficulties, sometimes fueled by the operators themselves, which increase political instability and favor autocratic and corrupt regimes.
In turn, this curse in turn affects the client countries, which must integrate this political risk. For the operating companies first, whose contracts are suddenly called into question by a political change, as is the case for Rio Tinto and its Chinese partners in Simandou, but also for the buyer countries. Westerners close their eyes and hold their noses to buy Russian gas or Congolese cobalt picked up by barefoot kids.
The overwhelming majority of commodity producers are autocratic types
The overwhelming majority of commodity producers are of the autocratic type. And this is not about to change, since among the main producing countries of essential minerals for renewable energies (batteries, wind, solar) only Australia and Chile are “stable” democracies. In the post-oil world, Western countries risk moving from one dependency to another. The curse of raw materials has not finished igniting the planet.