Bauxite-flush Guinea sees $27 bln investment by 2015

The poor West African state of Guinea, home to a third of the world's bauxite reserves, expects large investment projects to total $27 billion by 2015, an official of a national anti-poverty programme said on Tuesday. "From now until 2015, nearly $27 billion U.S. dollars will be invested in mega-projects," Ibrahima Sory Sangare said at the launch of Guinea's Poverty Reduction Strategy document. The document, which Sangare helped draw up as secretary of the group in charge of the project, will be presented to the International Monetary Fund and World Bank next week, and be used by other international donors to guide aid to Guinea. "In the mining sector, the policies followed in the past are out of date today. The document foresees a more effective approach taking into account the environment, job creation, development of local resources, etc," he said. Several foreign aluminium companies are investing in mining and processing capacity in Guinea, including Global Alumina (GLAu.TO: Quote, Profile, Research), which is spending more than $3 billion on a 2.8-million-tonne-a-year alumina refinery expected to be open by 2009. Alcoa (AA.N: Quote, Profile, Research) of the United States and Canada's Alcan (AL.TO: Quote, Profile, Research) plan to add an alumina refinery to their existing joint venture, while Russia's RUSAL also has a big operation there. Bauxite ore is refined into alumina which can then be smelted to make aluminium metal. China agreed last month to fund a $1 billion hydropower dam in return for rights to bauxite concessions. But despite growing foreign investment, poverty levels have risen and per capita gross domestic product (GDP) has fallen in the past few years as Guinea's economy has suffered from the country's political instability and high inflation. "Since 2003, poverty has got worse. Estimates ... show that poverty levels were at 50 percent in 2003, 50.1 percent in 2004 and 53.6 percent in 2005," Sangare said. "This deterioration in Guineans' standard of living results from the serious deterioration in the economic situation ... GDP per capita has fallen from $379 in 2002 to $332 in 2006. At the same time annual inflation has reached alarming levels, rising from 6.1 percent in 2002 to 39.1 percent in 2006," he said. Growing discontent over rising prices contributed to a series of strikes by opposition unions early this year during which at least 137 people were killed, many shot dead by President Lansana Conte's security forces. Conte agreed to name a new prime minister acceptable to the unions, and the new government has since said it plans to review some mineral contracts, but the unions have recently started complaining again about rising food prices.