The Guinean group UMS acquires the French Alteo – Interview with Fadi Wazni

This interview is taken from the media La Tribune Afrique

A major player in the Guinean mining sector for nineteen years and particularly active in the exploitation of bauxite, the United Mining Supply (UMS) group acquired the French Alteo, the world leader in specialty aluminas, in early January. For La Tribune Afrique, Fadi Wazni, founder and CEO of UMS, discusses this strategic acquisition, announces for June 16, 2021 the export of the first ton of bauxite from the Santou II & Houda deposits and notably presents the progress of the Simandou project, the largest mining project in the world.

La Tribune Afrique – UMS therefore took control of the world leader in specialty aluminas, the French group Alteo, with the key to developing a refinery in Guinea. Why did you acquire a French company rather than create one directly in Guinea where you are now a “former” operator?

Fadi Wazni – First of all, I would like to point out that the Alteo project in Gardanne in France and the refinery project in Guinea are complementary to each other. However, the refinery project in Guinea was approved in 2018 as part of SMB’s Boffa-Boké Project, long before UMS considered buying Alteo.

The first thing that motivated this acquisition was the opportunity. UMS was already in contact with Alteo to sell them bauxite and learning of their difficulties, we decided to make a takeover offer. There was an obvious synergy between Alteo and UMS given our activities in Guinea. With this acquisition, we are integrating skills that will be useful to us for our projects in Guinea, in particular concerning the Bayer process where Alteo has the best technology available at the global level, allowing us to have the highest standards in terms of respect for the environment.

“I have made a commitment to do everything to maintain the 480 jobs at Alteo. This will include the proposal of expatriation positions in Guinea. “

How do you plan to organize Alteo’s activity between France and Guinea, there is talk in particular of downsizing in France …?

I have made a commitment to do everything to maintain the 480 jobs at Alteo. With our recovery plan, we are going to transfer skills and redeploy staff, particularly in environmental management where Alteo is at the forefront. This will notably involve the integration of certain functions which are now outsourced and the proposal of expatriation positions in Guinea.

“As planned, we will export our first ton of bauxite from the Santou II and Houda deposits on June 16, 2021.”

UMS is a shareholder in Société minière de Boké (SMB) which, as part of the consortium with Singaporean Winning, is working on the Boffa-Boké project, which aims to make this Guinean region a global mining area with increased capacity Consortium’s export of 10 million tonnes of bauxite in 2022 and 30 million in 2024, a railway project under construction … What is the concrete status of this project ?

Despite the logistical difficulties and the health risk caused by the pandemic in 2020, the SMB teams have been able to adapt and we will export our first ton of bauxite from the Santou II and Houda deposits as planned on June 16, 2021 with this new 135-kilometer railway line, the first in Guinea for nearly 50 years. Crossing the regions of Boké and Kindia, this railway is intended to link the deposits of Santou II and Houda to the river terminal of Dapilon. Dedicated exclusively to the transport of ore at first, it will in the medium term also allow the transport of goods to contribute to economic diversification in the region.

The consortium will invest more than $ 4 billion in this project, what are the challenges that are emerging in its realization? What will be the economic benefits according to the estimates made?

The main challenge was in the construction of the railway, given that it includes many structures including 23 bridges and 2 tunnels, and we have entered the final phase of its construction. The other challenge lies in the construction of an alumina refinery, an investment of nearly 800 million US dollars in order to have the best technologies in the field and to ensure compliance with the most demanding environmental standards. We expect production from this refinery to begin within four to five years.

The entire Boffa-Boké Project is part of the development of the Special Economic Zone (SEZ) initiated by the Guinean State, with the key benefits at the national and local level: creation of several thousand jobs during construction and operation phases with subcontracting for Guinean companies, development of BOT infrastructure, technology transfers, establishment of an agricultural corridor for growth, increase in tax revenues for the Guinean State and local communities …

“The reforms of the mining sector carried out in 2012-2013 really enabled Guinea to attract international investors and contributed to the boom in the sector. ”

Several experts have often considered that it was abnormal for Guinea, so rich in resources, to be at the stage of development as we know it today, regardless of the crisis caused by Covid-19 across the world. What is your analysis of the economic situation of this West African country?

I am not an economist and cannot comment on such a question. What I can say as a business leader is that the reforms of the mining sector carried out in 2012-2013 really enabled Guinea to attract international investors and contributed to the boom in the sector, with a real impact in terms of wealth creation and jobs since.

In addition, I note that the Institute of Governance of Natural Resources (NRGI) underlined in its 2019 report on the governance of natural resources that Guinea was on a promising trajectory in terms of mining governance, with notable progress in transparency on the allocation of titles, the publication of sectoral statistics, and transparency on the activities of the state-owned company, SOGUIPAMI. All is undoubtedly not perfect, but I think that we must also underline the real progress of the Guinean mining sector which has contributed to the growth and development of the country in recent years.

Regarding the SMB, the firms PWC and Cambridge Econometrics published an impact report on the Consortium in 2018. The impact study showed that the investments of the SMB-Winning Consortium contributed to Guinean GDP to the tune of 780 million euros. dollars over the period 2015-2017. Over the 2018-2020 period, the contribution is estimated at around $ 2.3 billion. A very significant impact was also noted in terms of job creation: Over the period 2015-2017, 28,700 jobs were created thanks in particular to the significant investments made in the construction of road, port and production infrastructure. Through the multiplier effect, the two firms also estimated that 1 dollar invested as part of the Consortium’s mining investments creates 7.4 dollars in the agri-food and consumer goods industry over this period.

This study illustrates very concretely the positive impact in terms of economic and social benefits of the Consortium’s investments. And these spinoffs will greatly increase with the Boffa Boké and Simandou Projects from now on.

“The first commercial production of the Simandou project will be reached in 2025.”

In fact, the consortium formed by SMB-Winning that you chair also won in June 2020 the exploitation of blocks 1 and 2 of the Simandou project for an investment of 14 billion dollars. When will the work start? What should we expect from this exploitation and what would be its impact on the economy and development of the country?

In terms of timing, Winning Consortium Simandou (WCS) – of which UMS is a shareholder – is currently in the studies and research phase to present a feasibility study to the Guinean State within 30 months of the date of entry. in force of the agreement, in this case since June 2020. The construction works of the mine will begin immediately after the feasibility study has been validated and the first commercial production will be reached in 2025.

The Simandou project is currently the largest mining project in the world, with an investment from the Consortium estimated at $ 15 billion, including $ 6 billion in equity investments. Within the framework of the agreements concluded with the Guinean State, the Consortium undertakes to export its ore via Guinean territory, in particular by building a new railway line of approximately 650 kilometers, as well as a multimodal port platform at Matakong in the prefecture of Forécariah on the Guinean coast. At the same time, the Consortium also intends to create an agricultural growth corridor along the railway line as well as build a steelworks in partnership with other operators once the feasibility studies have been validated.

Beyond the many benefits in terms of direct and indirect jobs as well as local purchases, the Ministry of Mines and Geology estimates that the direct revenues of the State will be of the order of 15.5 billion dollars. US over the term of the agreement, which is 25 years.

Since its creation, the Consortium has endeavored to take into account the environmental and social context throughout the chain of operations. I do not believe in the viability of a mining project if it is not sustainable and respectful of local communities and offering the prospect of a win-win partnership for all. What we have applied with the SMB in Boké, we will apply it to Simandou with WCS.

What prospects for mining in Africa in 2021 in this context of economic recovery and operationalization of the Zlecaf according to you?

First of all, I would like to point out that the mining sector has managed the pandemic rather well, because we have a strong safety culture which has made it possible to face the health risk and preserve the health and well-being of the employees. Then, each raw material has been allocated in a different way depending on whether or not demand slows down and supply availability. It is therefore difficult to draw a global landscape of the situation of the miners.

Regarding the Zlecaf, studies show that regional integration brings economic benefits for the countries concerned in the long term. The challenge now is to implement it and this represents a considerable administrative and political project in the coming months.