world demand for bauxite will surge by 2011

New Bauxite Mining Venture in Cameroon Promises Thousands of Jobs
By Divine Ntaryike
Douala, Cameroon
29 December 2008


Governments in Africa are taking steps to lure more investors to their mining sectors with friendly legislation and attractive tax breaks. One example is Cameroon, which has just wrapped up a deal with an American-led consortium to explore and exploit a bauxite deposit. The project will curb dependence on the country’s slumping oil reserves and create thousands of new jobs and infrastructure development. Voice of America English to Africa Service reporter Ntaryike Divine, Jr. in Douala says thousands of jobless Cameroonians are rubbing their palms in anticipation of employment when a giant bauxite mining project takes off in three years.

Experts say world demand for bauxite will surge by 2011. They anticipate by then the current financial crisis will have eased and expect increased activity in housing construction and the manufacturing of automobiles and aircraft. All of those sectors require bauxite, the main raw material used to produce aluminum.

A consortium called Cameroon Alumina Ltd will carry out the venture. It is led by an American mining company, Hydromine, and includes Dubai Aluminum from the United Arab Emirates and India’s largest smelter and bauxite mining company, HINDALCO.

They will spend six billion US dollars over the next 18 months.

The figure includes an environmental impact study. Peter Briger, chairman and CEO of Hydromine, says getting the project underway will require the creation of some 15,000 jobs, either directly or indirectly. He has assured the Cameroon government that local labor will receive preferential treatment in hiring.

There are two locations for the mining project, Ngaoundal and Minim Martip, some 600 km north of Cameroon’s port city Douala. It will be designed to last between 50 and 70 years. Experts estimate the area holds two billion tons of bauxite, making it the sixth biggest bauxite reserve worldwide. When operations are underway, Cameroon Alumina Ltd plans to produce between two and three million tons yearly from the two sites.

Guinea is currently ranked the world’s largest bauxite producer. It holds 30 percent of global reserves and accounts for 94 percent of the continent’s total production. Bauxite is a mineral ore that is first transformed into alumina and then smelted to obtain aluminum, an industrial metal used in the manufacture of roofing sheets, kitchen utensils, processed foods and drinks cans, aircraft and cars.

It was first discovered in 1821 by a geologist at a ruined southeastern French medieval town, Les Baux, which gave its name to the mineral -- Bauxite.

Economists say worldwide demand will soar in two years. Aluminum, however, suffered its worst price slump at the London Metal Exchange this November. But economists say they expect a boom.

The project will provide work in a country of 18 million people suffering from 30 percent unemployment. Among the projects planned are infrastructure, such as a railway linking the mining sites, a hydro-electricity dam and a seaport to ease exports of the product. The government says the railway link will open up remote parts of the country’s northern region and at the same time allow farmers access to markets. The dam will address energy deficit problems, while the envisaged seaport will significantly decongest Cameroon’s lone port in Douala.

The project will also build schools and hospitals as part of a corporate social responsibility agreement that’s part of the deal with the government.

The government says the project is a major milestone aimed at boosting the country’s low economic growth. The government passed mining legislation in 2001 granting investors incentives such as a five-year tax break and the free transfer of capital out of the country. But poor infrastructure, red tape and corruption have stalled development.

But a two-year-old government campaign to attract investors to the sector now seems to be paying off. In the last two years, some 63 mining permits have been handed out, as the country seeks to curb dependence on oil production. That sector – which had climaxed the 1980’s – is now in decline.

Officials say Cameroon is teeming with reserves of other minerals like cobalt, nickel, uranium and iron ore. And major global mining companies like Sundance, Geovic and Rio Tinto Alcan are planning further investments there.

Nevertheless, the government has cut its 2009 economic growth forecast from 6.5 to 4 percent following slumps in the world market prices for oil and metals. Officials hope for a recovery in the international economic situation and a return to past years, when soaring commodity prices attracted foreign investors.

http://www.voanews.com/english/Africa/2008-12-29-voa40.cfm