Brief
MIGA to Support Pre-Construction Study Phase of Iron Ore Mining Project in Guinea
March 10, 2021
- MIGA is planning to issue guarantees for investments into the pre-construction study phase of a high-grade, open-pit iron ore mine in Mount Nimba, southeastern Guinea, along with the development of a transportation route for the iron ore through neighboring Liberia.
- Guinea is a low-income and fragile country endowed with vast natural resources, especially mining and hydropower resources, which could generate substantial income. For example, Guinea owns over 25% of the world’s global bauxite deposits, most of which are yet to be developed.
- GDP Growth in Guinea stood at around 10% in 2016 and 2017, before slowing to 6% in 2018. GDP growth is estimated to remain at 6% in 2019. Guinea is one of five African countries expected to have positive growth in 2021 despite the COVID-19 pandemic, mainly due to investments in mining sector.
- Growth in Guinea is driven significantly by foreign direct investment in the mining sector. Sustainable development of the mining sector is key to diversified economic growth in Guinea.
- Guinea is the world’s second largest producer of bauxite; the mining sector accounts for over 25% of GDP, 80% of foreign exchange earnings, and 25% of government revenues. Together with related services, mining employs over 25,000 people and many more indirectly.
- Without environmental and sustainability standards, the potential development of the iron mine could pose a risk to biodiversity in the project area. Surrounding the proposed project site are multiple, overlapping legally protected and internationally recognized areas: a Strict Nature Reserve, a Key Biodiversity Area, an Alliance for Zero Extinction site (considered the most important in Africa), a UNESCO Man and the Biosphere Reserve, and a Natural World Heritage Site.
At All Stages of Project Development, MIGA Requires Clients to Consider and Apply the Highest Level International Environmental and Social Performance Standards.
- MIGA’s support for the project is aimed at keeping MIGA’s Performance Standards on Environmental and Social Sustainability (2013) ‘front and center’ in the planning of the broader mining project. The Project is required to consider the mitigation hierarchy (i.e., avoid, minimize, mitigate, restore and compensate) at the design stage.
- Over the course of the project, key milestones to be undertaken include the completion of pre-feasibility studies, a viability study, a bankable feasibility study, Environmental and Social Impact Assessment (ESIA), and the finalization of agreements for the transport and evacuation of the iron ore through Liberia.
- Should MIGA consider issuing guarantees for future phases of the mine’s development, the Agency will undertake a new assessment including disclosing a separate Environmental and Social Review Summary, Environmental and Social Action Plan, and relevant project documents as specified by MIGA’s Access to Information Policy, as well as organizing a separate Board approval process.
- The project benefits Guinea through the mobilization of international technical expertise and private financing applied towards advancing a key project for the country.
- The project, should it lead to commencement of operations, is also expected to help unlock a transport corridor between Guinea and Liberia which has the potential to strongly benefit the economic activity of the two countries.
- Should the project lead to commencement of operations, the contribution of the mine will be significant in terms of employment and contribution to Guinea’s economy.
- The proposed project is in line with the World Bank Group (WBG)’s engagement in Guinea, focusing on improving the management of the mining sector, as well as natural resources and biodiversity. The project is also aligned with the WBG’s engagement in Liberia, namely by supporting regional transport integration.