Responding to the Financial Crisis – The African Development Bank to mobilize USD 450 million financing for Guinea Alumina Project
Tunis 3 December 2008- The Board of Directors of the African Development Bank (AfDB) authorized a financing package for the USD 6.3 billion Guinea bauxite mine and alumina refinery project in Guinea. Given the size of the project and to assure its firm support for Guinea’s development during the current global financial crisis, the AfDB not only approved a non-sovereign loan of USD 200 million, but also undertook to syndicate on best efforts basis, a B-loan of USD 100 million to be funded by participating commercial banks. In addition, the Bank will mobilize through the African Financing Partnership (AFP) up to USD 150 million in parallel co-financing by participating Development Finance Institutions.
The Guinea Alumina Project is transformational and timely for Guinea as it enables the country to add value to domestic resources by refining non-exportable grade bauxite into exportable alumina and increases the proportion of bauxite processed in-country from the current level of about 12% to more than 45%. In addition, the project includes significant ancillary infrastructure improvements and expansions, and spurs SME development. As the first large-scale private sector investment in the country, representing nearly twice its GDP, the project is also expected to catalyze future investments in the country’s extractive industry.
This project is consistent with the Bank’s Private Sector Operations (PSO) strategy to support large industrial projects, particularly those that aim at increasing local value added and creating employment. The Guinea Alumina Project will generate attractive economic benefits and significant fiscal revenues for the Government.
The project is expected to create about 12,000 direct and indirect jobs during construction and 2,000 direct full-time jobs during operation. Moreover, given the project’s associated SME Linkages Program, it also fits well with the Bank’s strategy for promoting SMEs and additional jobs. The project fulfills the Bank’s objective of increasing its private sector investment in Africa’s low-income countries to 40% of total approvals.
Mandla Gantsho, Vice-President in charge of infrastructure and private sector operations observed that, "this project is groundbreaking and hence will change the whole economic and social landscape of Guinea for a better future for the population". Tim Turner, Director of the Private Sector Department noted with pleasure that "the Guinea Alumina Project will launch the African Financing Partnership (AFP), the collaboration platform that brings together a number of DFIs operating in Africa, into its first concrete transaction.
The Bank will work with the Government of Guinea as well as the project sponsors to ensure harnessing of the benefits of the project for Guinea’s development through technical assistance, and financing for targeted government projects, particularly in the power and transport sectors.
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