Guinea: Bauxite, Iron Ore and the European Market

Guinea produced 98.3 percent of Africa's bauxite in 2024 and accounts for about a third of world output. Production is forecast to keep growing toward 160 million tonnes by 2030. Guinea also has Simandou, long described as the world's largest untapped high-grade iron ore deposit. A 670-kilometre railway now connects it to the coast, and production is starting.

In raw form, bauxite and iron ore are both outside the Carbon Border Adjustment Mechanism (CBAM). Both are raw materials for sectors that are inside it. Guinea has said that it wants to refine alumina in the country as well as export raw ore.

The European rules for critical raw materials

The Critical Raw Materials Act entered into force on 23 May 2024. It sets benchmarks for the Union for 2030. The Union wants to extract ten percent of its annual consumption within the Union, process forty percent there and get twenty-five percent from recycled sources. For each strategic raw material, at most sixty-five percent should come from any single third country. Projects outside the Union can also get Strategic Project status. These projects get guidance on funding and attention from the financing hub for EU funds and the European Investment Bank. Their off-takers (the buyers of the output) get more certainty. The Commission names off-take agreements with European industrial buyers as one way to contribute to supply security.

A European contract party signs these agreements. A Dutch company can be that party. It signs contracts with European industry and gets access to European trade finance. It also has the import position, with the Article 23 licence. With that licence, the import VAT is deferred to the periodic VAT return. You can read more in our guide to a European entity for critical raw materials.

Setting up the European company before refining starts

Today, a bauxite exporter deals with Europe on trade. This means off-take agreements with European alumina and aluminium producers, and trade finance against European receivables. It also means the trading margin between the mine-gate price and the delivered price. A Dutch company can be the European contract party for each of these. For iron ore, the same company can sign with European steel buyers.

This changes when alumina refining starts. Alumina is used to make aluminium, and aluminium is a CBAM sector. A Guinean group can set up its European company during the bauxite phase. The declarant position, the banking and the customer relationships are then ready when the first refined product is shipped. See our guides to a European entity for critical raw materials and an EU entity for CBAM for both stages.

Financing on European terms

For projects of this size, the difference in financing costs is especially important. A European company with receivables from creditworthy European buyers can borrow on European terms. In bulk commodity shipping, a lot of working capital is tied up for a long time. The difference in interest is then often larger than the operating margin. The Netherlands also has development finance and an export credit system.

Structure and practical points

Ownership chains in Guinean mining often include several intermediate holding companies. The notary then needs more time for due diligence. Banks also look closely at companies with goods from Guinea. We prepare the file from the first contact to the standard that European institutions apply. Before the notary drafts the deed, we map the treaty position with a specialist.

Setting up in the Netherlands

A Dutch BV is set up with a notarial deed and registered with the Chamber of Commerce. Your group owns the shares. You can do everything from abroad with a power of attorney. The company can then take on the roles that suit your plans. It can be an off-take contract party, a trading company, a joint venture company or the importer of record.

Banks look closely at commodity goods from this region. We start the talks with the bank at the same time as the incorporation. Further reading: a commodity trading entity and joint venture structures.

Frequently asked questions

Does CBAM apply to Guinean bauxite?

Raw bauxite and iron ore are outside the six CBAM sectors. Aluminium and iron and steel are inside them. The position changes when ore is refined in Guinea into products that fall under CBAM.

What is Simandou?

Simandou is a high-grade iron ore deposit in southern Guinea. It has long been described as the largest untapped deposit of its kind in the world. A 670-kilometre railway connects it to the coast, and production is starting.

Why establish a European entity during the bauxite phase?

Off-take relationships, banking and regulatory positions all take time to arrange. If you set up the company now, the declarant status and the customer relationships are ready when you start shipping refined alumina and aluminium.

How does a European entity improve financing for Guinean producers?

A European company with receivables from creditworthy European buyers can borrow on European terms. In bulk commodity shipping, a lot of working capital is tied up for a long time. The difference in interest is then often larger than the operating margin.