Natural Resources, Economic Development, And Fair Play

Guinea, in West Africa, is one of the world’s poorest countries. The iron ore buried inside the Simandou range may be worth a hundred and forty billion dollars.

Guinea, in West Africa, is one of the world’s poorest countries. The iron ore buried inside the Simandou range may be worth a hundred and forty billion dollars.

An article in this week’s New Yorker documents the challenges of sustainability in resource-rich developing economies with a history of political instability:

One of the world’s largest known deposits of untapped iron ore is buried inside a great, forested mountain range in the tiny West African republic of Guinea. In the country’s southeast highlands, far from any city or major roads, the Simandou Mountains stretch for seventy miles, looming over the jungle floor like a giant dinosaur spine. Some of the peaks have nicknames that were bestowed by geologists and miners who have worked in the area; one is Iron Maiden,

another Metallica. Iron ore is the raw material that, once smelted, becomes steel, and the ore at Simandou is unusually rich, meaning that it can be fed into blast furnaces with minimal processing. During the past decade, as glittering mega-cities rose across China, the global price of iron soared, and investors began seeking new sources of ore. The red earth that dusts the lush vegetation around Simandou and marbles the mountain rock is worth a fortune.

Mining iron ore is complicated and requires a huge amount of capital. Simandou lies four hundred miles from the coast, in jungle so impassable that the first drill rigs had to be transported to the mountaintops with helicopters. The site has barely been developed—no ore has been excavated. Shipping it to China and other markets will require not only the construction of a mine but the building of a railroad line sturdy enough to support freight cars laden with ore. It will also be necessary to have access to a deepwater port, which Guinea lacks.

Guinea is one of the poorest countries on the planet. There is little industry and scarce electricity, and there are few navigable roads. Public institutions hardly function. More than half the population can’t read. “The level of development is equivalent to Liberia or Sierra Leone,” a government adviser in Conakry, Guinea’s ramshackle seaside capital, told me recently. “But in Guinea we haven’t had a civil war.” This dire state of affairs was not inevitable, for the country has a bounty of natural resources. In addition to the iron ore in the Simandou range, Guinea has one of the world’s largest reserves of bauxite—the ore that, twice refined, makes aluminum—and significant quantities of diamonds, gold, uranium, and, off the coast, oil.

As wealthy countries confront the prospect of rapidly depleting natural resources, they are turning, increasingly, to Africa, where oil and minerals worth trillions of dollars remain trapped in the ground. By one estimate, the continent holds thirty per cent of the world’s mineral reserves. Paul Collier, who runs the Center for the Study of African Economies, at Oxford, has suggested that “a new scramble for Africa” is under way. Bilateral trade between China and Africa, which in 2000 stood at ten billion dollars, is projected to top two hundred billion dollars this year. The U.S. now imports more oil from Africa than from the Persian Gulf.

The Western world has always thought of Africa as a continent to take things from, whether it was diamonds, rubber, or slaves. This outlook was inscribed into the very names of Guinea’s neighbor Côte d’Ivoire and of Ghana, which was known to its British masters as the Gold Coast. During the Victorian period, the exploitation of resources was especially brutal; King Leopold II, of Belgium, was so rapacious in his pursuit of rubber that ten million people in the Congo Free State died as a result. The new international stampede for African resources could become another grim story, or it could present an unprecedented opportunity for economic development. Collier, who several years ago wrote a best-seller about global poverty, “The Bottom Billion,” believes that, for countries like Guinea, the extraction of natural resources, rather than foreign aid, offers the greatest chance of economic progress. Simandou alone could potentially generate a hundred and forty billion dollars in revenue over the next quarter century, more than doubling Guinea’s gross domestic product. “The money involved will dwarf everything else,” Collier told me. Like the silver mine in Joseph Conrad’s novel “Nostromo,” the Simandou deposit holds the promise of supplying what Guinea needs most: “law, good faith, order, security.”

Read the rest of the story here.

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