The start of the Simandou Iron Ore Mine: Guinea plans to establish a $1 billion sovereign wealth fund by 2026, funded by Simandou Mining revenues
¬ Guinea plans to launch a $1 billion sovereign wealth fund by the second quarter of 2026, funded by mining revenues
¬ The fund aims to stabilize the budget and invest in education, infrastructure, and industry
¬ The Simandou project is a major revenue source; Saudi Arabia and Singapore provide governance support
Guinea plans to establish an initial capital of $1 billion sovereign wealth fund by the second quarter of 2026.
Reuters reported on Wednesday, November 12, that the plan was announced by Minister of Planning Ismail Nabe. This fund will be Guinea's first such fund, mainly funded by mining revenues, including the expected earnings from the Simandou Iron Ore Project launched this week.
The government stated that the fund will help direct resources to key areas such as education, infrastructure, and industry. Additionally, the fund aims to reduce budget fluctuations caused by commodity price volatility and support economic diversification.
According to Minister Nabe, "We will set aside a portion of all revenues for the sovereign wealth fund to help us raise more funds and make more investments." Guinea is the world's largest bauxite producer, also producing alumina, gold, and iron ore. According to data from EITI-Guinea, mining accounted for over 92% of Guinea's export revenue in 2022 and 20% of its GDP.
The Simandou project is expected to further solidify Guinea's position. Rio Tinto is one of the co-owners of the project, which estimates that the mine with a maximum annual capacity of 120 million tons could double Guinea's mineral exports. The launch of the fund is part of Guinea's national "Simandou-2040" plan.
This plan faces governance challenges, and Guinea is not the only country seeking to use mining revenues for long-term investment. Other African countries, such as the Democratic Republic of the Congo with the FOMIN Fund and Botswana with the Pravala Fund, have also adopted similar strategies.
The Natural Resource Governance Institute (NRGI) pointed out that the successful operation of such funds requires a strong management framework, clear rules, and broad support from stakeholders. In its 2014 report titled "Governance of Natural Resource Funds: Key Points," NRGI warned: "Even the best rules may not be effectively implemented if key stakeholders and citizens do not accept the necessity of public savings and continuously pressure for rule compliance."
Minister Nabe said the government prioritizes governance. He stated that Guinea has received advice from Saudi Arabia and Singapore to help establish a sound legal framework for the fund.
Source: ecofinagency
Original: www.toutiao.com/article/1848691129048072/
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