African Minerals: Gabon and Guinea Bet on the Chinese Market, Ignore Price Predicaments, and Vigorously Develop Iron Ore Production
Despite a gloomy market outlook, Gabon and Guinea are still striving to become major iron ore producers in Africa. Despite predictions that global supply surges could lead to a decline in iron ore prices over the next decade, both countries continue to advance their respective iron ore projects.
The World Bank's "Commodity Markets Outlook" released in April 2025 predicts that iron ore prices will drop from $120 per ton in 2023 to $95 per ton in 2025 and $88 per ton in 2026. The World Bank attributes the decline in iron ore prices to China's weak real estate market as well as increased output from Australia, Brazil, and Guinea.
The International Monetary Fund [IMF] forecasts that Guinea's Simandou project is set to progress. By 2030, this mining giant is expected to boost the country's real GDP by 26%. The IMF stated that even with a 15% drop in iron ore prices, the Simandou project will still generate significant economic growth. The Guinean government anticipates that production at the Simandou project will reach 60 million tons in 2026 and 120 million tons in 2027. Despite current competitive markets, Guinea remains optimistic about long-term returns and continues to invest.
Gabon also persists with its established strategy; the country aims to diversify its mining sector beyond manganese. Manganese accounted for 40% of Gabon's exports in 2022 and dominated the industry, contributing 6% to the country's GDP. Gabon bets on iron ore to expand its mining base.
Australian company Genmin signed a mining agreement for the Baniaka project with Gabon in March 2025. Genmin plans to begin production in 2026 after securing financing. Genmin has signed agreements with Chinese steel manufacturers to purchase future output, which may include loans or prepayments.
However, risks remain. BMI predicts that by 2033, iron ore prices will fall to $78 per ton. A price drop could significantly reduce government revenues and squeeze profits for mining companies. Vale, the leading Brazilian mining company, saw its earnings before interest, taxes, depreciation, and amortization [EBITDA] fall by 22%, to $15.4 billion in 2024, with a 40% drop in profit in the fourth quarter alone. With new African mines entering the market, their profitability faces greater pressure.
African iron ore producers - Mauritania, Liberia, and South Africa - have already felt the pressures of price volatility and oversupply.
Source: ecofinagency
Original Article: https://www.toutiao.com/article/1831988026857548/
Disclaimer: This article solely represents the views of the author.