Gabon and Guinea step up their iron ambitions despite price difficulties

Gabon and Guinea are stepping up their efforts to become major players in iron ore production in Africa, despite unfavourable market forecasts marked by an oversupply of iron ore worldwide and an expected fall in prices. According to the World Bank's "Commodity Market Outlook" report published in April 2025, the price of iron ore is expected to fall to $95 per tonne in 2025 and $88 in 2026, from $120 in 2023, as a result of weakness in the Chinese property sector, industrial stagnation and increased supply from Australia, Brazil and Guinea.

In Guinea, the Simandou mining project, considered to be one of the world's largest untapped iron ore deposits, remains at the heart of the country's economic ambitions. According to the International Monetary Fund (IMF), the project could boost Guinea's real GDP by 26% by 2030, even if iron ore prices fall by 15%. The Guinean government is forecasting initial production of 60 million tonnes in 2026, with a target of 120 million tonnes by 2027.

Despite the gloomy price outlook, Guinea sees Simandou as a long-term opportunity to diversify its economy and strengthen its infrastructure. Investment in the railways and ports needed to export the ore should also boost regional development, although logistical and financial challenges remain.

In Gabon, the government is seeking to reduce its dependence on manganese, which accounted for 40% of exports in 2022 and contributed 6% of GDP, by developing its iron ore sector. In March 2025, the Australian company Genmin signed a mining agreement with the Gabonese authorities for the Baniaka project, located in the south-east of the country. Genmin plans to start production in 2026, after securing financing and signing pre-purchase agreements with Chinese steelmakers, including loan and prepayment options.

The Baniaka project aims to position Gabon as a new player in the iron ore market, thereby diversifying its mining portfolio and reducing its vulnerability to fluctuations in manganese prices. However, the development of the project depends on Genmin's ability to raise capital in a difficult market environment.

The ambitions of Gabon and Guinea come against a backdrop of major challenges for the iron ore industry. BMI, a unit of Fitch Solutions, predicts that prices will fall to $78 per tonne by 2033 as a result of increased global supply. This glut is exacerbated by new mines coming on stream, particularly in Africa, where countries such as Mauritania, Liberia and South Africa are already active. These producers are already feeling the effects of price fluctuations and oversupply.

For example, Brazilian giant Vale, the world leader in the sector, saw its EBITDA fall by 22% in 2024, to $15.4 billion, with a 40% drop in profits in the fourth quarter. The arrival of new African mines, such as Simandou and Baniaka, is likely to increase pressure on the profitability of existing producers, while reducing the margins of new entrants.

For Gabon and Guinea, iron ore projects represent both a transformative economic opportunity and a risky gamble. A prolonged drop in prices could limit tax revenues and squeeze mining companies' profits, affecting their ability to finance the necessary infrastructure. In Guinea, the Simandou project is also facing logistical challenges, notably the construction of a 650 km railway to link the deposit to the port of Morebaya, an investment estimated at several billion dollars.

In Gabon, the Baniaka project depends on Genmin's ability to secure financing in a climate of uncertainty. However, agreements with Chinese steelmakers offer a degree of stability, by guaranteeing a market for future production.

Despite the difficult market outlook, Gabon and Guinea remain committed to exploiting their iron ore resources to boost their economies. These projects illustrate Africa's wider ambition to harness its mineral wealth to finance development, while diversifying its sources of revenue. However, their success will depend on both countries' ability to navigate a volatile global market, mobilise massive investment and manage the social and environmental impacts of these mega-projects.

In conclusion, as Gabon and Guinea position themselves to become major producers of iron ore, they will face significant economic and logistical challenges. Against a backdrop of global oversupply, their success will depend on strategic planning and rigorous execution to turn their ambitions into lasting benefits.