Overview of the Guinea fuel depot explosion; What implications does it have for the global aluminium sector?

Recent events have occurred at the Conakry Kalum oil depot in Guinea, affecting the largest oil storage facility in the country. The government of Guinea has reported that 13 out of 18 warehouses in the oil storage area were destroyed, leading to potential fuel shortages in the future.

It is important to note that Guinea's production of refined oil products is limited, and most of its gasoline and diesel fuels are imported from other regions. In light of the explosion, the main fuel supply is currently relying on the northern Kamsar Port oil storage area, and the shortage of fuel supply has impacted the daily lives of residents in the country.

Recuperations after the incident

The National Oil Company of Guinea has stated that rebuilding a new oil storage warehouse will take approximately 30 months. The Guinean authorities have decided to start supplying residents with diesel in a daily quantity nationwide beginning the 20th and are proposing to solicit fuel reserves from major multinational corporations to support national unity. However, precise regulations on mining production are needed.

Impact of the fuel burst

Local mines in Guinea have reported that the explosion had a significant impact on the Bofa region, and mines in Bokai can still maintain normal operations. However, the oil storage inflicted due to this accident is primarily lowering the fuel supply level in Africa, which has the potential for great impact in the near future.

Present scenarios

At present, some large mines still have certain fuel reserves and can maintain average production; however, some mines with insufficient fuel reserves may face specific impacts on production in the near future. A large mine has stated that due to its high daily output, its average production will not be quickly halted, and a one-day shutdown will cause substantial financial losses. The fuel reserves in the mining area are relatively abundant, and relevant emergency plans are currently being developed. In terms of ports, there are still some sources of goods being loaded typically at the port.

What happens if the oil supply is not up and ready in a week?

If the oil supply is not restored in about a week, the few raw material reserves will be insufficient for extracting production oil and transportation oil, thus affecting the economy. It is important to note that Chinese alumina companies have significant dependence on Guinea's bauxite ore. This accident will inevitably have an impact on the future long-order execution of mines, and some mines that have shipping plans but have not yet started port consolidation have to postpone their shipping plans.

Local politics and discrepancies

Currently, there is about a year left until the expiration of the transitional government in Guinea, and local party disputes and various riots are frequent. Whether the oil depot incident can be resolved appropriately and the time for resuming oil supply in the future remains to be seen. If the recovery period is long, it is expected that the arrival of long domestic orders by the end of the first quarter may be affected to some extent.

A silver lining after all

Fortunately, aluminium oxide enterprises in coastal areas of China have relatively abundant reserves of imported ore, with aluminium oxide enterprises in Shandong generally having ore reserves of 60-90 days. And there are still resources on the way, which makes it difficult to affect the average production of Chinese alumina enterprises in the short term. It is essential to pay attention to the production and shipping situation of local mines at the end of the month.