RAW MATERIALS

The African country is one of the world's leading exporters of bauxite, a key metal in the production of this raw material.

Thecoup in Guinea couldhave consequences for markets around the world. The African country is akey supplier of bauxite, a raw material essential for aluminum production. Leading analysts and stock exchanges around the globe are already warning of the risks that the unrest and the violent seizure of power by the army could pose to the entire supply system.

As a result, the London Stock Exchange has recorded a sharp rise in the price of this raw material,reaching its highest level in 10 years. In China, one of the main buyers of bauxite, aluminum futures are already touching their 2006 highs. The possibility that political instability could disrupt and halt many shipments is very real.

Specifically, the rise on the London Stock Exchange has reached 1.8%, and the metal is now trading at $2,775 per ton. In China,the price is rising by 3.4%. The Asian country not only transports the material to its territory, but also has multiple investments on the ground and works directly with local suppliers in a market that could be shaken from top to bottom.

Bank of America explains that "if the country that supplies 20% of the world's bauxite has problems, it will clearly be a problem." They highlight the fall in other metals such as nickel, which fell by exactly the same amount as the rise in aluminum (-1.8%). This could be because investors may"be concerned that China buys a large part of Guinea's bauxite."

Aluminum has risen 40% in the last year due to soaring demand caused by economic recovery. Foundriesare returning to business eagerto recover what they lost during the pandemic and need materials to resume manufacturing their products.

The coup in Guinea was completed on Sunday when a group of soldiersarrested President Alpha Condé.One of the coup leaders, Lieutenant Mamady Doumbouya, posted a video on social media urging citizens not to take to the streets, while announcing the end of the constitution and dissolving the government.

It remains to be seen whether this declaration will result in an effective takeover, as there is now open conflict in the country andno one knows what will happen.That uncertainty has already hit the markets, which are closely watching developments in one of the world's largest bauxite exporters.

Via El Confidencial.com