Political uncertainty in Guinea unsettles miners

Guinea’s new military chief is keeping mining companies in the West African nation on pins and needles after yet another televised threat against a foreign mining firm there.

Captain Moussa Dadis Camara, who took power after the death of President Lansana Conte in December, warned Global Alumina (GLAu-T) that he would rip up its contract with the state if the company did not provide a schedule of its activities, Reuters news agency reported today.

“You must give us a timetable of your activities so Guineans can ultimately benefit from Guinea’s riches,” Reuters quoted Camara as saying on national television. “Just as the government reclaimed that zone from [resources firm] CBG to grant it to you, the state can reclaim the contract from you.”

Global Alumina and its joint-venture partners BHP Billiton (BLT-L), United Arab Emirates state-owned aluminium smelter Dubal Aluminium, and Mubadala Development Company, an Abu Dhabi government investment fund, are building an alumina refinery in the country.

(Dubai Aluminium owns one of the largest single-site aluminum smelters in the world, while Mubadala invests in strategic sectors such as energy, utilities, health, real estate, public-private partnerships, basic industries and services.)

Michael Cella, Global Alumina’s senior vice president and chief financial officer, did not return phone calls or emails requesting comment before presstime.

Ruban Yogarajah, a spokesman for BHP Billiton, declined to discuss the matter. “We can’t confirm it and we’re not commenting,” he said. “We don’t comment on our discussions with governments.”

The latest threats against Global Alumina follow Camara’s detention of former mining ministers and an order last week to shut down AngloGold Ashanti’s (AU-N, AGD-L) Siguiri mine after one of the gold major’s directors missed a meeting at a mining forum the military chief had convened. Camara later relented and allowed AngloGold to reopen the mine.

Since coming to power, the 45-year-old former army captain has promised to fight corruption and improve living conditions.
NGOs call the mineral-rich country (steeped in bauxite, alumina, gold, and diamonds) one of the poorest and most corrupt nations in the world.

Guinea borders Sierra Leone, Liberia, Guinea-Bissau, Senegal and the Ivory Coast.

Camara has said that national elections will be held before December 2010.

Global Alumina says the estimated US$3 billion refinery will represent the largest single private investment in sub-Saharan Africa.

It forecasts the refinery, to be built in northwestern Guinea and produce about 3.6 million tonnes per year, will create more than 10,000 construction jobs and 1,500 permanent mining and refinery operations’ jobs.

With a projected three to five indirect jobs for each direct job created, the project’s employment impact on the economy is estimated to be more than $300 million over the construction period and $30 million per year for the life of the refinery, the company says on its website.
Other benefits to the economy include direct local procurement of more than $100 million during the construction period.

Under the basic agreement, the joint venture will pay the government annual bauxite royalties of roughly US$9 million. It will also make fixed annual payments in lieu of income taxes for the first 15 years of operation of US$5 million for the first five years, US$8 million for the next five years and US$12.5 million for the last five years and then revert to the statutory income tax rate, which is currently 35%. In addition, the joint venture has agreed to pay local community development taxes of US$500,000 per year for the first 15 years and US$1 million thereafter.

At presstime Global Alumina was trading at about 50¢ per share. It has a 52-week trading range of 35¢-C$1.84 per share and has 195.6 million shares outstanding.

 

 

 

Print

Be the first to comment on "Political uncertainty in Guinea unsettles miners"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close