Guinea Bauxite Production

Key political risks to watch in Guinea-FACTBOX

By Saliou Samb

CONAKRY, July 5 (Reuters) - Guinea, the world's biggest supplier of the aluminium ore bauxite, has moved to civilian rule after a presidential election won by opposition campaigner Alpha Conde, but legislative elections will test its stability.

Guinea's successful election set a powerful example to the region, where civil war, armed power grabs and accusations of rigged elections have become common.

Guineans and foreign observers also see it as a first step towards the country winning back foreign aid and ensuring its mineral wealth benefits its 10 million people.

Conde's government is reviewing country's mining code to boost the state share in projects, and is also seeking to reform the military and ease ethnic tensions that have festered for decades.

POLITICS

Since Conde won the Nov. 7, 2010 election, tensions continue to simmer in the country. Conde's security forces have cracked down on supporters of his chief political rival Cellou Dalein Diallo, who conceded defeat in the election.

What to watch:

- Tensions over preparations for legislative elections expected by year-end. Conde's government has said it would push ahead with plans to organise the election that is tied to aid from the European Union and other donors, despite opposition objections over its plans to revamp the voter roll.

- Ethnic tension. Conde and Diallo drew support essentially on ethnic lines and the election rekindled ethnic tensions. Conde belongs to the Malinke ethnic group, as does around 35 percent of the population, while Diallo is a Peul, a group which makes up around 40 percent.

- How Conde's government deals with the opposition will be closely watched by investors and human rights observers. The organisation of legislative elections planned for the latter part of the year will also be scrutinized for signs Conde's leadership will break with Guinea's authoritarian past.

- The role of the army. Conde appointed himself defence minister, giving him direct involvement in a military reform effort started by junta leader Sekouba Konate. The country's military has earned a reputation for brutality and indiscipline.

MINING AND INDUSTRY

Guinea relies on minerals for over 70 percent of exports. It is the world's biggest shipper of bauxite, the feedstock ore for aluminium. With its Friguia complex, RUSAL has capacity for 640,000 tonnes of alumina a year which the Russian firm ships around the world for further refining into aluminium.

Dances With Bears » HAND JOB — GUINEA REJECTS RUSAL PROPOSAL TO ...

By John Helmer, Moscow

Yesterday’s report on the Guinean President’s ultimatum to Rusal to use or lose the giant Dian-Dian bauxite deposit has drawn fresh sources with additional information, confirming the deterioration in Rusal’s hold on its concession agreement.

According to Vladislav Soloviev, Oleg Deripaska’s first deputy at Rusal headquarters in Moscow, his company is currently in talks with the Government of Guinea on terms for developing Dian-Dian. “We are ready to start to develop the deposit, but we need to solve the problems with infrastructure and agree on railroad use with the government,” Soloviev is reported as saying. Responding from Conakry, the Guinean capital, industry and government sources say that Rusal has submitted a Dian-Dian project proposal, but that it has been rejected.

According to the Guinean government, no comprehensive feasibility study from Rusal on Dian-Dian has been submitted yet, and no agreement on the project plan. According to initial calculations by the government, the capital cost of the bauxite mine ought to be about $250 million. Required by Rusal’s 20-year concession agreement, signed in 2006 with the government in Conakry, a new alumina refinery should be built to process at least part of bauxite dug out of the mine; the capital cost of the refinery is estimated by the Guinean government at about $1.5 billion. To transport the bauxite and alumina to market, the government’s terms for Rusal are similar to those required for Rio Tinto and other mine developers in Guinea – they should build a freight-standard railroad – estimated at $200 million – and a new port loading terminal; that last bill should cost about $100 million. Total government projection for Rusal’s Dian-Dian project capex – more than $2 billion.

Rusal’s detailed references to the Dian-Dian project plans in its Hong Kong Stock Exchange listing prospectus of January 2010 revealed two project cost estimates – one for the bauxite mine, and another for the alumina refinery. “Dian-Dian is a greenfield project to be constructed in Guinea. The studies to date have identified Measured and Indicated Mineral Resources compliant with the JORC Code of 472.1 Mt with 47.7% Al2O3 and 1.5% silica. The expected volume of bauxite mined, subject to confirmation by additional studies is 13.1 Mtpa (for alumina production) and 10 Mtpa (for export). A feasibility study has been prepared by international consultants. The capital expenditure of the mining aspects of the project has been estimated at US$425 m, which would include the development of the mine and mine related infrastructure.

Guinea, selected issues and statistical appendix

Minerals Yearbook, 2008, V. 3, Area Reports, International, Africa and the Middle East

Historical dictionary of Guinea

Mining engineering

West Africa