Top bauxite exporter withdraws mining agreements for review

Guinea, the world’s number one bauxite expor-ter, says it is with-drawing agreements made with a U.S. oil company and a Russian-managed bauxite producer as part of a planned review of minerals contracts.

The withdrawals were announced in a government statement read on state television Sunday.

They referred to a production-sharing contract with American oil company Hyperdynamics and an annex of an accord with Compagnie de Bauxite de Kindia (CBK), a local bauxite company run by Russian aluminium giant RUSAL.

They were the first foreign companies in the West African state to be affected by a review of all mining and minerals contracts announced last Wednesday by the new Guinean government, appointed last month to end a violent general strike.

“In the framework of renegotiation of mining contracts, the government has proceeded to withdraw the annex to the accord with Compagnie de Bauxite de Kindia (CBK), and the agreement with Hyperdynamics Corporation’s SCS subsidiary,” said the statement, read by a TV presenter.

It added the documents “should be reviewed by the deputies” of the national assembly.

CBK is run by RUSAL.

Guinea has one-third of the world’s known reserves of bauxite, the ore used to make aluminium, and is the top exporter thanks to the operations of Russia’s RUSAL and a joint venture of aluminium heavyweights Alcoa and Alcan.

No Alcoa-Alcan association

The announcement of the withdrawals on Sunday did not refer to the Alcoa-Alcan venture.

Hyperdynamics was the only oil company prospecting in Guinea’s 64,000 square kilometre (25,000 square mile) offshore zone.

The country produces no oil and so far has no proven viable oil reserves.

In announcing the withdrawal of the Hyperdynamics accord, the government said the fact the U.S. company had been given rights to explore one-third of Guinea’s entire offshore acreage did not conform to international practice.

The normal practice was to award smaller blocks, it added.

A Mines Ministry source told Reuters the objections to the deal with RUSAL-run CBK centred on the terms of the company’s exploitation of the Kindia bauxite deposits and its use of the railway and port infrastructure related to the project.

Regimes to be reviewed

The government felt the Guinean state was not benefitting enough from these aspects of the Kindia contract, and the tax and customs regimes would also be reviewed, said the source, who asked not to be named.

The government initially announced the plan to review contracts last Wednesday after its first cabinet meeting under Prime Minister Lansana Kouyate, who was appointed in late February as a consensus premier to end crippling strikes led by unions who said Conte was no longer fit to rule.

Kouyate’s government marked a complete break with the past and brought in technocrats and economists, including a former International Monetary Fund official who was named as economy and finance minister.

Reuters