- Print This Post Print This Post

By John Helmer in Moscow

On Thursday evening in Conakry, the capital of the west African republic of Guinea, presidential advisor Mamadou Conde was dismissed, after he was found to have been involved in a plan to sign over bauxite concession rights to the Russian aluminium monopoly Rusal, and arrange for acting Guinean President Sekouba Konate to endorse the scheme on this week’s planned Moscow trip.

Sources familiar with the matter in Conakry and Moscow have reported that Konate’s trip to Moscow on a private Russian plane was aborted after public disclosure of details of meetings he and his advisors had held at the start of the week with Oleg Deripaska, who had flown into Conakry to negotiate with Konate.

The sources say that Conde, acting as Konate’s advisor, agreed to a Rusal plan confirming title and mining right to the Dian-Dian bauxite concession, one of Guinea’s largest unmined deposits of the mineral, and one of the largest in the world. Unilateral transfer of Dian-Dian to the Russians has been opposed by Guinea’s Mining Minister, Mahmoud Thiam. Thiam has notified Rusal that it is in violation of the earlier agreements it had signed for Dian-Dian. Thiam says he is preparing to revoke the defaulted Rusal concession agreement, and offer the mine licence to open international bidding.

Thiam has recently arranged a similar outcome for Guinea’s Simandou iron-ore concession; this had been held without development by Rio Tinto until revocation last year. It will now be developed by Brazil’s Vale and Israel’s BSG group, with more than a billion dollars flowing into the Guinean treasury.

According to Rusal’s website, it holds exploration rights to Dian Dian. “A decision by the company’s management to begin exploration of one of the largest bauxite deposits in the World Dian Dian also typifies our strategic interests in Guinea. The Dian Dian deposit is located 350 km north of Conakry in the Boke province, and is a unique deposit containing around 1 billion tonnes of bauxite ore with a high aluminium content and insignificant amounts of hazardous impurities.”

Rusal’s prospectus for prospective share-buyers at its Hong Kong Stock Exchange listing in January implies that the right to mine Dian-Dian also belongs to Rusal. In a listing of the company’s mining rights and licences, the Rusal prospectus says the licence for Dian-Dian is for both mining and exploration, and runs until 2026. The prospectus also claims that no additional permits are required “according to [the] Concession Agreement”.

Counting Dian-Dian’s measured bauxite at 402 million tonnes, the prospectus suggests that Dian-Dian comprises two-thirds of Rusal’s global bauxite reserves. But the Rusal plan for Dian-Dian is reported to be still at the early study stage. “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.”

Dian-Dian’s bauxite is also vitally linked to Libyan government plans to build a gas-fired aluminium smelter in Libya. Rusal reveals in its prospectus that if and when it starts to mine bauxite at Dian-Dian, it would supply from this mine 13 million tonnes of bauxite annually for refining in Guinea into alumina. This would then be exported for an “approximately 600 thousand tonnes per annum aluminium smelter in Libya.”

The Libyan connexion to Rusal was revealed late last year, when Saif al-Islam Qaddafi, Muammar Qaddafi’s son and head of the Libyan Investment Authority, asked Guinean officials what their intentions were towards Rusal’s concessions in the country. He also disclosed that he had been offered, and was thinking of buying, a 10% shareholding stake in Rusal. The Guineans warned Qaddafi to be cautious. When Rusal finally listed its shares on January 27, the Libyan Investment Authority was reported as buying just over 1% of the 10% on offer.

Unnoticed until now has been the link between Qaddafi’s investment in Rusal shares, and the scheme to fuel a new Libyan aluminium smelter with alumina processed from Dian-Dian bauxite. That scheme took a serious knock when Deripaska failed to get Konate to fly to Moscow on Tuesday. According to the Kremlin announcement conceding what had gone wrong, “the Guinean side requested to postpone the visit of the Acting President of Guinea. Due to the onset of urgent matters of an internal nature, the Guinean side requested to postpone the planned June 9 working visit of the Acting President of the Republic of Guinea Sekouba Konate in Russia to another occasion. In Moscow this message is understood and accepted.”

Without acknowledging to the Hong Stock Exchange the Guinean government claims regarding Dian-Dian, Rusal has admitted in its share prospectus the risk that, if the company loses Dian-Dian, the impact on its aluminium production operations would be serious. “UC RUSAL has a long-term strategy to reduce reliance on purchased bauxite through the development of the Dian-Dian project. Should there be any delays to these projects, this will maintain UC RUSAL’s significant exposure to the third party bauxite market and may potentially result in higher bauxite costs.”

Conde, it is confirmed today by government sources in Conakry, was responsible for arranging Deripaska’s visit this week, and for Konate to agree to sign the Rusal documents on Dian-Dian. In addition to sacking Conde, Konate has ordered all papers submitted by Deripaska and signed by Guinean officials to be cancelled.

Leave a Reply