Dakar, Senegal — MININGREVIEW.COM — 06 January 2009 – Mining firms doing business in the West African state of Guinea face uncertainty after the country’s newly-installed military leadership vowed to revise mining contracts with foreign mining companies.
Reuters reports from here that companies such as Rio Tinto, Alcoa and Rusal have spent billions in Guinea, which is the world’s biggest bauxite exporter, a gold producer, and has the potential to be a major source of iron ore.
Junta leader Captain Moussa Dadis Camara singled out the state’s contracts with mining companies in his first public indications of economic policy, saying defective deals would be revised – a line that was later toned down.
“It is a question of opening negotiations to set the basis of a collaboration that is advantageous for all parties,” said Nouhou Thiam, spokesman for the National Council for Democracy and Development (CNDD). The CNDD has not named any companies or mining concessions that might be a risk, nor has it said what might constitute a defective contract.
Camara’s CNDD took power after the death of long-serving President Lansana Conte last week, and although there appears little internal opposition to the coup, it makes for anxious times for companies spending money in Guinea.
“There is going to be operational uncertainty,” said Rolake Akinola, senior analyst, West Africa at consultancy Control Risks. “Relationships and dynamics are highly fluid. There will be a lot of uncertainty and lack of clarity in the short to medium term.”
A key policy question is whether the Conte administration’s practice of using foreign resources firms as cash machines will be reversed, analysts said.
Reuters quotes the Eurasia Group’s Middle East and Africa analyst Sebastian Spio-Garbrah as saying: “It remains to be seen whether the Camara regime will seek to redress the historical imbalance in the country’s finances by setting up a credible contract review process, as has recently happened in the Democratic Republic of Congo, or whether it will seek merely to extort monies from the country’s foreign operators.”