GLOBAL ALUMINA'S MINING PROJECT VALUED AT $7 BILLION

UNCLAS CONAKRY 001056

SIPDIS

SIPDIS
SENSITIVE

E.O. 12598: N/A
TAGS: EMIN ECON ETRD PGOV GV
SUBJECT: GLOBAL ALUMINA'S MINING PROJECT VALUED AT $7 BILLION


1. (SBU) SUMMARY. Contrary to press reports and statements by
Guinean government officials, econoff's visit to Global Alumina
revealed that with a $7 billion investment planned, the company's
proposed bauxite refining project is twice as big as anticipated.
The project is still in the feasibility study stage, but the project
manager expects Global Alumina will ultimately approve the proposal
and move forward on the investment. END SUMMARY.


2. (SBU) On September 10 and 11, Econoff visited government
officials and mining projects in the heart of Guinea's bauxite
country, Boke and Sangaredi (septels) This area of Guinea is about
3 hours by vehicle north of Conakry, along some of the best
maintained and most picturesque roads in Guinea.

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GLOBAL ALUMINA - STRAIGHT TALK FROM SOMEONE WHO KNOWS
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3. (SBU) On September 11, Econoff met with Charles Wickwire, the
Construction Manager for Bechtel and a 32-year Bechtel veteran, at
the Global Alumina (GA) refinery site just outside of Sangaredi.
Mr. Wickwire is currently the only AmCit working for Bechtel at this
site, along with approximately 800 local hires. Contrary to press
reports and assertions by government officials, Mr. Wickwire stated
that Global Alumina will not decide to move forward on the refinery
project until it reviews the results of the current feasibility
study, expected to be completed in April 2008. However, Mr.
Wickwire said that because GA had already spent $230 million on the
project, and is keeping 800 people on payroll pending the report,
his opinion was that the green light will be forthcoming.


4. (SBU) Mr. Wickwire contrasted Bechtel's decision to keep
Guineans on the payroll with RusAL's unannounced decision to replace
all Guineans with Russian expatriates except for basic manual
laborers. (NOTE: No mention of RusAL's termination of Guineans has
made the local press. END NOTE).


5. (SBU) Mr. Wickwire revealed that the current refinery project is
budgeted at $3.5 billion, but that the company actually plans to
build a second refinery at the same location, also valued at $3.5
billion. (NOTE: This $7 billion figure is also contrary to previous
media reports of just one $2.5 billion alumina refinery. END NOTE.)
The project will include not only its own water treatment plant, and
power generation facilities, but its own air field capable of
handling jet aircraft to fly in materials and workers, thereby
avoiding the congestion and costs of going through Conakry.


6. (SBU) When construction gets under way, Mr. Wickwire estimates
that 9,000 workers will be employed on-site composed mostly of
expatriates, but with a significant Guinean component. He also said
that it is likely that an aluminum smelter will be built as a
follow-on project, although this would depend on whether the Chinese
build the hydro-electric dam at Segouri.


7. (SBU) Mr. Wickwire related that the refineries will be located
in direct proximity to the mines so that the bauxite can be
efficiently mined, processed and then shipped via a 14 km rail spur
to the main line to Kamsar for export. (NOTE: the rail spur is
currently being built by Chinese company, Henan-China. END NOTE.)
In addition, the refineries will be able to receive shipments from
CBG's Sangaredi mines via the same rail spur. Finally, if Global
Alumina builds a smelter, the rail line would also handle export of
the finished aluminum.

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NEW SHERIFF IN TOWN
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8. (SBU) Mr. Wickwire stated that the biggest problem facing the
project was corruption, pointing out that he had already been
subject to demands for payments, in-kind and cash, from the local
prefect and other officials. However, Mr. Wickwire said that
Bechtel strictly enforces an anti-corruption policy. While working
on a Bechtel project in Equatorial Guinea, Mr. Wickwire said he had
been thrown in jail three times for refusing to pay bribes to
government officials, and he does not plan to change his position in
Guinea.


9. (SBU) COMMENT. Guinea is a beautiful country with vast natural
resources and enormous potential. Mining continues to dominate the
country's economy and new projects on the horizon, such as that of
Global Alumina's, will continue to contribute significantly to
national revenues. However, corruption ultimately undermines the
country's potential, keeping the vast majority of citizens among the
poorest in the world. END COMMENT.

BROKENSHIRE