Identifier
Created
Classification
Origin
07CONAKRY468
2007-04-26 07:27:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Conakry
Cable title:  

MINING COMPANIES CALM AS GUINEAN GOVERNMENT PLANS REVIEW OF

Tags:  EMIN ECON ETRD PGOV GV 
pdf how-to read a cable
VZCZCXRO7633
RR RUEHMA RUEHPA
DE RUEHRY #0468/01 1160727
ZNR UUUUU ZZH
R 260727Z APR 07
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 1012
INFO RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 02 CONAKRY 000468 

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR AF/W, AF/EPS
TREASURY FOR OFFICE OF AFRICAN NATIONS

E.O. 12598: N/A
TAGS: EMIN ECON ETRD PGOV GV
SUBJECT: MINING COMPANIES CALM AS GUINEAN GOVERNMENT PLANS REVIEW OF
ALL MINING CONTRACTS

REF: Conakry 425

UNCLAS SECTION 01 OF 02 CONAKRY 000468

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR AF/W, AF/EPS
TREASURY FOR OFFICE OF AFRICAN NATIONS

E.O. 12598: N/A
TAGS: EMIN ECON ETRD PGOV GV
SUBJECT: MINING COMPANIES CALM AS GUINEAN GOVERNMENT PLANS REVIEW OF
ALL MINING CONTRACTS

REF: Conakry 425


1. (SBU) SUMMARY. Most mining companies are undaunted as the
Guinean government prepares to review all mining sector contracts.
Representatives from all established mining interests -- bauxite,
gold, diamonds and iron -- told us they had received the
government's assurance that the mining sector review will not
necessarily lead to contract renegotiation or concession revisions.
End Summary.

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Semantics: Review vs. Revise
--------------


2. (U) During its first meeting on April 5, the Guinean cabinet
agreed to review and, if deemed in the best interests of Guinea,
renegotiate all mining contracts and concessions (Reftel). Prime
Minister Kouyate subsequently softened the language regarding
renegotiation, saying the government of Guinea will guard its
credibility with investors and understands the importance of
honoring established contracts. Minister of Finance Ousmane Dore
has publicly said the government does not intend to violate its
investment code. We contacted mining companies in the sectors of
bauxite, diamonds, gold and iron, and they told us they are not
overly concerned by the government's pending review of mining
contracts. Most mining companies we spoke with have already
contacted government officials and offered to present documents to
assist in their respective contract reviews.

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Just Part of Doing Business in Guinea
--------------


3. (SBU) On April 23, Econoff met with Dr. Alain Pillevuit,
resident director of iron company Simfer, Rio Tinto. Multinational
Rio Tinto holds mining concessions throughout Africa, but its
interests in Guinea center on iron. Pillevuit said his company was
"not at all" concerned about any review of its contracts or
concessions. Pillevuit said during a recent meeting of the Guinean
Chamber of Mines, he urged all mining companies to remain calm and
regard the review as "just part of doing business in Guinea."
Pillevuit said Rio Tinto's initial 2002 contract with the government
of Guinea was withdrawn by president Conte's order some 15 minutes

before it was to be signed, and the final contract not secured for
several months more. "So you see," he continued, "Rio Tinto is
familiar with surprises from the state."

--------------
What More Can They Do to Us?
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4. (SBU) On April 23, EconOff met with Hayat Muhammad Mirza,
general manager of Aredor-First City Mining, a subsidiary of the
Canadian firm, Trivalence Mining Corp. Aredor holds Guinea's largest
diamond mining concession. Mirza said his company is not
apprehensive about the pending review of its contract because the
terms are "equitable" and because the government of Guinea generates
much tax revenue from it. Mirza said his firm believes it should be
exempt from a 3 percent export tax the government levied in 2005.
Aredor contested the tax with the former government, but was told
the tax was valid. According to Mirza, Aredor actually welcomes the
review because it will be an opportunity to contest the tax. Saying
the company is already taxed at the highest level, he added "What
more can they do to us?"

--------------
All Is Calm With Bauxite and Gold
--------------


5. (SBU) On April 24, Mamady Youla, Global Alumina's director
general, told us the company expected its review process to be
uncomplicated. Before joining Global, Youla was employed by the
Guinean Ministry of Mines. He says he knows all the members of the
bauxite contract review team, and holds them all in high regard.
Youla believes the review is more politically than economically
motivated. Since many Guineans question the fairness of mining
concessions, Youla thought the government wise to make Guinea's main
source of income more transparent.


6. (SBU) Likewise, Emmanuel Wooley, assistant director of mines at
AngloGold Ashanti, told us his firm was confident no issues would
arise from the review of their contract. When Econoff spoke with him
on April 20, Wooley said his firm had already contacted the Ministry
of Mines to offer documents to facilitate Anglogold Ashanti's review
process. Wooley said the Minister of Mines personally assured him
the review process was simply to assess the status of existing

CONAKRY 00000468 002 OF 002


contracts and concessions.

--------------
Comment
--------------


7. (U) Long established mining companies are not perturbed by the
government of Guinea's planned mining sector review. Some officials
we spoke with expected and even welcomed some sort of review because
the new government is composed of many "reformers". Rio Tinto's
Alain Pillevuit said he has seen so many iterations of the Guinean
government - particularly Ministers of Mines - that he is now
thoroughly adept at articulating Rio Tinto's current and projected
activities in Guinea.


8. (SBU) U.S. firm Hyperdynamics possesses a contract for offshore
oil and natural gas exploration and development in Guinea. While
not technically a mining interest, the government of Guinea intends
to review the Hyperdynamics production sharing agreement, which has
drawn a fair amount of local controversy, some almost certainly the
result of rival interests. Hyperdynamics has expressed concern
about the review. We will continue to advocate on its behalf to
ensure the firm is treated fairly.

MCDONALD