MINISTER OF MINES: CONTRACT REVIEW THUMBS UP,

C O N F I D E N T I A L SECTION 01 OF 02 CONAKRY 000081

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: DECL: 01/28/2018
TAGS: EMIN ECON PGOV GV
SUBJECT: MINISTER OF MINES: CONTRACT REVIEW THUMBS UP,
HYPERDYNAMICS THUMBS DOWN

REF: A. CONAKRY 0027

B. CONAKRY 0028

C. CONAKRY 0029

D. CONAKRY 0030

Classified By: ECON OFFICER KIM JORDAN FOR REASONS 1.4 B AND D


1. (C) SUMMARY. The Minister of Mines provided a general
overview of what Guinea needs for continued development. He
also stated that the Government of Guinea will renegotiate
mining and oil contracts, including the contract of U.S.
company, Hyperdynamics. Meanwhile, Hyperdynamics continues
to court Conte's cronies. END SUMMARY.

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INTERNATIONAL CONTRACT NORMS AND COMMUNITY INTEGRATION
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2. (SBU) On January 24, the Ambassador and Econoff met with
Dr. Ahmed Kante, the Minister of Mines. The meeting was
cordial, with both parties clarifying their positions with
respect to the issue of bring existing mining and oil
contracts up to international norms.


3. (SBU) The Minister, who holds his doctorate in
Mathematical Economics, opened the meeting by emphasizing
that the Guinean Government fully supports foreign direct
investment in Guinea. However, he stated that the existing
mining and oil contracts are not fair and need to be updated
in order to being them up to current international norms.
The Ambassador pointed out that the current IMF poverty
reduction program for Guinea requires existing mining and oil
contracts to brought up to international norms as well. The
Ambassador emphasized that the U.S. takes no position the
review of mining contracts, as long as all companies,
including the U.S. companies, are treated equitably and that
mutually satisfactory agreements are reached. The Ambassador
added that he would have a problem if the reviews were done
to the advantage of one firm over another. He stressed that
the process must be fair and transparent.


4. (SBU) Dr. Kante went on at length about the need for the
mining companies to integrate into mining communities and
foster economic development. The Ambassador noted that the
U.S. African Development Fund is already facilitating such
development in the Boke area in partnership with miner BHP
Billiton. The Ambassador emphasized that the government has
an obligation to meet the social needs of mining communities.
He noted the case of the situation in Sangaredi (NOTE:
Sangaredi is a mining town in the north of Guinea. END NOTE.)
where the Sous-prefet has done nothing to improve the quality
of life of the local community, while mining company CBG is
the has improved the lot of the people, in effect making CBG
the real government there.


5. (SBU) The Minster stated that the Government of Guinea is
not under external pressure from any foreign mining company
seeking unfair commercial advantages, and that his ministry
wants all of the contracts to be fair to all parties. Kante
said that contrary to persistent rumors, French oil giant
Total has not made any attempt to influence the Ministry in
order to get a foot in the offshore oil work.

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HYPERDYNAMICS; DIVERGING INTERESTS
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6. (SBU) Dr. Kante insisted that the contract with
Hyperdynamics is not yet binding because it has not been
ratified by the National Assembly. He went on to say that
the Ministry of Mines is responsible for contract
negotiation. In support of the Minister's assertion, the
Ambassador mentioned that when Hyperdynamics met with
President Conte, the President referred them to the Minister
of Mines for contract discussions. As for the Secretary
General of the Presidency, Sam Soumah, the Minister stated
that despite Mr. Soumah's recent claim to control all
hydrocarbon contracts, he does not have such power.


7. (SBU) The Minster revealed that the government dossier on
Hyperdynamics' oil exploration consists only of the contract,
and that not one piece of technical information has been
provided by the company to the government regarding the
supposed major oil reserves in offshore Guinea. The Minister
said that this failure to provide technical information is
contrary to the requirements of the Mining Code, and makes it
impossible for the government to realistically evaluate the
project. The Minister also noted that Hyperdynamics has not
provided any documentation to account for the $40-50 million
dollars it claims to have spent so far as they reported to
the previous Minister of Mines.

CONAKRY 00000081 002 OF 002




8. (C) While leaving the meeting, the Ambassador asked
whether the original Hyperdynamics contract was signed as a
result of corrupt practices. The Minister was coy, but
smiled and said that it is difficult to find such evidence.
The Ambassador also inquired about reports that Hyperdynamics
paid 500 Million Guinea Francs to various youth associations
to oppose the strike call earlier this month (REFTELS) as a
mechanism for destabilizing the consensus government under PM
Kouyate. The Minister said he was not sure, but that Soumah
had spent a lot of money on the youth. He urged the
Ambassador to ring up the subject of Hyperdynamics with the
Prime Minister.


9. (C) COMMENT. The PM and his ministers have been
consistent in their call for all mining and oil contracts to
be updated, which includes Hyperdynamics' contract. In
response, the U.S. firm appears to be attempting to
manipulate members of the President's inner circle in order
to get around the PM. Post has a growing suspicion that the
company is funding some anti-PM activities to further
undermine Kouyate's administration as a means of securing its
contract. Repeated efforts by Post to encourage the firm to
open a dialogue with the Government of Guinea have had little
impact from Post's perspective. The interests of
Hyperdynamics and the U.S. government appear to be diverging
and may be at cross-purposes. END COMMENT.
CARTER