Guinea is launching a comprehensive review of mining contracts to root out 'unconscionable provisions' granted by previous administrations in the West African state, Mines Minister Mohamed Lamine Fofana told Reuters.
The move comes after the country, the world's top supplier of the aluminum ore bauxite whose iron ore reserves have drawn billions of dollars in investments, passed a new mining code that more than doubles state share in projects.
If by defending the interests of the country people think we are being protectionist, well then I agree, Fofana told Reuters in an interview late on Monday.
Now I plan to clean up the mining sector and will conduct a review to remove unconscionable provisions in certain contracts and ensure we have balance and fairness, he said.
Guinea held its first free elections late last year bringing President Alpha Conde to power and ending nearly two years of military rule during which authorities signed several high-profile mining accords.
Analysts had said the accord appeared potentially exploitative, was unlikely to help Guinea's mostly-impoverished 10 million people, and would almost certainly be scrapped by the new government.
CIF will be treated like any other company, Fofana said, adding it would be able to retain current holdings, which include a stake in London-listed iron ore miner Bellzone's Kalia development.
Guinea's former junta leaders had formed a joint-venture with CIF called GDC Mining Oil & Gas in which CIF had a controlling stake and a right of first refusal for all unexploited minerals resources. Fofana said the company still existed, but its rights had been toned down.
The GDC has state and Chinese involvement and is involved in a number of permits granted by my predecessors. But this company will be subject to the same mining laws as every other mining company working in the country, Fofana said.
Fofana also said that he expects a deal with Russian mining giant RUSAL over a range of disputes -- from back taxes to compensation for alleged pollution at the port of Conakry -- by the end of the year.
He said RUSAL's Dian Dian bauxite project was on the table, but gave no further details.
As of today, the president prefers bilateral discussions that are friendly and can produce a happy outcome, Fofana said. We expect this to be resolved by the end of the year.
A RUSAL official said Guinea's plan to review mining contracts and its mining code overhaul had made it a less attractive place to do business.
Contractual obligations are not subject to unilateral review, the official said. Any investor of good sense will look for investment opportunities outside Guinea.
Guinea lawmakers passed a new mining code last week that gives the state a free 15 percent stake in all mining projects along with an option for an additional paying 20 percent stake.
Guinea's previous mining code, from 1995, had secured the state only a 15 percent stake in some projects.
Fofana said the 1995 code had succeeded in drawing investors into some mega-projects but that it did not satisfy the needs of the state.
He said he would push for the big projects -- including developments by Anglo-Australian mining giant Rio Tinto , Brazil's Vale , and Bellzone iron ore developments -- to begin producing as soon as possible.
The freezing of Guinea's resources is over, he said.
Rio Tinto and Vale each have blocks in Guinea's giant Simandou iron ore deposit, estimated to hold two billion tonnes of high-grade ore.
Fofana said his government had sought feedback on the new mining code from private research firms, the International Monetary Fund, Revenue Watch and others to ensure it balanced state and investor needs.