Guinea's ruling military junta said on Sunday it planned to challenge in court the 2006 sale of the Friguia alumina refinery to Russian aluminium company RUSAL.

Camara has made a series of threats to mining firms with operations in the world's biggest bauxite producer, a trend analysts says is destabilising an already fraught business environment for miners.

We are going to take legal action to cancel the sale of the Friguia plant. A number of technicalities mean we can win this case, said Captain Moussa Dadis Camara, the head of the junta.

The plant employs more than 1,000 people and has capacity to refine enough raw material bauxite to produce 640,000 tonnes of alumina per year.

Camara made the remarks about the sale during a hearing with various officials involved in the sale.

RUSAL, which had previously operated Friguia under a long-term contract, acquired full control of the plant in 2006.

The deal involved buying 100 percent of the Friguia company from the state, along with the government's 15 percent stake in the operating company, Alumina Company of Guinea.

A lawyer representing the junta said the initial sale promise made in 2003 had been signed by one of the president's civil servants, rather than a minister.

This situation lasted three years before an agreement by two Guinean ministers sold the Friguia assets without going through the privatisation department, which is illegal, said lawyer Momo Sacko.

The sale decree provided for an agreement to be signed between the different parties to make the sale definitive. Yet this agreement, which should have been ratified by parliament, was never signed, said Sacko.

Workers went on strike at the plant at the start of April to demand better salaries but returned to work last Wednesday after personal intervention from Camara.

RUSAL said last week it expected the 2006 purchase of the refinery to be scrutinised by the junta, but that it was fully confident the privatisation deal was legitimate.

Guinea has long had issues over the RUSAL sale. The West African country's previous government warned RUSAL a year ago it risked losing the alumina factory if it did not successfully renegotiate a share transaction. (Editing by David Clarke and Mike Nesbit)

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