Guinea to revise mining code after talks with investors
GUINEA. Nov 10 (Interfax) - The government of Guinea said it was prepared to review certain provisions of its mining code following consultations with major investors.
In order to boost the competitiveness of Guinea's mineral resources compared to countries that are closer to customers, the government intends to issue a decree to improve the relevant tax provisions, the government said in a statement, citing Mining and Geology Minister Mohamed Lamine Fofana.
The proposed changes will first be submitted for study and approval to the National Transition Council (CNT), the country's quasi-legislative body.
Guinea passed a new mining code in September that dramatically increased the tax burden on companies. It imposes an export duty of 8% on bauxite shipped out of the country without processes, and 6% on processed bauxite.
Russian aluminum giant Rusal is cautiously assessing the outlook of new investment in Guinea due to the country's recently adopted new mining industry standards.
"The new mining code has so changed business conditions in the bauxite-alumina industry that it raises the question about the very possibility of economically justified work in the country," Yakov Itskov, the Rusal international alumina business director, said in an interview published on the Rusal Facebook page in October.
The new rules significantly raise taxes, Itskov said. "By our calculations with such taxes and taking into account the quality of Guinean bauxite and the cost of delivering to Rusal companies it would be better to use any other bauxite," he said.
The company is also wary of Guinean government plans to own a 35% share in mining projects handled by foreign companies. The new mining code also seriously restricts the work of experienced foreign specialists in Guinea, he said.
"Although we do not expect these new rules to affect our companies in Guinea with concessions signed many years ago, but the prospect of new investment, expansion of existing capacity and development of new deposits is under question," he said.
Rusal completed construction of a dam at the Friguia alumina complex in the first half with investment of around $600,000, providing the company with extra capacity to store slurry for 2 years. The company plans to build a cascade of new dams to ensure slurry storage for 10 to 15 years.
Rusal operates the Friguia bauxite and aluminum complex and Compagnie des Bauxites de Kindia, which produced respectively 2.1 million tonnes and 2.9 million tonnes of bauxite in 2010, and account for 42% of the bauxited mined by the Russian company.