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Guinea’s Major Mining Operations

June 29, 2010

FACTBOX-Guinea’s major mining operations
Sun Jun 27, 2010 6:54am EDT

June 27 (Reuters) – Guinea, the world’s biggest exporter of aluminium ore bauxite and a potentially huge source of iron ore, is holding a presidential election on Sunday intended to end a political crisis that has persisted since a 2008 military coup.

Resources firms have committed billions of dollars of fresh investment in the West African country this year. Several presidential candidates have indicated they could put existing contracts under review if elected.

Here are details of some of the country’s major mining operations and planned developments.

*********************BAUXITE***************************

BACKGROUND:

Guinea boasts about a third of all known reserves of bauxite, the ore used to make aluminium. CBG, or Compagnie des Bauxites de Guinee, owned by Alcoa (AA.N), Rio Tinto (RIO.L) (RIO.AX) and the Guinean government, is the world’s biggest bauxite exporter. It shipped a 13.7 million tonnes in 2008.

PRODUCTION:

Guinea’s total bauxite production in 2009 was 14.77 million tonnes, down from 19.78 million in 2008, partly because of the effects of political turmoil. Output recovered in the first quarter of 2010 to nearly 4 million tonnes from 3.35 million in the same period a year ago, the government said. [ID:nLDE64K1VP]

Bauxite production capacity is estimated as follows:

– Compagnie des Bauxites de Guinee/Boke Mine 15 mln

– Alumina Company of Guinea/Fria-Kimbo Mine (RUSAL) 2.8 mln

– Compagnie des Bauxites de Kindia 3.8 mln

ALUMINA REFINERIES:

RUSAL’s (0486.HK) Friguia plant, Guinea’s largest single employer, refines bauxite to alumina, with a total production of about 530,000 tonnes.

Alcoa and Rio Tinto are considering adding an alumina refinery to their Guinea bauxite joint venture.

Toronto-listed Global Alumina (GLAu.TO) is building a new 3.3 million tonnes per year alumina refinery but has delayed start-up by two years to 2011 and raised its cost forecast by 35 percent to $4.3 billion.

Total Guinean production of alumina was down 15.8 percent in 2009 to 500,400 tonnes and continued to lag during the first quarter of 2010.

**********************IRON ORE**************************

BACKGROUND:

Guinea is believed to have some of the world’s richest undeveloped iron ore deposits. A flurry of deals have been announced in recent months despite ongoing political uncertainty.

DEALS:

In March, Rio Tinto and Chinese metals group Chinalco signed a $2.9 billion agreement to jointly develop the Simandou iron ore project. Under the terms of the deal, Rio puts its 95 percent stake in Simandou into the joint venture, and Chinalco pays $1.35 billion for 47 percent in that venture.

Rio says Simandou is the largest undeveloped iron ore mine in the world, containing 2.25 billion tonnes of the mineral. The project is forecast to cost $6 billion.

On June 23, Rio issued a statement insisting it has “firm rights” to all of its Simandou deposit after the government said it wanted to exercise an option to acquire 20 percent of the part under Rio’s control. The government last week gave Rio 60 days to produce a feasibility schedule for the project or face a possible further review of the deposits’ future.

In April, Vale (VALE.N)(VALE5.SA) spent $2.5 billion on a majority stake in a division of BSG Resources in Guinea in order to develop the Simandou-Zogota project. Output will begin in 2012 with 10 million tonnes of iron ore and reach 50 million tonnes by 2015, Vale said.

London-listed explorer Bellzone BMZ.L announced a joint-venture deal with Guinea in June, paving the way for a feasibility study into the construction of the 280-km railway line from the Kalia iron ore concession to the port of Matakan. The study should be completed within 30 months, according to the terms of the deal. China International Fund will help fund the project, Guinea’s government said.

************************GOLD****************************

BACKGROUND:

Guinea’s gold production surged during the first quarter of 2010 to 229,991 ounces from 73,210 ounces in the same quarter a year ago. It remains a relatively small producer compared with regional leaders Ghana and Mali, which produce closer to 2 million ounces each per year.

PRODUCTION:

Anglogold Ashanti (ANGJ.J) operates Guinea’s biggest gold mine at Siguiri in the northeast, where it produced 332,000 ounces of gold in 2008. Guinea holds a 15 percent stake.

Crew Gold (CRU.TO) operates the LEFA Corridor Gold Project, which produced 189,520 ounces in 2008.

West Africa-focused gold miner Semafo, which is listed in Toronto, operates the Kiniero mine in eastern Guinea. It produced 51,700 ounces in 2008.

Artisanal gold mining is also common in Guinea.

**********************DIAMONDS***************************

Guinea’s diamond reserves are estimated at more than 25 million carats, not including as yet unmapped kimberlite fields. Production during the first quarter of 2010 was 72,870 carats, up slightly from 70,920 carats in the same period in 2009.

**********************NICKEL****************************

Australian-listed company Lindian Resources (LIN.AX) is exploring for nickel at the Dinguiraye project, about 400 km northeast of Conakry. ******************************************************** Sources: Reuters news, company websites & Reuters Metal Production Database, available to 3000Xtra users here (Reporting by Daniel Magnowski, Richard Valdmanis, Saliou Samb and David Cutler; editing by Matthew Jones) (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/)

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