Guinea: All Part of Master Plan — Mines Minister Wants the Steinmetz, Bellzone and Rio Tinto-Chinalco Deal Resolved Before Final Round of Elections
Written by Honoré Banda in Conakry
Wednesday, 27 October 2010 13:16
Guinea is one of the world’s leading producers of bauxite, and its government plans to make it the biggest producer of iron ore. In the final days of President Lansana Conté in December 2008, the regime announced it had revoked 50% of the rights to Rio Tinto’s huge iron ore concession at Simandou and transferred them to Israeli diamond magnate Benny Steinmetz, a friend of former Israeli Prime Minister Ehud Olmert. Officials had warned Rio Tinto six months earlier that it had held Simandou for too long without developing it, a breach of the mining code.
The key official behind this more muscular approach is mines minister Mahmoud Thiam. A former banker with Merrill Lynch and UBS, Thiam was asked to return to his native Guinea to take over the mining portfolio after the palace coup in December 2008 that brought Captain Moussa Dadis Camara to power. A canny and well-connected operator, Thiam carries a US passport and contributed to President Barack Obama’s election campaign.
Thiam has masterminded deals with companies from Israel, Brazil, Australia and China to expand iron and bauxite production. Sometimes the new alliances work as a political insurance policy: In October 2009, the military junta signed an infrastructure and minerals deal worth $7bn with China International Fund just days after soldiers killed 150 demonstrators at an opposition rally which triggered calls for international sanctions.
In June, Thiam brought in Brazil’s mining giant Vale to take a 51% stake in a venture with Steinmetz for $2.5bn. That suddenly made the Steinmetz project look serious and added to pressure on Rio. Under a special deal, the Steinmetz-Vale consortium would be able to use a railway on the Liberia side of the border to transport their ore but Rio would have to part-finance a multi-billion-dollar railway project in Guinea. In June, the Conakry junta told Rio that if it did not accept the transfer of 50% of Simandou to Steinmetz and Vale, it risked losing the remaining 50% of the concession. The following month, Rio strengthened its agreement to invest in Simandou by partnering with Beijing’s Chinalco. Rio’s engineers have also started assessing railway routes through the mountainous interior.
According to a message sent by Thiam to a friend in August, he wanted the Steinmetz, Bellzone and Rio Tinto-Chinalco deal resolved before the final round of elections in September when the military is due to hand power back to civilians. “Then I can go home,” he said.