Guinea miners find fewer legal demands from crisis Torn Junta
Monday, 12 Oct 2009
Bloomberg reported that Guinea’s political crisis following the massacre of at least 130 pro democracy demonstrators last week may force the country’s military junta to back off in disputes with mining companies.
Mr Sebastian Spio Garbrah an analyst at Eurasia Group in New York said that as aid dwindles and the African Union and European Union threaten sanctions, the junta likely won’t pursue legal disputes with the companies.
Mr Spio Garbrah said that “Plans to review pre existing mining sector contracts may now be viewed as jeopardizing that flow of revenue and aborted.”
Mr Spio Garbrah said that while any escalation in the crisis would affect the operations of mining companies, the political tensions currently remain localized in the capital of Conakry. The mines are situated 100 of miles away and rail links and ports have been unaffected by the violence.
Last month, before the crackdown, the government asked United Company Rusal to return a bauxite and alumina complex at Friguia after a court ruled that its purchase was invalid. Bauxite is a raw material used in aluminum production. Alumina is made from bauxite ore in a step that produces the metal. The junta is also reviewing accords between the previous government and companies including AngloGold Ashanti Limited.
The mining industry accounts for 90% of exports, a fifth of economic output and much of the government’s revenue.
According to the US State Department’s Web site, Guinea holds as much as half of the world’s reserves of bauxite, more than 4 billion tonnes of high grade iron ore, significant diamond and gold deposits and undetermined quantities of uranium. Still, per capita income is less than half the sub Saharan African average of USD 861 and the country ranks 170 out of 182 countries on the UN’s Human Development Index which measures life expectancy, literacy and gross domestic product per capita.
