VZCZCXRO7633
RR RUEHMA RUEHPA
DE RUEHRY #0468/01 1160727
ZNR UUUUU ZZH
R 260727Z APR 07
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 1012
INFO RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 CONAKRY 000468 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR AF/W, AF/EPS 
TREASURY FOR OFFICE OF AFRICAN NATIONS 
 
E.O. 12598:  N/A 
TAGS: EMIN ECON ETRD PGOV GV
SUBJECT: MINING COMPANIES CALM AS GUINEAN GOVERNMENT PLANS REVIEW OF 
ALL MINING CONTRACTS 
 
REF: Conakry 425 
 
¶1.  (SBU) SUMMARY.  Most mining companies are undaunted as the 
Guinean government prepares to review all mining sector contracts. 
Representatives from all established mining interests -- bauxite, 
gold, diamonds and iron -- told us they had received the 
government's assurance that the mining sector review will not 
necessarily lead to contract renegotiation or concession revisions. 
End Summary. 
 
---------------------------- 
Semantics: Review vs. Revise 
---------------------------- 
 
¶2.  (U) During its first meeting on April 5, the Guinean cabinet 
agreed to review and, if deemed in the best interests of Guinea, 
renegotiate all mining contracts and concessions (Reftel).  Prime 
Minister Kouyate subsequently softened the language regarding 
renegotiation, saying the government of Guinea will guard its 
credibility with investors and understands the importance of 
honoring established contracts.  Minister of Finance Ousmane Dore 
has publicly said the government does not intend to violate its 
investment code.  We contacted mining companies in the sectors of 
bauxite, diamonds, gold and iron, and they told us they are not 
overly concerned by the government's pending review of mining 
contracts.  Most mining companies we spoke with have already 
contacted government officials and offered to present documents to 
assist in their respective contract reviews. 
 
------------------------------------- 
Just Part of Doing Business in Guinea 
------------------------------------- 
 
¶3.  (SBU) On April 23, Econoff met with Dr. Alain Pillevuit, 
resident director of iron company Simfer, Rio Tinto.  Multinational 
Rio Tinto holds mining concessions throughout Africa, but its 
interests in Guinea center on iron.  Pillevuit said his company was 
"not at all" concerned about any review of its contracts or 
concessions.  Pillevuit said during a recent meeting of the Guinean 
Chamber of Mines, he urged all mining companies to remain calm and 
regard the review as "just part of doing business in Guinea." 
Pillevuit said Rio Tinto's initial 2002 contract with the government 
of Guinea was withdrawn by president Conte's order some 15 minutes 
before it was to be signed, and the final contract not secured for 
several months more.  "So you see," he continued, "Rio Tinto is 
familiar with surprises from the state." 
 
---------------------------- 
What More Can They Do to Us? 
---------------------------- 
 
¶4.  (SBU) On April 23, EconOff met with Hayat Muhammad Mirza, 
general manager of Aredor-First City Mining, a subsidiary of the 
Canadian firm, Trivalence Mining Corp. Aredor holds Guinea's largest 
diamond mining concession. Mirza said his company is not 
apprehensive about the pending review of its contract because the 
terms are "equitable" and because the government of Guinea generates 
much tax revenue from it.  Mirza said his firm believes it should be 
exempt from a 3 percent export tax the government levied in 2005. 
Aredor contested the tax with the former government, but was told 
the tax was valid.  According to Mirza, Aredor actually welcomes the 
review because it will be an opportunity to contest the tax.  Saying 
the company is already taxed at the highest level, he added "What 
more can they do to us?" 
 
--------------------------------- 
All Is Calm With Bauxite and Gold 
--------------------------------- 
 
¶5.  (SBU) On April 24, Mamady Youla, Global Alumina's director 
general, told us the company expected its review process to be 
uncomplicated.  Before joining Global, Youla was employed by the 
Guinean Ministry of Mines.  He says he knows all the members of the 
bauxite contract review team, and holds them all in high regard. 
Youla believes the review is more politically than economically 
motivated.  Since many Guineans question the fairness of mining 
concessions, Youla thought the government wise to make Guinea's main 
source of income more transparent. 
 
¶6.  (SBU) Likewise, Emmanuel Wooley, assistant director of mines at 
AngloGold Ashanti, told us his firm was confident no issues would 
arise from the review of their contract. When Econoff spoke with him 
on April 20, Wooley said his firm had already contacted the Ministry 
of Mines to offer documents to facilitate Anglogold Ashanti's review 
process.  Wooley said the Minister of Mines personally assured him 
the review process was simply to assess the status of existing 
 
CONAKRY 00000468  002 OF 002 
 
 
contracts and concessions. 
 
------- 
Comment 
------- 
 
¶7.  (U) Long established mining companies are not perturbed by the 
government of Guinea's planned mining sector review.  Some officials 
we spoke with expected and even welcomed some sort of review because 
the new government is composed of many "reformers".  Rio Tinto's 
Alain Pillevuit said he has seen so many iterations of the Guinean 
government - particularly Ministers of Mines - that he is now 
thoroughly adept at articulating Rio Tinto's current and projected 
activities in Guinea. 
 
¶8.  (SBU) U.S. firm Hyperdynamics possesses a contract for offshore 
oil and natural gas exploration and development in Guinea.  While 
not technically a mining interest, the government of Guinea intends 
to review the Hyperdynamics production sharing agreement, which has 
drawn a fair amount of local controversy, some almost certainly the 
result of rival interests.  Hyperdynamics has expressed concern 
about the review.  We will continue to advocate on its behalf to 
ensure the firm is treated fairly. 
 
MCDONALD