VZCZCXRO9483
RR RUEHMA RUEHPA
DE RUEHRY #1004 2490712
ZNR UUUUU ZZH
R 060712Z SEP 07
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 1605
RUEHZK/ECOWAS COLLECTIVE

UNCLAS CONAKRY 001004 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12598:  N/A 
TAGS: EMIN ECON ETRD PGOV GV
SUBJECT: BOOMING MINING SECTOR MAY BRING NEW RAILROAD 
 
¶1.  (SBU) SUMMARY.  Long-time bauxite and iron ore mining investors 
are stepping up operations in Guinea, while Chinese and Brazilian 
companies are looking to carve out niches for themselves. 
Meanwhile, one company is looking to build a multi-billion dollar 
tran-Guinea railroad in order to transport their iron ore.  END 
SUMMARY. 
 
¶2.  (SBU) On August 22, Econoff met with Mr. Moumini Sylla, National 
Director of Mines.  He stated that Guinea's mining sector is 
booming, with several new projects either underway or in the 
feasibility study stage. 
 
------------------------------------------ 
Bauxite/Alumina Sector Continues to Expand 
------------------------------------------ 
 
¶3.  (SBU) Guinea's bauxite/alumina sector, which generates over 80% 
of government revenues according to Sylla, continues to grow as 
investors explore and develop new opportunities.  Sylla said that 
Global Alumina has already begun construction of a new bauxite 
mining project near Boke, which will produce 3 million tons 
annually.  Another nearby project, owned by multi-national 
corporation BHP-Billiton, is underway.  Rainer Engels, Vice 
President of BHP Billiton in Guinea, stated that this new project 
will also produce 3 million tons annually.  (Note:  BHP-Billiton has 
a 33% interest in Global Alumina.)  In addition, Sylla said that 
U.S. company Alcoa is conducting a feasibility study on a new 
project in the north of Guinea, while Rusal, a Russian company, is 
considering expanding its current operations in Fria. 
 
¶4.  (SBU) The National Director confided that Chinese and Brazilian 
bauxite companies are also exploring new mining projects.  He said 
Henan-China is looking at the Telemele area, which is located 
several hours from the Rusal concession at Fria.  Sylla also 
identified Brazilian company CBRD as working around Tougue, a remote 
area in Middle Guinea.  In addition, newspapers are reporting that 
Chinese firms recently met with the GoG and proposed building a 
hydro-electric dam at Souapity in exchange for bauxite concessions 
while Brazilian oil companies are rumored to be lining up to bid on 
off-shore oil concessions should the Hyperdynamics contract be 
cancelled. 
 
---------------------------- 
Iron Ore and a New Railroad? 
---------------------------- 
 
¶5.  (SBU) Sylla stated that British-Australian multi-national 
company, Rio Tinto, has a contract with the GoG for an iron ore 
concession in the forest region.  Although mine construction has not 
yet begun, he said that the company projects initial annual 
production at 30 million tons of high quality ore, rising to 100 
million tons at full production.  He also confided that, currently, 
the company is arranging financing for construction of a 1000 km 
trans-Guinea railroad to link their concession with a future port at 
Binty, near the border with Sierra Leone.  According to Sylla, Rio 
Tinto proposes to share the use of the railroad with BHP Billiton's 
iron ore concession on Mt. Nimba. 
 
¶6.  (SBU) NOTE:  When Econoff met in July with Rainer Engels, Vice 
President of BHP Billiton in Guinea, Engels expressed skepticism for 
Rio Tinto's dedicated trans-Guinea mining railroad proposal since it 
would be much cheaper to simply build a 250 km spur onto an existing 
railroad in Liberia and transport iron ore through Liberia instead. 
END NOTE. 
 
------------------------ 
We Will Not Renegotiate! 
------------------------ 
 
¶7.  (SBU) In a July meeting, Mr. Engels also discussed the GoG's 
current review process for existing mining contracts.  He stated 
that renegotiation was out of the question, and that BHP would only 
consider enhanced social investment programs, such as investing in 
community projects (schools, infrastructure, etc.) 
 
BROKENSHIRE