Friday, 22 October 2010

Guinea Presidential Run-Off Rivals Pledge to Push Ahead With Mining Review

Guineans vote in a delayed second- round presidential election on Oct. 24 that pits two candidates who have both vowed to overhaul mining laws in the world's biggest bauxite-exporting nation.

Former Prime Minister Cellou Dalein Diallo, who received 43.7 percent of the June 27 first round, will compete against opposition leader Alpha Conde, who garnered 18.2 percent. The vote will mark the transition from military to civilian rule.

An ongoing review of mining accords has already led to a dispute with London-based Rio Tinto Group over ownership of the Simandou iron-ore project. Other companies operating in the country include Russia's United Co. Rusal, the world's largest aluminum producer, AngloGold Ashanti Ltd., Africa's biggest gold miner, and Brazil's Vale SA, the No. 1 iron-ore producer.

“Political and social pressures for a review of the legal framework governing the mining industry are unlikely to go away,” said Christopher Melville, a senior associate at Menas Associates in London. That may bring the new government “into further conflict with mining companies, many of which have negotiated special terms for their projects.”

Guinea holds as much as half of the world's reserves of bauxite, an ore used to make aluminum, more than 4 billion metric tons of “high-grade” iron ore and “significant” deposits of diamond and gold, according to the U.S. State Department. Aluminum Corp. of China Ltd. also operates in the country.

'Defending Interests'

The election is being held almost two years after army the seized power following the December 2008 death of President Lansana Conte, who ruled the country for two decades. Guinea hasn't had a democratic transfer of power since it gained independence from France in 1958. General Sekouba Konate became the leader in December after an aide shot the coup leader, Moussa Dadis Camara, in the head.

In the period since the first round vote, Conde has become the favorite to win the run-off after at least two defeated candidates pledged support to the 70-year-old leader of the Rally for the Guinean People.

“The momentum has clearly shifted toward Alpha Conde during the period of delay,” Melville said.

While beset with organizational difficulties, the June election was held “freely,” a European Union observer mission said after the vote. The run-off was then postponed for “technical reasons,” Konate has said.

Mining Deal

Conde will “renegotiate mining deals” and develop standard mining policies, Moustapha Naite, a spokesman for the RPG, said in an interview from Conakry, the capital, on Oct. 18. He also favors a stronger state role in the economy and plans to replace the leadership of the Central Bank of Guinea and promote economists who support lower interest rates, his adviser, Mamady Sinkoun Kaba, said in an interview on Sept. 10.

Diallo said in August he would also review mining deals if he wins the second round “to make sure that the interests of Guinea are defended.”

The 58-year-old leader of the Union of Democratic Forces of Guinea was prime minister of the country from 2004 to 2006.

In the run-up to this weekend's vote, supporters of Conde and Diallo were injured in clashes between the two groups. This week, at least one person died when police fired upon backers of Diallo at a rally in Conakry.

A plan announced on Oct. 12 by Conde and Diallo to form a national union government may indicate that “none of these candidates are confident of victory,” Rolake Akinola, West Africa analyst at Eurasia Group, said in an interview on Oct. 15. The plan was reported by state-owned Radio Television Guineenne, which didn't provide further details.

Growth Accelerating

Guinea's political turmoil won't prevent the economy expanding 4.3 percent this year and 4.5 percent in 2011, according to the African Development Bank. Mining generates 24 percent of the nation's total economic output, according to the bank's website.

Per capita income is less than half the sub-Saharan African average of $861, according to the World Bank, and the country ranks 170th out of 182 countries on the UN's Human Development Index, which measures life expectancy, literacy and gross domestic product per capita.

Source: Bloomberg

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