Stakes rise with Guinea election gamble

A move by Guinean authorities to hold a delayed presidential run-off on Sunday marks an attempt to contain rising ethnic tensions in the West African country but could store up trouble for later.

The landmark vote, meant to end nearly two years of military rule, has been repeatedly postponed since the first round in June amid outbursts of violence between rival political camps and a lack of adequate preparation.

The newly-appointed electoral commission chief surprised observers on Tuesday by proposing to hold the vote on Oct. 31 -- a move widely seen as a bid to stifle rising conflict and the potential for a new military coup.

"There are clearly dangers in allowing this impasse to continue," said Chris Melville, senior associate at Menas Associates, a London-based consultancy watching Guinea and its large bauxite and iron ore mining sector.

But the attempt to rush the vote could lead to a chaotic election aftermath in a country that has drawn billions of dollars in investment from firms like Rio Tinto and Vale.

Junta leader General Sekouba Konate has yet to ratify the date and one candidate, ex-premier Cellou Dallein Diallo, said the date was premature -- raising worries that his supporters would vigorously contest the outcome if he lost.

TRADE-OFF

Diallo took 43.69 percent in June's first round, relying on support from his ethnic Peul, who make up about 40 percent of the country. Veteran opposition leader Alpha Conde, one of the Malinke who make up about 35 percent of the country and have tended to enjoy political power since independence, took 18.25 percent of the first round.

But Diallo's lead may not be as strong as it appears.

Diallo said on Tuesday that recent ethnic clashes in regions that favour Conde had displaced large numbers of his supporters and no measures had yet been taken to ensure they could vote.

Conde has burnished his support with alliances with defeated first-round candidates Papa Koly Kourouma and Jean-Marc Telliano -- both of whom did well in the large Guinea Forestiere region -- and has strong support in Malinke stronghold Haute Guinea.

After complaints in the first round that some voters had to travel 20 miles (30 km) to vote, election officials have been adding new voting stations in those regions -- in theory making for a stronger turnout for Conde.

"The first round showed Diallo as the clear front-runner. But it will be interesting to see if the machinations of the political elite in between will affect those results," said Tara O'Connor of Africa Risk Consulting.

Analysts said the Peul would be in no mood to accept defeat this time around given their view that other ethnicities have ganged up to exclude them from power since independence from France in 1958.

But there has been pressure from Paris, the United Nations and neighbouring states on Guinea not to delay the election any further. Assuming Konate accepts the Oct. 31 date, the trade-off will be in favour of reducing the risk of violence before the vote in the hope of being able to contain it later.

"The damage to the electoral system has already been done," said O'Connor of an electoral process that was billed as being Guinea's first democratic vote since 1958.

"It is just better that they are getting on with it."

Source: Reuters

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Guinea poll "difficult" to hold Oct 24 -commission

Guinea's election commission chief said on Thursday it would be hard to stage a presidential run-off on Sunday as planned, citing a "deplorable" lack of preparation that would lead to a disputed outcome.

The comments were the clearest sign yet of a likely further delay in the transition from junta to civilian rule in the world's top exporter of the aluminium ore bauxite after a dispute over allegations of bias within the election commission.

"I must stress to you that the date of Oct. 24 will be difficult to stick to," new commission chief Siaka Toumany Sangare said after meetings with key political players.

"I would not want to rush and send voters to the ballot boxes in such deplorable conditions that do not respect international standards and which will mean that the results will be disputed afterwards," said Sangare, who was named two days ago after his predecessor was accused of partiality.

The presidential run-off is seen drawing a line under decades of authoritarian leadership that left the West African country in poverty despite huge mineral resources.

Sangare stopped short of confirming a postponement but said he would carry out an "objective and inclusive re-evaluation" on whether the poll could go ahead as planned on Sunday. Further talks -- and a likely final decision -- are due on Friday.

Earlier, French Foreign Minister Bernard Kouchner, who has played a major role in efforts to guide Guinea towards civilian rule, suggested a delay of one week.

The run-off is due to pit former prime minister Cellou Dallein Diallo against veteran opposition leader Alpha Conde, strongly associated with the large Peul and Malinke ethnic groups respectively.

MINER UNCERTAINTY

A June 27 first round passed off relatively smoothly but was marred by accusations of fraud and other irregularities which prompted street battles between rival factions in which one person died and several dozen were injured.

It also sparked a row over the leadership of the national election commission which was only allayed on Tuesday with the naming of Sangare, a Malian, as the new president of the body.

The ensuing delay in preparations has meant that many of the electoral lists dictating voter eligibility in the various constituencies were not complete, one member of the cross-party body set up to oversee the transition told Reuters.

Diallo came out on top in the first round with 43.69 percent of the vote compared to Conde's 18.25 percent.

Analysts say whoever wins is likely to face calls to shake up existing contracts governing the presence of international firms such as Rio Tinto and RUSAL in the mining sector.

"Any new government will be vulnerable to such calls in the aftermath of a highly contested election. This could bring it into further conflict with mining companies," said Christopher Melville, senior associate at UK-based Menas Associates.

Source: Reuters

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Bellzone razes risk in Guinea

Bellzone Mining has continued to eliminate the mining risk at its Kalia iron ore project in Guinea with a further increase and upgrade of its mineral resources. With only more good news expected on the resource front in the coming months, the remaining risk centres around the would-be operation's challenging infrastructure demands and existing country-risk.

The updated resource follows work over both Kalia I and Kalia II and has increased the total magnetite resource by 56.5% to 3.74 billion tonnes. More importantly from a risk perspective, 670 million tonnes from an entirely inferred initial resource has been converted into measured and indicated resources. There is also a maiden resource on the way in the fourth quarter for the higher quality oxide ore, on which Bellzone is relying to deliver a direct shipping ore (DSO) element within its planned operation.

The current resource would support a 50Mt per annum operation with a life of 60 years as envisaged by Bellzone, which would be reached with a staged approach. Stage one would see 20Mtpa of DSO produced as early as 2014 and 10Mtpa of concentrate by 2015 before the DSO production climbs to 30Mtpa by 2017 with 20Mtpa of concentrate.

The price tag for stage one has been set at $US3.8 billion, most of which is attributed to related infrastructure requirements – a 285km rail and coastal port, primarily – that China International Fund (CIF) has committed to fund in exchange for a 100% offtake agreement at Kalia.

This is just part of the picture. The current resource at Kalia has been delineated from just 6km of the 19km combined strike length at Kalia I and Kalia II. Bellzone predicts the total magnetite resource could reach more than 13Bt in addition to possible oxide resources of 2.9Bt. In this case, the mine life and production would be increased.

Bellzone managing director Nik Zuks said while the company would continue to look at expansions to the overall resource, focus had turned to producing the oxide resource in the December quarter. Investment bank CanaccordGenuity indicated in a research note last week that the upgraded magnetite resource figures had reduced the discount applied to Kalia and that an oxide resource would have the same effect when released next quarter.

“This upgrade and the major steps achieved over recent months towards project completion reduce the completion risk on this project and, as such, allow us to reduce the 'haircut' we applied previously to our net present value estimate for the completed project,” the bank said.

“We point to the importance of the higher-grade near-surface hematite at this project as a source of DSO. Our site visit and familiarity with these deposits suggest to us that JORC classification of the hematite cap is little more than a formality. When it comes later this year, we will be able to upgrade its contribution to value in Bellzone.”

In addition, Zuks said that both the infrastructure agreement and government agreements in place had “hugely de-risked” the project.

“The detailed agreement with CIF, the presidential decrees which lawfully secure the Kalia convention and exclusive infrastructure development rights, and a proven substantial JORC magnetite resource has hugely de-risked Bellzone's aspirations of building a 50Mtpa iron operation in Guinea,” he said.

With such a large and expanding resource in hand along with a financial partner in CIF, CanaccordGenuity broker Mike Cook believes that delivering an economic feasibility study for the infrastructure component of the development remained the major hurdle for Bellzone.

“[Kalia] is being de-risked because Bellzone is managing to tick a number of boxes,” he said. “The next step to de-risk it further is the feasibility study both on infrastructure and the mine itself. The feasibility for the mine will be the easy bit. The tricky bit is going to be getting the rail to traverse across some fairly tricky terrain – it's not flat like Western Australia but then again we're not talking about the Himalayas.

“The risk is that the feasibility study comes up and says that it's actually going to cost too much and will erode the return on the project; and that it's going to take five years to build the project rather than three. And that's a possibility.”

He said coming up with a positive feasibility over the next 12 months and building the mine and infrastructure over the following three years would be “quite a big ask”.

There is also an element of risk hanging over Guinea – a country that has had its share of troubles over the years and which loves a good military coup. Chris Melville from risk consultancy Menas Associates said the move toward democratic elections (in progress) after a year of military rule and a further nine months of interim government was a positive step for Guinea, but the outlook was uncertain. He said both presidential candidates were similarly accepting of foreign investment in the mining industry, with the frontrunner, Cellou Dalein Diallo also having increasingly strong links with the Chinese.

“This is a country that has been locked down and stagnating under the authoritarian rule of Lansana Conte from 1984 to 2008,” he said. “A lot of the ethnic and political dynamics that were contained under his rule have the potential to re-emerge under a newly democratic order. There is also a risk going forward, given how close the election process has been, that whoever loses it will seek to overturn the result through popular protest or potentially unconstitutional means.

“In a highly personalised and contested political environment such as Guinea's, the personalities of the people in power are hugely important for mining companies, especially those who have signed agreements during a transitional period. A lot of deals have been signed in this period, which creates an underlying level of risk when a new fully legitimate and constitutional government is inaugurated. The key question for the players who signed deals is to what extent have they been able to embed themselves with personalities who will remain important in the post-election period.”

Guinea is seen by many, including the usually conservative Rio Tinto, as a country where the mineral wealth outweighs any risk. Bellzone's position in Guinea and its ability to progress rapidly towards production make the junior one of the standout emerging iron ore players in the market, according to Renaissance Capital.

“Given its growth potential and the fact that the region is now game-on in terms of iron ore development, we think investors should see Bellzone as a highly favourable risk/reward investment,” the bank said. “At the time of Bellzone's IPO, the market was sceptical about management's ability to progress the project over a compressed timeline. This is no longer an issue.

“The project has been de-risked, and actually accelerated, due to the elimination of the usual lengthy period of funding required for a project of this nature.”

Source: HighGrade

For more news and analysis about mining, please visit the Menas Associates Newsroom.

Guinea election leader secures backing for run-off

The candidate who came top in the first round of Guinea's presidential election, Cellou Dallein Diallo, became strong favourite on Wednesday (28th July) to win the decisive run-off by securing the backing of a leading rival.

Diallo signed a deal with third-placed Sidya Toure, making him the likely next president following the elections, which are are meant to pave the way for a return to civilian rule in the world's top exporter of the aluminium ore bauxite.

Toure became a possible king-maker after he secured 13.62 per cent of the vote in the first round in June behind Diallo, who won 43.69 per cent, and second-placed Alpha Conde.

No date has been set yet for the run-off between the top two candidates in Guinea, which has been gripped by political uncertainty since a coup in late 2008.

"I express my thanks to Mr Sidya Toure for having agreed to ally himself with us," Diallo said after the pair signed the agreement in Conakry.

No details were made public but sources in Diallo's UFDG party said Toure's party had been promised the post of prime minister and 30 per cent of cabinet jobs in return for its support, should Diallo win.

"(The choice) for the second round is difficult. But our priority is that Guinea should at last launch its economic development. That is why we made the choice (we made)," Toure told reporters journalists after the signing ceremony.

Toure told Reuters last week that he would negotiate with the two leading candidates to try to secure an alliance.

Sixth-placed Ibrahima Abe Sylla's NGR and the PUP former ruling party also signed the agreement to support Diallo, a 58-year-old former minister and prime minister under the late President Lansana Conte.

Months before Guinea held its election, Rio Tinto and Vale surprised many by saying they would spend billions on iron ore projects there. Analysts expect some contracts will be reviewed after the elections but a Diallo victory could ease fears.

"We don't believe that Conde will put together a comparable coalition and we expect Diallo to be the next president of Guinea, barring any unexpected reintervention from the army," said Chris Melville, senior associate at Menas Associates.

"Diallo has spent recent months getting close to members of the transitional government and his victory would provide some reassurance to mining companies that have signed agreements with the (transitional government)," Melville told Reuters.

Voters following orders?

Results from the first round showed the importance of ethnic allegiance, with Diallo and Conde taking votes from their own large ethnic groups - Peul and Malinke, respectively.

Toure's Diakhante minority makes up just one percent of the population but if he can repeat his first round performance, and there is no significant anti-Peul mobilisation, Diallo looks set to win.

"I think that (Toure's) supporters will do what he tells them to do. I don't think there will be a lot fading off," a diplomat who follows Guinea told Reuters.

Conde has opposed all three recent and generally unpopular leaders - Captain Moussa Dadis Camara, who seized power when Conte died but was replaced by an interim leader after being shot last year, Conte himself, and Sekou Toure.

European and US observers broadly praised conduct of the 27th June first round vote following months of political tension and wrangling, which included the killing of dozens of pro-democracy demonstrators last year. But the process revealed a number of logistical problems which experts say poll organisers need to fix before a potentially tense and close second round of voting.

Source: Reuters

For more news and expert analysis about West Africa, please visit the Menas Associates newsroom.