Guinea wants more benefit from bauxite, PM says

By Saliou Samb

CONAKRY, Feb 13 (Reuters) - Guinea has not reaped full advantage from its vast deposits of bauxite and other minerals and needs more infrastructure development and local refining capacity, Prime Minister Lansana Kouyate has said.

The West African country, with nearly a third of the world's proven bauxite reserves, is conducting a review of mining contracts. Guinea is poor and has only one alumina refinery while most of its production is shipped overseas as ore.

The Friguia refinery, which converts bauxite into alumina which can then be smelted into aluminium, is operated by privately-owned Russian company Rusal and has a capacity of 640,000 tonnes of alumina and 1.9 million tonnes of bauxite.

"How is it possible that we have all these bauxite reserves and only one alumina refinery? I'm not even mentioning aluminium!" Kouyate told a forum on mining in West Africa late on Tuesday. "That must be reviewed."

"Has Guinea draw the maximum benefit from its mineral resources? I say no ... Our infrastructure has not developed in line with the exploitation of our mineral resources."

"All of what I've said is in the context of the debate which Guinea is conducting: the renegotiation of mining contracts," he said. "This is not a fight between partners ... It is all about development in a win-win framework."

Several foreign aluminium companies are investing in mining and processing capacity in Guinea, including Global Alumina (GLAu.TO), which is spending more than $3 billion on a 2.8-million-tonne-a-year alumina refinery due to open by 2010.

BHP Billiton (BLT.L) (BHP.AX), Dubai Aluminium Co (DUBAL) and Mubadala Development Company took a two-thirds stake in the project in March.

Alcoa (AA.N) of the United States and Canada's Alcan AL.TO, which was bought by Rio Tinto (RIO.L) (RIO.AX) last year, plan to add an alumina refinery to their existing joint venture, while Russia's RUSAL (OKSAI.RTS) also has a big operation there.

Meanwhile, China agreed last month to fund a $1 billion hydropower dam in return for rights to bauxite concessions.

Growing discontent over rising prices contributed to a series of strikes by opposition unions last year during which at least 137 people were killed, many shot dead by President Lansana Conte's security forces.

Veteran President Lansana Conte named Kouyate under a deal with unions to end the protests, although the consensus prime minister has faced opposition from established political cliques.

(Writing by Daniel Flynn; editing by Chris Johnson)