December 18, 2012 / 7:05 PM / 5 years ago

UPDATE 2-Idle Guinea mining permits should be cancelled-minister

* All inactive permits are for exploration

* Full results of mining audit to be made public within days

* Guinea to consult more partners on infrastructure

By Saliou Samb

CONAKRY, Dec 18 (Reuters) - More than 75 percent of mining permits granted by Guinea before 2011 are currently inactive and should be cancelled, Mines Minister Mohamed Lamine Fofana said on Tuesday.

The mineral-rich but impoverished West African nation launched an audit of its mining registry in April 2011, following the election of President Alpha Conde, whose swearing-in marked the end of decades of dictatorship and military rule.

“Of 1,072 permits, 818 are inactive. Our objective is of course to cancel them,” Lamine Fofana said during a news conference in the capital Conakry announcing the results of the review.

All those permits considered inactive were authorisations for exploration.

The minister gave no further details concerning the names of companies holding the licences, but said the full results of the audit would be made public in coming days.

President Conde came to power in 2010 promising to clean up and strengthen Guinea’s minerals sector, whose gold, diamond, bauxite and iron ore reserves have attracted little investment due to decades of corruption and turmoil.

The government has moved to overhaul the mining code and review existing natural resource contracts, particularly those signed during the 2009-2010 period when the country was ruled by a military junta.

Last month it announced it was focusing its review on three of the largest contracts.

These include BSG Resources Ltd’s deal to obtain half of the Simandou iron ore concession, RUSAL Plc’s purchase of the Friguia alumina refinery, and Hyperdynamics Corp’s rights to nearly a third of Guinea’s offshore oil blocks.

BSG Resources, owned by Israeli diamond billionaire Beny Steinmetz, reached a deal in 2008 to control half of the Simandou iron ore deposit - one of the largest unexploited reserves in the world.

No cash payment was involved, although it invested $160 million in the project and pledged to spend $1 billion to rebuild a railroad.

In 2010, BSGR sold half of its stake for $2.5 billion to joint venture partner Vale. The Brazilian miner has since put the project on hold, however, in favour of others closer to home.

Earlier this month, the mines ministry said it would complete the review of the deal in the first quarter of 2013.

On the southern half of Simandou, Lamine Fofana said the government had decided to consult more firms to help secure its share of about $15 billion on infrastructure investments to make the project viable.

Rio Tinto - ousted from the north of Simandou in 2008 - secured permission to mine the southern half of the deposit, agreeing to pay $700 million and give the government the right to up to 35 percent of the project.

Rio has pledged to build an export route with the government including almost 700 km (430 miles) of rail, 35 bridges and a four-berth wharf 11 km offshore.

Guinea has struggled to secure financing for its share of the required investment.

“We have taken the decision to expand our consultations to all potential backers of the Republic of Guinea in the Simandou project,” Lamine Fofana told journalists.

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