Guinea Alumina Slowed by Credit Crisis, Investor Says (Update1)

Nov. 30 (Bloomberg) -- Development of the $5 billion Guinea Alumina joint venture has slowed because of the credit crisis, said Global Alumina Corp., one of its investors. “The financial crisis definitely has an impact on our project,” Karim Karjian, chairman of Global Alumina, the Toronto-based owner of 33 percent of the venture, said in a Nov. 27 interview. “It slowed down the pace.” The “current thinking” on starting production at the project, whose other investors include BHP Billiton Ltd., Dubai Aluminium Co. and Abu Dhabi’s Mubadala Development Co., is the end of 2014 or beginning of 2015, Karjian said in London. Output won’t commence in mid-2012 as previously scheduled, he said. Potential investors in Guinea Alumina are concerned about the political situation in the West African country, Karjian said. Security Forces in September opened fire on demonstrators protesting against military leader Moussa Camara, who took power in a coup in December. At least 130 people were killed, according to the United Nations. Guinea has one-third of global reserves of bauxite, an ore used in aluminum production. “The government’s political standing with the international community is the major concern,” Karjian said. “Many of our lenders are government-related.” Global Alumina’s refinery is slated to produce 3.3 million metric tons a year of alumina, the raw material used to make aluminum. Capacity is planned to rise to 6 million tons later, Karjian said. The project has one approved loan so far, from the African Development Bank for $300 million, he said. Arms Ban “Our approved loan will only be in place when other creditors all agree to lend,” said Hussein Yusuf Iman, chief investment officer at African Development Bank, in an interview in London Nov. 27. “They still worry about the political instability.” The European Union and the 15-nation Economic Community of West African States banned arms sales to Guinea last month to protest the deaths. Sovereign-related creditors involved in the Guinea Alumina project include some from the Europe, Middle East, China and Japan, Iman said. “They may only make up their mind when the situation stabilizes after next year’s election,” he said. Guinea’s Camara seized power on Dec. 23, a day after the death of former President Lansana Conte, who had ruled for two decades. He suspended the constitution, pledging to relinquish control to a civilian government and not to run in national elections. Camara later said he may be a candidate in the vote scheduled for next year, sparking demonstrations. Support Unchanged “We’ve had seven mining ministers, two presidents and five prime ministers in Guinea during the nine years since our project started,” Karjian said. “Their support for us has never changed.” Global Alumina has signed agreements to sell most of its alumina output, based on a discount to London Metal Exchange aluminum prices, Karjian said. “Up to now, 30 percent of the engineering has been completed, with $700 million invested by shareholders,” he said. Construction of the plant is expected to start in “early 2011,” he said. BHP, the world’s largest mining company, owns 33 percent of Global Alumina, Dubai Aluminium has 25 percent and Mubadala 8 percent. BHP spokesman in London Ruban Yogarajah declined to comment. To contact the reporter on this story: Zijing Wu in London zwu17@bloomberg.net