Rusal Won’t ‘Dare’ Seek Arbitration, Guinea Says (Update1)

Sept. 15 (Bloomberg) -- United Co. Rusal won’t “dare” challenge Guinea’s seizure of the Friguia alumina smelter through international arbitration because it was improperly acquired, an adviser to the African country’s president said. The Moscow-based company should exercise its right to challenge the Sept. 10 decision made by a Guinean court within the 10 days stipulated, the adviser, Momo Sacko, said in an interview from Conakry late yesterday. Rusal has said it may seek arbitration and says the plant is its “legitimate” property. Guinean President Moussa Camara said in April he had asked the justice ministry to consider legal action over Rusal’s deal because in 2006 Guinea was paid $19 million for the assets by Rusal, while consultants had valued them at $257 million, he said. “They will not dare to lodge a complaint elsewhere,” Sacko said. If they do not appeal in Guinea “they can consider themselves as losers.” Rusal wasn’t immediately available for comment. While the plant was taken over by Russky Alyuminiyum it is now operated by Rusal and this breaches the agreement with the government, Sacko said. Russky Alyuniniyum, which means Russian Aluminium, is the former name of Rusal before its merger with Sual Group in 2006. Guinea’s government is capable of managing the plant on its own and may choose to do so rather than seeking a new partner, Sacko said. “Guinean experts in the past proved they can indeed manage the company and make it profitable,” Sacko said. ‘Reviewing Agreements’ Guinea, the largest exporter of bauxite used to produce aluminum, in December ordered Rio Tinto Group, the world’s second-biggest iron ore producer, to hand over part of an iron- ore concession. The country is also reviewing agreements between the previous government and companies including AngloGold Ashanti Ltd. Camara took power last year after a military coup. Friguia has the capacity to produce 640,000 metric tons of alumina a year, according to Rusal’s Web site. Bauxite is an ore used to make alumina, which in turn is used in the manufacture of aluminum.