Rusal feels the chill in Guinea

Guinean President Moussa Camara says Russia’s Rusal short changed the government on a 2006 deal and will seek remediation.

The Justice Ministry will look at taking legal action against Rusal for the deal that gave the company control of the Friguia bauxite and alumina complex back in 2006.

The announcement from the president came on state T.V. and is part of the 45- year-old former army captain’s recent campaign against corruption in the country. He came to power in late December after long time leader Lansana Conte died.

The salvo at Rusal comes in the context of Camara’s previous statements that deals made between Conte’s regime and mining companies would be reviewed.

For its part Rusal says its welcomes any review that examines its acquisition because it was made legitimately.

Production at the mill comes in at 640,000 metric tonnes of alumina and 1.9 million tonnes of Bauxite a year.

Rusal’s interest in the project pre-dates the 2006 deal, as the company was operating the mine through a concession when it was given the chance to buy the mine outright from the government.

While no purchase price was given at the time of the deal, Camara said Rusal paid $19 million for assets that other consultants had valued at $257 million.

Camara, while not naming the consultants that came up with the $257 million value, said he would go after the Guinean nationals who negotiated the deal on the part of the government as well as Rusal.

Rusal is only the latest company to fall into Camara’s site. Global Alumina (GLA. U-T, GBAMF-O) was told at the end of March that their contract could be ripped up if it didn’t provide a schedule of its activities.

Global Alumina and its joint-venture partners BHP Billiton (BHP-N, BLT-L), United Arab Emirates state-owned aluminum smelter Dubal Aluminium, and Mubadala Development Co., an Abu Dhabi government investment fund, are building an alumina refinery in the country.