Business As Usual After Guinea’s Military Coup

It didn’t take long for unrest to take hold in Guinea after the country’s long-serving president was pronounced dead on Dec. 22 and that has meant increased uncertainty for miners in the country.

Only hours after President Lansana Conte’s death was announced, a relatively peaceful coup led by a faction of Guinean soldiers installed itself as the new government in the capital of Conakry.

The group, led by junior army officer Capt. Moussa Camara, said economic distress and widespread corruption gave it the right to suspend both the country’s constitution and the government as a whole.

Shortly thereafter, it was reported that the new government would be re-evaluating all mining contracts.

Vancouver-based Crew Gold (CRU-T, CRUGF-O) said it was ordered to stop operations at its LEFA gold mine for one day, Sunday Dec. 28, but was told by coup leaders that it could resume mining the following day.

LEFA sits roughly 700 km northeast of Conakry. As of the end of the third quarter of 2008, the open-pit mine had produced roughly 144,500 oz. of gold.

The project hosts 75 million tonnes of proven and probable reserves grading 1.6 grams gold per tonne for 3.87 million oz. It holds another 3.09 million tonnes of measured resources grading 2.2 grams gold for 220,000 oz. of gold.

Fellow gold miner, St-Laurent, Que.-based Semafo (SMF-T, SEMFF-O), said mining at its Kiniero mine in the country continued uninterrupted.

In a statement, Benoit Desormeaux, Semafo’s executive vice-president and chief operating officer said that representatives from the new military government visited the mine, began discussions with management and confirmed that it is business as usual.

“Although this is a time of adjustment for Guinea, we will continue to work in collaboration with the new government,” added Benoit La Salle, Semafo’s president and chief executive, in the release.

Other major players in the country include: Rio Tinto (RTP-N, RIO-L), BHP Billiton (BHP-N, BLT-L), Rusal and Alcoa (AA-N). None have reported any interruptions to their operations in the country.

As for the new government, the group has already begun to suffer a diplomatic backlash as the African Union announced it was suspending Guinea’s membership because of the military actions taken.

In a statement, the African Union said the suspension would remain in place until constitutional order was restored.

Unabashed, the junta has established an interim government made up of 26 military members and six civilians.

Camara, its leader, has said he will maintain power until a vote is held in December 2010 — adding that he will not run for president in those elections.

Transparency International ranked Guinea as Africa’s most corrupt country in 2006. In 2007, only Sudan and Chad ranked higher in corruption on the continent.

Yet Western miners have had longstanding operations in the country due to its considerable mineral wealth. Guinea is host to almost half of the world’s bauxite reserves and is the second-largest bauxite producer.

The mining sector accounts for more than 70% of Guinea’s exports.

Former President Conte led a coup in Guinea in 1984, and ruled until his death. While he won reelection many times, those elections were said to have involved many irregularities.

Conte, who was 74 when he died, was known for having a firm grip on the military. His health had been failing in recent years and he is thought to have died of natural causes.