Alufer hold talks with banks & private equity for bauxite mine in Guinea

Alufer Mining Ltd., planning to build a $305 million bauxite mine in Guinea, has started interacting with banks, commodity traders and private equity funds to develop their finance of Bel Air project.

Danny Keating, the Chief Executive Officer wants to complete the financing of this project by this year’s end and has contacted a number of banks such as BNP Paribas SA and a few of them in South Africa for a sum of around $200 million of debt, he said at the Investing in an interview. The company is also finding out ways to raise funds through various agreements with traders and potential customers and has also been in talks with the biggest publicly listed commodity trader in the world, Glencore Xstrata Plc.

Alufer plans to begin the construction of the mine early next year and wants production by 2016 end. It is estimated the project will produce 10 million metric tons of bauxite per year. The project is based 15 kilometers (9.3 miles) from the coast of Guinea which helps to cut down the project’s operating costs, Keating said.

Last month, Indonesia introduced the bauxite ore ban, helping to encourage the outlook for price of bauxite used in the aluminum production. Indonesia accounts for about 9-10 percent of the global exports of aluminum from bauxite, according to an estimated report Goldman Sachs Group Inc.

An $8 billion pool of private-equity money raised over the last two years that has lain dormant is being stirred this year by attractive valuations and predictions of resilient demand for raw materials. The influx of private money and the dearth of transactions to date may aid Alufer’s ability to attract finance, he said.

“The pressure will start to mount on them to deploy in some way,” Keating said. “We might see more pressure toward the second half of the year if people haven’t been investing, which from our side works well in terms of timing.”