Guinea Threatens to Cancel Mining Licenses

CAPE TOWN, South Africa—Guinea next month will begin an audit of mining companies operating in the country, which could see some licenses revoked.

The country isn't "getting the benefit from its resources," Mines Minister Mohamed Lamine Fofana said on the sidelines of the Indaba mining conference here Tuesday. "A lot of companies took licenses and then went all over the world to sell them," he said. "If the miner isn't fulfilling his commitments, his license will be canceled."

The ministry also said it plans to revise some of the demands on miners imposed last September. The changes will include lowering taxes imposed through royalties or export duties, Mr. Fofana said.

Guinea is a significant source of bauxite, a raw material used to make aluminum. Brazil's Vale SA, Russia's United Co. Rusal PLC, South Africa's Anglogold Ashanti Ltd., Alcoa Inc. of the U.S. and Anglo-Australian miner Rio Tinto PLC operate in the country. China's CPI International Minerals & Investments Ltd. plans to invest $5.8 billion to develop a bauxite mine and refinery in Guinea.

A revised mining code adopted in September increases state participation, nationalizing up to 20% of assets. It also raises taxes, based on the price of benchmark aluminum prices on the London Metal Exchange; increases custom duties to 10% from 5.6%; and limits the validity of a number of existing mining concessions.

"With the duty tax, I found it a little too high," Mr. Fofana said. The country must find a balance to increase revenue while not dissuading mining investment, he said.

Mr. Fofana said all companies will be included in the audit, which will be conducted by a third party.