Dubai group seeks funding for $8bn Guinean bauxite mine

A Dubai-based resources firm is in talks with trading houses to develop bauxite reserves in Guinea, valued at $8 billion and previously held by BHP Billiton, the company's co-founder said on Thursday.

James Tounkara, co-founder of Gajah Investment Group, said he also expected Chinese involvement in the project that he expects to start production by the end of next year, but there had been no contact yet.

Guinea has around a third of the world's bauxite reserves, used for making aluminium, although their development has been thwarted by years of military rule and popular unrest.

BHP, which formerly owned the Boffa South bauxite blocks, some 150 km (93 miles) north of the capital Conakry, halted exploration in 2012 there after aluminium prices dropped.

Tounkara said Guinea "missed the opportunity to enter the golden age" before the commodity price collapse. But speaking by telephone from London, where he was meeting investors, he said his birth country Guinea, now under democratic rule, was ripe for development and investors would be emboldened further "once one or two mega projects take off".

He said he had "interest from major traders" in offtake contracts that would see them commit to buying some future production, but declined to name them or the price being discussed.

Asked about China, he said: "We have not yet been contacted or contacted them, but I think it will happen. I believe there will be an approach."

After BHP halted activity, Guinea cancelled a tender for the bauxite mining acreage that sources said had been won by a Chinese firm in partnership with figures in President Alpha Conde's political party.

Tounkara signed an agreement with the Guinean government and its state mining company to develop the mine, which contains 9 billion tonnes of bauxite, in March 2016. He said the Boffa South bauxite mine had a net present value of $7.95 billion, based on a 25-year cash model.

Global aluminium demand is rising, but after record low prices last year, the price outlook is still clouded by oversupply.

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