Guinea: UAE’s MCI wants to make the southern mining corridor a success

By Diawo Barry
Posted on Thursday, 17 February 2022 18:04

At the Port of Konta, a large-scale project is underway to renovate existing structures, convert some of them and extend them. © MCI

More than $2bn will be invested in building a port, a railway and a road to facilitate mining and open up the southern and central part of Guinea. However, a legal dispute might end up complicating matters.

Marine Contracting & Infrastructure (MCI), the Guinean subsidiary of the Emirati Ghantoot Group, and the Guinean authorities will be signing a concession agreement on the sidelines of the 2020 World Expo in Dubai. They are doing so with the hope of implementing a strategy that will guarantee communal use of mining infrastructure. This is already underway in the north-western part of the country.

The Conseil National de Transition (CNT), which is the provisional parliament that Mamadi Doumbouya (president of the transitional government) has just implemented, must then ratify the agreement. The deal provides for the construction of infrastructure – port, railway and road – to create a corridor in the south-western and central part of the country between the coastal area of Forécariah and the cities of Kindia and Mamou in particular. Although the project represents an investment of more than $2bn ($1.9bn) over seven years, it remains threatened by a legal dispute between some stakeholders.

Decongesting the port of Conakry

Today, to reach Mamou or Kindia in Forécariah by road, the traveller has no other choice – due to the lack of paved roads or railways – but to push on to Coyah, at the gates of Conakry, before then taking the National Road 4 (RN4) Coyah-Pamelap towards the border with Sierra Leone.

Similarly, “all the mines in the region are located between 150 and 350km from the coast, three to five times further from the ocean than those in the northern corridor”, says Ghassen Knani, MCI’s managing director. “Since mining exports travel exclusively by sea, transport costs are currently too high to make the exploitation of these mines viable.” This problem is expected to be remedied by the Southern Corridor.

In detail, the concession has three components. The first involves renovation and extension of the port of Konta (in the Forécariah area), which is owned by the Guinean state and previously operated by the Indian company Ashapura to evacuate iron ore from the Yomboyéli mine. In addition to the refurbishment, MCI is also committed to building docks for mining and agricultural products; an oil terminal with storage capacity; and a service dock for freight and rolling stock. This is a long-standing but never-realised project, which intends to relieve congestion in the port of Conakry.

The project’s second component involves constructing a 160km-road, 120km of which will link the port of Konta and the RN4 to the RN1 Kindia-Mamou at Bokaria. The third and final component is a 420km-long railway (to be built in two phases) that will link the port of Konta to the Kindia and Mamou regions’ bauxite plateaus. The mining companies are using the infrastructure in exchange for making a royalty payment to MCI and the state.

Several thousand jobs created

According to MCI’s forecasts, 70m tonnes of product are expected to be evacuated over 10 years, and for each tonne, Guinea will receive $1.7 in royalties. In total, the country is expected to reap $7bn over the concession period, which is currently set at 30 years. The project is predicted to generate 4,500 direct jobs during construction and 2,500 during the operational phase. In the end, the infrastructure, which is under a BOT (build, operate, transfer) arrangement, will revert to the state.

“There has always been a need to build a multi-modal port in the Konta area,” says an expert in the sector. “Generally, miners develop port docks and not a complex like here. The corridor has the advantage of encouraging the projects that are in the area while creating a new development pole.”

The same is true of MCI. “We use the mines to develop other sectors. It is a structuring project,” says Knani. Some 15 mining companies, including Ashapura, the Société de Bauxite Dabola-Tougué (SBDT), the Société des Bauxites de Guinée (SBG), Elite Mining and Belzone Mining, have already expressed interest in investing in the area.

“The challenge is bringing together all the stakeholders in the area around the project, even though they are companies with different skills and cultures,” says Amadou Bah, president of the NGO Actions Mines Guinée. “The matters of financing, coordination, complying with environmental standards and operating the infrastructure will be crucial.”

Legal wrangling

“It is not the project’s quality that is in question, but rather ensuring that all the conditions for investment are met, and one of them is the absence of litigation.” This is how a good connoisseur of the Guinean mining sector sums up the context around the southern corridor project. MCI has been present in Guinea since 2014 and this is not its first project. However, it has been in a legal battle with four subsidiaries of one of its partners – Monaco Resources Group (MRG), which is present in Forécariah through its subsidiary Société des Bauxites de Guinée (SBG) – for almost a year now.

MCI is accusing MRG and some of its managers of “forgery, fraud, breach of trust, money laundering, criminal association and complicity” at an estimated loss of €16m ($18m), including damages. In an order dated 26 November 2021, an investigating judge from the court of Kaloum banned the eight defendants from leaving Guinean territory and ordered that their assets be seized as a precautionary measure. On 4 January 2022, this decision was overturned by the first investigating judge of the Conakry Court of Appeal, which was seized by MRG.

This is not just a civil dispute, we believe that criminal offences have been committed. We are letting the justice system work calmly and independently.

The two parties are disputing over the nature of the case, which arose from a contract between the two companies to construct a 200km road (linking the RN4 to the RN1) and a port at Konta (Forécariah), with MCI carrying out the work for MRG. “Although the work was 44% completed, against all expectations, MCI complained about the payment of an invoice outside the agreement,” SGB (whose parent company is MRG), which has since declined to comment on the case, tells us. SGB interpreted MCI’s complaint as a “breach of contractual obligations” resulting in the contract’s cancellation.

MCI, which claims to have completed 60% of the road construction work and delivered the port, denounced this as a “unilateral termination”. “This is not just a civil dispute, we believe that criminal offences have been committed. We are letting the justice system work calmly and independently,” says MCI’s legal advisor Sophie Hacker-Waels, who does not wish to comment further on the procedure.

MCI, which assures that the conflict has no impact on the southern corridor project’s development, wants “a legal solution acceptable to all”. “We will work in the general interest to remove the obstacles that prevent production from resuming,” said the group. It remains to be seen whether it is not already too late.

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