Daily Maverick (Johannesburg)

28 May 2014

Guinea: Shock and Ore - How Guinea Took Charge of Its Most Valuable Resource

analysis

The multi-billion dollar iron ore deal signed by Guinea's President Alpha Conde this week is more than just the beginning of a resource boom in the poor West African country. In ripping up the dodgy deal which came before, Conde showed that African countries don't have to put up with one-sided contracts that benefit no one but foreign shareholders, especially when they've been concluded in bad faith.

In July last year, Patrick Radden Keefe published a remarkable piece of journalism in the New Yorker. 'Buried Secrets: How an Israeli billionaire wrested control of one of Africa's biggest prizes' told the story of businessmen Beny Steinmetz and the Republic of Guinea's absurdly large, and almost completely untapped iron ore reserves.

It's worth reading in full, but here are the crib notes: Steinmetz, who made his money in diamonds and had no experience in the immensely complicated and capital-intensive business of iron ore extraction, somehow procured an exploration licence on the promise of nothing more than a bit of capital investment. This was in 2009. In 2010, Steinmetz sold a 51% percent stake in his Guinea operations to the Brazilian mining company Vale for a tidy $2.5 billion -...

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