Mahmoud Thiam: Guinea's $200m Technocrat from UBS

Issue 106, October 2014

Continued from Page 3 ➤

...which the $200m was based.

“They seemed so certain of themselves when they first started things that you wonder what happened to the proof,” Thiam observes. “It looks like they're really testing what they can throw and what would stick.”

Fox was recently “humiliated” by an arbitration court, he adds, after a corruption report Fox filed against the owner of Conakry port was thrown out “almost in laughter.” Thiam says Fox has been on the payroll of Alpha Conde since 2009, “to help him seize valuable contracts” when Conde came to power in 2010.

Simandou in turn was stripped from BSGR to be awarded to Conde's backers, Thiam believes. “Vote rigging is at the centre of Alpha Conde's move to confiscate that asset from BSGR. Plainly it's in payment for vote rigging.”

Sam Walsh

Another explanation is that Rio expects its case to be struck out, but has filed it to publicly undermine its critics in Guinea, who say the company is stalling on Simandou in clear breach of the mining code, holding iron ore off the market.

It is an expensive call option for the company: besides legal fees, the group paid Alpha Conde's government $700m in 2011 to exempt it from Guinea's mining code. Chief executive Sam Walsh has meanwhile squirmed between government pressure to advance the asset and investors bent on capital restraint.

"The [start] date will be determined by the bankable feasibility study," Walsh has said. "Some people have thought, when we announced the signing of the framework, that we were committing to the project. It's a commitment to the framework.”

Value Destruction

Thiam remains unsure why Rio paid the $700m, when as minister he offered the company an extension to its license for free, if it could prove the asset was advancing. “The shareholders of Rio should consider the value destruction that represents.”

Thiam says he routinely advised heads of state...

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“Rio should consider the value destruction that represents.”

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