Guinea Plans Defense Against Bauxite Miner’s $28.9 Billion Claim
(Bloomberg) — Guinea plans to defend Axis International Ltd.’s $28.9 billion arbitration claim, saying the firm terminated its bauxite mining permit for violating an industry code.
The United Arab Emirates-based company filed a lawsuit against Guinea in May for the cancellation of mining rights. Axis, which says it is the country’s second largest bauxite producer, submitted its arbitration request to the International Center for Settlement of Investment Disputes, a branch of the World Bank.
“Guinea is ready to defend its interests,” Minister of Mines and Geology Bouna Sylla said by phone from the country’s capital, Conakry. “We will go to arbitration, but Axis is not right.”
The arbitration comes as President Mamadi Doumbouya, leader of Guinea’s military junta, aims to attract more mining investors to the West African country. The country is the largest exporter of bauxite, a raw material converted into alumina, the main raw material for aluminum production, and began shipments from Simandou, one of the world’s largest iron ore deposits, earlier this year.
The dispute also reflects a broader push for African governments to increase their share of resource revenues. The Guinean government terminated some old concessions on the grounds that they did not comply with its rules. This includes the Axis permit covering a bauxite mine at Boffa, about 150 kilometers (93 miles) northwest of Conakry.
“The permit was canceled due to violations of the mining law and the general tax law of the Republic of Guinea,” Sylla said. “The company itself was not involved in mining activities, but subcontracted the permit to two other companies, from which it receives $2 per tonne, makes no investment and pays no taxes.”
Axis said it canceled Guinea’s permit because the mine was not operating, a claim that was untrue.
“The law is on our side,” Axis founder and Chairman Pankaj Oswal said in response to emailed questions. “International investment law exists precisely to protect mining investors who face such situations.”
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