UPDATE 1-Guinea Says RUSAL Owes over $860 mln in Taxes

CONAKRY, Apr. 23 -- Guinea's mines minister said on Thursday that RUSAL (0486.HK: Quote) owes the West African nation at least $860 million in unpaid taxes.

The claim is a result of Guinea's hiring auditing firm Alex Stewart International to inspect the Russian company's operations in Guinea, and follows a conflict over the purchase of a refinery, which Conakry says RUSAL paid too little for.

"The firm told us that (RUSAL) owes us at least $860 million," Mines Minister Mahmoud Thiam told journalists on Thursday.

Thiam said that Guinea suspected RUSAL of exaggerating the costs of its operations in Guinea in order to pay lower taxes.

RUSAL was not immediately available for comment in Conakry.

Mining firms have had a rocky time in Guinea, the world's biggest bauxite exporter, since the December 2008 coup that followed the death of veteran ruler Lansana Conte.

A court in Guinea last year ruled that the 2006 sale of the Friguia alumina refinery to RUSAL was unlawful. RUSAL last week said that the court of appeal in Conakry had overruled the decision.

Meanwhile, Thiam also issued a warning to Rio Tinto (RIO.AX: Quote)(RIO.L: Quote), who he suspects may still try and win back two of four of its blocks in the giant Simandou iron ore concession, which were revoked during Conte's rule.

"We have asked for a relinquishment in writing of these blocks, a firm promise to develop the mines and a clear timetable for putting in the feasibility study," Thiam said.

In exchange, he added, Guinea would accelerate the process of signing the decree which guarantees Rio's ownership of the remaining two blocks.

Benny Steinmetz General Resources (BSGR) has since taken over Rio's former blocks.

Guinea's military rulers have promised to hold elections in June, though preparations for the polls have been dogged with delays.