Rusal: Reaches Bauxite, Infrastructure Deals With Guinea

LONDON, June 17 -- Russian aluminum producer United Co. Rusal PLC (0486.HK) Tuesday said it reached a verbal agreement with the Guinean government for the Dian Dian bauxite deposit and held talks on its Friguia bauxite and alumina refinery complex.

Rusal said a delegation headed by its chief executive, Oleg Deripaska, held talks with Guinean Prime Minister Jean-Marie Dore and its acting president, Brigadier General Sekouba Konate, during a two-day visit to Guinea.

The company said the two parties had verbally agreed to the schedule and terms for developing the 500 million metric ton Dian Dian bauxite deposit, though it didn't release a start date. Rusal expects to produce 20.5 million metric tons a year and spend $425 million in building the mine and infrastructure.

"The two parties determined the major areas of focus for long-term cooperation between UC Rusal and the Republic of Guinea and reaffirmed their commitment to a strategic partnership," Rusal said in a statement.

Rusal said the two discussed prolonging the current tax and customs rates for Rusal's Friguia, though it didn't say if an agreement was reached.

The Guinean government had earlier sought to revoke its sale of Friguia to Rusal in 2006 and reclaim $960 million from the company. A Guinean appeals court in March ruled against the government, and Rusal said the government hasn't communicated to the company that it will appeal the case in an international court of arbitration.

The Friguia alumina refinery has the capacity to produce 600,000 metric tons of alumina a year. Alumina is a raw material used to produce aluminum.

Deripaska said in the statement that the talks were productive and that it doesn't plan to reduce its bauxite or alumina production in Guinea despite an oversupply in the aluminum market.

"I am pleased that our negotiations were held in a friendly and constructive atmosphere, which enabled us to reach a number of specific decisions," he said in the statement.

Rusal also said it reached a verbal agreement with Compagnie des Bauxites de Guinee and the Ministry of Mines and Geology to establish a three-party commission that will determine the joint use of railways and ports, as well as transport equipment owned by Compagnie des Bauxites de Guinee.