Guinea defends its riches, but will that scare investors?
The nation's mining reforms are poised to set a new precedent for working with foreign investors.
Freetown, Sierra Leone — Alpha Condé, the new president of Guinea, is looking to squeeze more concessions out of the mining companies that are exploiting his country's abundant natural resources – and he's asked none other than billionaire financier George Soros to help him do it.
Mr. Soros visited the small and impoverished West African nation earlier this year, and he's promised to support its mining reforms through his Open Society Initiative for West Africa. But Soros and the Guinean government must tread carefully. If they push too hard, they could scare away the foreign companies that have promised to invest $4 billion.
The reforms are still under discussion, but Mr. Condé has hinted that he wants to crack down on corruption, boost the benefits of mining for the Guinean people, and – critically – increase the government's ownership of mining projects. Condé said in January that he aims to up the government's stake in all mining ventures from 15 percent to 33 percent, although officials later cautioned that the figure has yet to be finalized.
If Guinea succeeds in winning more concessions from its investors without scaring them away, it could set a strong example for other nations across the region. Just how much to coddle investors has long been a matter of debate in West Africa, where politicians are often as desperate to attract foreign investment as they are to pull their citizens out of poverty.
At a Dakar mining conference last year, Senegalese President Abdoulaye Wade said that Africa's mineral-rich nations must learn to stand up for themselves. "I never said enrichissez-vous (enrich yourselves)," he told the gathered crowd of mining executives. "I said enrichissons-nous (let's enrich one another)."
It's unclear whether Condé can afford to be forceful with investors. At some point, Condé risks driving their dollars to other resource-endowed West African countries, many of which offer generous tax incentives and royalty arrangements to foreign investors.
Patrick Heller, a legal adviser for the nongovernmental organization Revenue Watch, says there's room to demand more of mining companies. "The resources that are at stake here are so large, so attractive that I think Guinea does have some leverage in its relationship with investors."
Revenue Watch is working with Soros's group to advise Guinea on its new mining code. Mr. Heller stressed the importance of striking a balance between luring big investment dollars and ensuring that all Guineans benefit from the projects. "Guinea needs to come up with a package that meets both of those needs," he says. "That's not easy to do."
The government is involving mining companies in the review process, Heller says, by circulating drafts of the new code and soliciting comment. So far, industry seems cautious. None of the mining companies that the Monitor contacted for this story were even willing to comment on the reforms that are under discussion.