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U.S. Shipping Firm Sues Alcoa for $300 Million Over Guinea Bauxite

U.S. Shipping Firm Sues Alcoa for $300 Million Over Guinea Bauxite

Reuters
Total Views: 34
August 8, 2014

ReutersBy Saliou Samb

CONAKRY, Aug 8 (Reuters) – A U.S. shipping firm is suing Alcoa for $300 million saying it suffered losses after the aluminium maker breached a contract with the Guinean government concerning bauxite shipments from the world’s top exporter, court documents showed.

Nanko Shipping and its president Mori Diane filed a civil complaint in the U.S. district court of the District of Columbia last week saying it had been harmed by Alcoa’s refusal to honour the terms of the 1963 joint-venture mining deal with the Guinean government.

That agreement established the Compagnie des Bauxites de Guinee (CBG), the largest bauxite mine in the West African country, and gave the government the right to choose a company to ship half of its production, according to a copy seen by Reuters.

In its suit, Nanko alleged that Alcoa – which manages the day-to-day operations of the CBG – had refused the government’s request in 2011 to let the U.S. shipping firm take charge of the transportation of Guinea’s 50 percent of production.

Nanko’s demand for damages was based on its estimates that the value of the government’s shipping rights was some $100 million a year since then.

Alcoa spokeswoman Christa Bowers said the firm had not been served with any legal papers relating to a lawsuit by Nanko.

“However, we can confirm that we do not have, and never have had, a contractual relationship with Nanko Shipping,” she said. Bowers declined to comment on whether Alcoa had refused a request from the Guinean government to allow Nanko to handle the shipment of its bauxite.

If Nanko’s case were successful it would mark a step forward for African nations seeking to wrest greater control of their natural resources from international companies.

Guinean officials said the government had signed a deal with Nanko in August 2011 to transport its share of the CBG’s production – a copy of which was reviewed by Reuters.

Tidiane Traore, transport minister at the time of the deal, confirmed he had signed the contract. “We signed this deal with Nanko Shipping because we want Guinea to benefit from its share of the minerals, especially in transport,” he said. “This contract is valid.”

In 2012, the CBG produced 14.5 million tonnes of bauxite. Bauxite prices are currently around $70 a tonne in the international market.

President Alpha Conde, elected in 2010 after a transition from a military coup, is keen to increase the economic benefits that Guinea reaps from its rich mineral resources. The former French colony remains one of the world’s poorest countries despite the world’s largest reserves of bauxite and vast untapped deposits of iron ore.

Alcoa owns its stake in the CBG via a U.S. holding company Halco Mining, which controls 51 percent of the joint venture, with the remainder held by the Guinean state.

Alcoa owns 45 percent of Halco, with Rio Tinto owning a further 45 percent and Dadco with 10 percent.

In his suit, Diane, a black U.S. citizen of Guinean origin, also accused Alcoa of racial discrimination for denying his company a contract on the same terms that other shippers had been offered.

Bowers said that Alcoa does not engage in unlawful discrimination of any type in its business activities.

Asked why he had included the charge of racial discrimination in the filing, Diane told Reuters: “I cannot understand why I am being refused while Alcoa is doing business on the same terms with businessmen who are not Africans.” (Additional reporting by Jonathan Stempel and Allison Martell; Writing by Daniel Flynn and Bate Felix, editing by David Evans)

© 2014 Thomson Reuters. All rights reserved.

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