Guinea gives nod to BHP's $5.2 billion alumina refinery stake sale

CONAKRY (Scrap Monster) : The Mining Ministry of Guinea has given approval to BHP Billiton and parent company Global Alumina to sell their stake in the Guinea Alumina Corp (GAC) to its Middle East partners-Dubal and Mubadala.

BHP is reported to have paid $140 million for 33% stake in the aluminum and bauxite refinery project. The balance stake is owned by Global Alumina(33%), Dubal(25%) and Mubadala(8.3%). The government nod have paved the way for transfer of stakes by Billiton and Global Alumina to DM GAV-a joint holding company owned by Dubal and Mubadala.

Earlier BHP had plans to sell its stake to Global Alumina Corporation- the original promoter of the $5.2 billion alumina development project. Later, BHP Billiton announced change in its Guinea exit plan by deciding to sell its one-third stake to Dubai Aluminium and Abu Dhabi state-owned Mubadala.

The escalating political risks in Guinea coupled with the pessimistic growth outlook projected for aluminum industry has forced BHP to take exit route out of the bauxite rich Guinea. The political instability in Guinea has resulted in under-investment by mining companies in the region, pushing Guinea to fifth place among world’s leading bauxite producers despite having huge untapped resources. Moreover, the aluminum prices are yet to recover from the slump.

The BHP-led JV owners are believed to have spent around $ 800 million on the project which has not made substantial progress due to repeated delays.