China Hongqiao close to clinching bauxite deal in Guinea

China Hongqiao Group is in advanced talks on a mining and port investment deal in Guinea that could help it reach a target to have 60 per cent of its needs for bauxite coming from mines it has invested in.

The Shandong province-based firm, the nation's second largest aluminium smelter, is in talks with a Singapore firm and a firm in Guinea, West Africa to jointly invest in a bauxite mining project with a top annual output capacity of 10 million tonnes, chief executive Zhang Bo said.

It also expects to co-invest with three other firms, including a mainland state-owned firm to build a port. The total cost of the mine and port would be less than US$200 million, he said.

"Guinea has a lot of quality mineral resources but most are not exploited since few dared to invest in needed port and rail," he said. "Instead of finding the mines first, we zeroed in on the simplest logistics channel and then located the nearby mines."

The first shipment was expected to arrive in Shandong by late September, he added.

Chief financial officer Zhang Ruilian told the South China Morning Post they hoped to sign the investment deal before August. Hongqiao has no investment in bauxite mining, but has an alumina refining project in Indonesia with an annual output capacity of one million tonnes due for completion late this year.

Bauxite is refined to produce alumina, which is then smelted to produce aluminium, a lightweight metal of which the mainland accounts for half of global demand.