Belinga, Gabon - Africa Policy Forecast

Africa Policy Forecast
by Natznet Tesfay, All Africa
27 June 2012

Gabon: On 7 June 2012, Prime Minister Sima announced on-going talks
between the government and state-owned China National Machinery Import
and Export Corporation to renegotiate the Belinga iron-ore project,
which requires about $3.7 billion for the construction of hydropower
dam, at least 300km of railway and a deep water port. The Belinga
project was originally awarded to Chinese mining consortium Comibel in
2006 with a 25-year tax break. In 2008, the contract was renegotiated
due to criticism over the tax break provision as well as environmental
concerns, given the fact that the project is located along the periphery
of Ivindo National Park. In 2010, Comibel transferred the licence to its
current owner.

The Belinga project is likely to be awarded to another partner, most
probably BHP Billiton, Vale or Eramet, if the government and the Chinese
firm fail to reach a new deal. Foreign firms with 25-years tax break
incentives, such as Indian minerals processor, Abhijeet, which has a
contract for manganese mining, also are at risk of having their contract
reviewed as fiscal and social pressures on the government increase.

The contract review is likely driven by government intention to develop
the mining sector, particularly awarded projects that have been delayed
or undeveloped, in order to reduce fiscal dependence on the oil sector,
to increase local participation and accelerate infrastructural
development projects. To this end, the government has already introduced
a draft mining code, which was criticised for its high tax on profits,
the removal of fiscal incentives and the inclusion of new environmental
demands.

[The Belinga iron-ore project originally included plans for the
controversial Belinga Dam - further information
http://www.internationalrivers.org/resources/belinga-dam-gabon-3597]
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