GUINEA sits on an extraordinary treasure trove of base metals. It enjoys the world’s largest known reserve of bauxite, and its Simandou deposit in the south has the potential to become the site of the largest integrated iron-ore mines and infrastructure project ever developed in Africa.

But the country is dirt poor and most of its 10-million population live in unacceptable conditions.

This can be laid at the feet of two dictators, first Sékou Touré, who led the country to independence from France in 1958, then Lansana Conté, who lasted until his death in 2008. An army captain, Moussa Dadis Camara, then seized power and lasted until an assassination attempt in December 2009. Interim president Sékouba Konaté handed power to the incumbent, Alpha Condé, in December 2010.

But Condé’s election was controversial. He lost the first round of voting to Dalein Diallo, who collected 44% of the votes cast. Condé was second with 18% and Sidya Touré third with 13%. Ten days ahead of the final round, Guinea’s electoral commission chief was jailed for a year for electoral fraud.

Al-Jazeera, a news and current affairs channel, said Diallo "is expected to win the run-off vote".

He didn’t. Repeated delays in arranging the second round enabled ethnic groups to mobilise around Condé, who won with a margin of 141,000 votes after 177,000 votes were declared invalid. Unsurprisingly, Diallo cried foul.

South Africa’s involvement in the election is certainly intriguing — and shrouded in mystery.

I am advised, but have been given no supporting proof, that this country’s security services were involved. A local company, Waymark Infotech, providing IT solutions and services, has held a number of contracts to provide voter registration systems for African countries.

It is, apparently, black economic empowerment-qualified, and all of its shares are said to be owned by black shareholders.

Benin alleged in 2008 that the system it used was unreliable and the manner in which it secured the contract was questionable.

It was chucked out early in tendering for the Cameroonian election this year. In South Africa, Waymark was axed by the Department of Trade and Industry after it was accused of improperly securing an R11m contract to maintain information technology for the former Cipro (now the Companies and Intellectual Property Commission).

It was alleged that President Condé’s son, Mohamed Alpha Condé, worked for Waymark at one stage and introduced the company to the administration.

Rioters in Guinea in September 2010 displayed protest banners that read: "Waymark should get out of Guinea elections".

It was reported that the Guinean finance department said Waymark’s contract work amounted to $3m, but the invoice was for $14m. And the United Nations website reveals that Waymark was removed from its list of approved service providers in September 2008. Waymark’s own website is inaccessible.

What has happened since Condé assumed the presidency is electrifying — much of it rooted in the past. When Camara seized power in December 2008 he brought technocrats into his administration, among them Mahmoud Thiam, whose father was arrested by Sékou Touré’s police, tortured and murdered. Thiam and a sibling were smuggled out of Guinea. Thiam went on to study in the US, and a financial career with US institutions.

Thiam’s appointment was as minister of mines and his first action was to begin a reassessment of the various exploration and mining licences that had been awarded. Among these was the licence given to Rio Tinto, the British-based international mining house, for the Simandou 1,2,3 and 4 iron-ore deposits, the heart of the Simandou prospect.

Rio Tinto is also the owner of some of the major iron ore deposits in Australia known as the Pilbara, where it has advanced plans to ship as much as 283-million tons a year to China, on its way to a final delivery of 353-million tons a year. Logically, therefore, and in line with the policy adopted by many major mining houses, it seeks to sterilise the capabilities in deposits which, in the hands of its peers, might present stiff competition — if not in terms of swift delivery then certainly in price. Rio has been in Guinea since 1994.

Not one ton of iron ore has been exported since then.

Rio complained bitterly about the decision by Thiam to reconfirm an earlier decision by a previous mines minister, Lounceny Nabe (now governor of Guinea’s central bank), to relieve it of its rights to Simandou 1 and 2, but seems now to have accepted this. It has entered into an agreement with the Aluminium Corporation of China, Chinalco, in which Chinalco bought a 44.35% interest for $1.35bn (with the International Finance Corporation, an arm of the World Bank, owning 5%).

Now here’s the intriguing bit. In terms of the Guinean government’s latest reappraisal of the mining and exploration licences granted, Rio has agreed to pay more than $700m to the government. Rio’s stakes won’t be subject to any further challenge.

Is this a penalty for past failures to comply with the terms of the earlier licences or an advance payment to avoid retribution?

This leaves Simandou licence areas 1 and 2. These were granted in 2008, and reconfirmed during Thiam’s term as mines minister, to BSG Resources (BSGR), managed by Geneva-based Onyx’s London office. The award came after BSGR had discovered a new iron-ore deposit more than 100km south of the key Simandou areas, now called Zogota. Drilling to prove the Simandou 1 and 2 deposits at a cost of $160m, BSGR entered into a development deal with Brazilian mining house Vale, to which it sold a 51% stake for $2.5bn, a sum to be paid when several milestones are achieved.

Information from various sources is that well-placed Guinean officials have suggested that a down payment of $1.25bn — once again, and as in the case of Rio and Chinalco, half the sum realised in theory by BSGR — will ensure the permanence of the licence agreements.

More next week.