Alufer in Talks With Banks, Private Equity for $305 Million Mine

Alufer Mining Ltd., seeking to build a $305 million bauxite mine in Guinea, has held talks with banks, private equity funds and commodity traders to help finance development of the Bel Air project.

Chief Executive Officer Danny Keating wants to complete financing of the project by the end of this year and has held talks with a number of banks including BNP Paribas SA and some in South Africa for as much as $200 million of debt, he said in an interview at the Investing in African Mining Indaba in Cape Town yesterday. The company is also seeking to raise funds through agreements with potential customers and traders and has held talks with Glencore Xstrata Plc, the world’s biggest publicly listed commodity trader.

Alufer plans to start building the mine early next year with first production forecast by the end of 2016. The project is estimated to produce 10 million metric tons of bauxite a year. The project is 15 kilometers (9.3 miles) from Guinea’s coast, helping to lower operating costs for the project, Keating said.

Last month, Indonesia banned the export of bauxite ore, helping to bolster the outlook for the price of the material used in the production of aluminum. Indonesia accounts for about 9 percent to 10 percent of global exports of aluminum from bauxite, Goldman Sachs Group Inc. estimates.

An $8 billion pool of private-equity money raised over the last two years that has lain dormant is being stirred this year by attractive valuations and predictions of resilient demand for raw materials. The influx of private money and the dearth of transactions to date may aid Alufer’s ability to attract finance, he said.

“The pressure will start to mount on them to deploy in some way,” Keating said. “We might see more pressure toward the second half of the year if people haven’t been investing, which from our side works well in terms of timing.”