Guinea cancels tender for ex-BHP bauxite permits

CONAKRY, March 26 (Reuters) - Guinea cancelled a tender for bauxite mining blocks that sources said had been won by a Chinese firm in partnership with figures in President Alpha Conde's political party.

The government did not give any reason on Thursday for cancelling the tender for the blocks in Boffa, some 150 km (93 miles) north of Conakry. The acreage was previously owned by BHP Billiton which halted exploration there in 2012 after aluminium prices dropped.

Guinea is battling to overcome an Ebola outbreak that has killed more than 2,000 people and is counting on a rebound in its mining sector to revive the economy.

However, investor interest in the country - Africa's largest exporter of bauxite - has cooled because of low metals prices coupled with political and contractual instability.

The statement issued by the mines ministry did not say who had won the tender but announced that a new, transparent bidding process would be launched.

Sources in the mining sector said a company called Maison Kebo had initially won the tender.

Maison Kebo is 25 percent owned by senior figures in Conde's ruling party with the other 75 percent being owned by Chinese firms backed by Shandong Xinfa Aluminum and Electricity Group, the sources said.

An official working on mining transparency issues said that the government ordered the cancellation of the tender after it found out that officials close to Conde had a stake in the project.

A member of the government committee that handles contract negotiations confirmed people in Conde's party were among the shareholders in Maison Kebo but said that had nothing to do with the cancellations.

"It is more to do with the fact that they could not come up with a final proposal for executing the mining programme in the area. That was the main reason it was cancelled," he said.

The government would not comment further. (Reporting by Saliou Samb; Writing by David Lewis; Editing by Elaine Hardcastle)