The Simandou mountains in Guinea holds some of the richest iron ore deposits in the world and has the potential to transform the fortunes of the impoverished West African nation.
But that’s all Simandou constitutes at the moment – potential.
World number two miner Rio Tinto is developing the southern part of the vast mountain deposit with first production from the massive $20 billion project not expected until late 2018 at the earliest.
The northern part of the Simandou concession is held by BSG Resources, a company in the stable of billionaire diamond magnate Beny Steinmetz, and Brazilian giant Vale.
All work on the BSGR-Vale section has been halted as the government of Guinea under democratically elected president Alpha Condé revisits all mining contracts entered into under previous military regimes and dictatorships.
Reuters reports Wednesday the committee reviewing the agreements has summoned BSGR to hearings on December 10 to respond to a string of corruption allegations:
A BSGR spokesman confirmed on Tuesday the company had received a letter from the Guinean committee requesting more information, but said there was no change to answers already provided to existing graft allegations.
“This is their latest attempt to damage our reputation in an effort to illegally seize our private property,” he said.
For its part the committee said BSGR’s responses to the allegations had been “incomplete, inaccurate or irrelevant” and evidence obtained during a separate US grand jury investigation “raised questions over some of BSGR’s responses.”
BSGR’s role in the Simandou saga is now the subject of a probe involving six countries including an ongoing FBI investigation in the US.
The Geneva home of Steinmetz was raided by Swiss police in September under orders from the city’s public prosecutor following a request by the government of Guinea.
BSGR was awarded the rights days before the death of Guinea dictator Lansana Conté in 2008 after spending more than $160 million exploring the prospect.
Conté had not long before stripped the Simandou blocks from Rio Tinto which had held the exploration rights since the late 1990, ostensibly over the Anglo-Australian company’s failure to develop the deposits.
In 2010 BSGR sold a controlling half of its concession to Vale for $2.5 billion.
But after forking over the first half a billion dollars, the Rio de Janeiro company halted payments after Guinea embarked on the probe.
Rio Tinto in April 2011 struck a deal with the Condé government, paying $700 million and granting the government a 35% stake to resolve all outstanding issues concerning its half of the concession.
Image of Guinea postcard by Ekaterina Didkovskaya