Simandou hearing delay hints at Vale-BSGR settlement

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.

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 (NYSE:VALE).

All work on the section awarded to BSGR by a former Guinea dictator in 2008 and 50%- sold to Vale in 2010 has been halted as the government of Guinea under democratically elected president Alpha Condé revisits all mining contracts entered into under previous regimes.

Reuters reports Tuesday the committee reviewing the agreements has delayed hearings scheduled for today where VGB – the Vale-BSGR partnership in Guinea – was to respond to corruption allegations:

A source at VGB saw agreement on the new hearing date as a positive sign for the group. "This step by the Guinean government proves that our rights are not being challenged. Now it's up to senior management to negotiate," said the source, who asked not to be named.

Last month Condé visited Brazil where he met with Vale’s director of corporate affairs Rafael Benker. Condé was in the country on invitation of the Lula Institute, an NGO founded by former president Luiz Inacio Lula da Silva.

Lula is said to have close ties to B&A Mineração, an infrastructure and mining investment company set up by Roger Agnelli, former boss of Vale and a large Brazilian bank. Late last year BHP Billiton (ASX, NYSE:BHP) sold its 40% stake in its massive Nimba project in the same district as Simandou to B&A.