BSG Resources (BSGR), a company of the Israeli billionaire diamond magnate Beny Steinmetz, said Wednesday it initiated arbitration proceedings over the government of Guinea’s decision to revoke BSGR’s mining rights in the country.
The company took the first preparatory step by filing a notice of dispute with the International Centre for Settlement of Investment Disputes against president Alpha Conde and the government of Guinea.
Guinea’s government withdrew the mining permit held by VBG, a company run by BSGR and Brazil’s Vale (NYSE:VALE), in the Zogota and Simandou regions of south-east Guinea in April.
The Simandou mountains in Guinea holds some of the richest iron ore deposits in the world. World number two miner Rio Tinto (LON, ASX:RIO) is developing the southern part of the vast mountain deposit and the northern part of the Simandou concession was held by BSG Resources.
This withdrawal came after Guinea accused BSGR of obtaining its rights through corruption in 2008.
BSGR denied any laws were broken and accused president Conde and his allies of attempting to steal BSGR’s assets.
“BSGR is seeking the restitution of its mining titles and agreements as well as damages arising out of the revocation of these interests, which have been unlawfully expropriated through the illegal and dishonest practices of the corrupt Alpha Conde government in Guinea,” said the company in a statement.
In 2010 BSGR sold a controlling half of its concession to Vale for $2.5 billion.
Vale halted payments when Guinea’s new president, Conde, ordered all mining deals signed under his predecessors be re-opened.
Rio Tinto has filed its own lawsuit against both Vale and BSGR for what it qualifies as a “steal” of its previously-owned concessions on April 30.
Vale is also fighting its own legal battle, seeking a minimum compensation of US$1.1 billion, due to losses suffered because BSGR’s actions in Guinea.