Israeli diamond tycoon Beny Steinmetz, owner of BSG Resources (BSGR), will go on trial in Geneva over allegedly bribing government officials in Guinea to obtain mining rights over the vast Simandou iron ore project.
Steinmetz and two associates are said to have given $10 million to one of the wives of former Guinean President Lansana Conte, who died in 2008.
The magnate reached a deal with Guinean authorities in February, which saw corruption charges against him lifted in exchange for giving up his remaining rights to Simandou.
The country also agreed to partner with mining veteran Mick Davis, who will develop the Zogota iron ore deposit, which also belonged to BSGR.
Geneva, however, has continued its investigation, which could see Steinmetz jailed for up to 10 years if convicted.
“Just as the Guinea government has backtracked on its claims, here too it will be proven that there was no wrongdoing in Steinmetz’s activities,” the billionaire’s spokesman said on Tuesday.
“It should be emphasized that the investigation was launched in Switzerland at the request of the Guinea government, and under international arbitration Guinea has retracted its claims, which is why these are baseless charges.”
Simandou is one of the world’s richest reserves of high-grade iron ore, holding an estimated 2 billion tonnes of the steelmaking ingredient. It’s also one of the most easily exploitable iron ore fields outside of Australia’s Pilbara region and top producer Vale’s Brazilian home base.
The asset, however, has been a source of headaches for those interested in developing it, including Rio Tinto, which was first granted rights to start prospecting for iron ore in the area two decades ago.
In 2008, one of Guinea’s former dictators stripped Rio of its rights over two of the four blocks and handed them to BSGR. Rio was able keep the two southern blocks, but only after paying $700 million to the government, which guaranteed the miner tenure for the lifetime of the Simandou mine.
That deal came under scrutiny in 2016, forcing Rio to fire managers over a questionable $10.5 million payment made to a consultant who helped the company secure the two blocks and alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office.
Currently, the West African country is accepting bids for the blocks given up by Steinmetz. Interested companies have until Aug. 19 to draw the necessary documents to prepare their proposals.