Simandou probe now involves 6 countries

Typical street scene in the capital Conakry

The Simandou mountains in Guinea groan under some of the richest iron ore anywhere on the planet and winning the licence to mine the steelmaking raw material brings with it billions of dollars for decades to come.

Rio Tinto is developing the southern part of the vast mountain deposit and has already spent more than $3 billion building open pits, although recent reports suggest production won’t happen until late 2018.

The northern part of the Simandou concession is held by BSG Resources, a company in the stable of diamond magnate Beny Steinmetz, and Brazilian giant Vale. All work on the BSGR-Vale section has been halted amid an anti-corruption probe.

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 its 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 when Guinea’s new president, Alpha Condé, ordered all mining deals signed under his predecessors be re-opened.

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.

BSGR’s role in the Simandou saga is still being investigated and according to a Guardian report Thursday that probe has now spread to six countries.

The decision by the Serious Fraud Office, in London, and the Financial Investigation Unit, in Guernsey, to open inquiries into the deal which the company of Beny Steinmetz struck with Guinea, means the billionaire now faces scrutiny in six countries.

Two employees of the company, BSG Resources, have been arrested in Guinea, while an associate of Steinmetz has been arrested and charged with attempting to pervert the course of justice in the US, where the FBI is attempting to establish whether the mining deal involved any breach of the Foreign Corrupt Practices Act and anti-money laundering laws.

Last week 20 Swiss police raided an office of a company associated with Steinmetz following a formal request from the government of Guinea and a further request from the US justice department. In France police set up a simultaneous raid on the home of a BSGR director.

Continue reading at the The Guardian.

Image by Jeff Attaway.

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