MINING.com has been contacted by Mishcon de Reya Solicitors, acting on behalf of BSG Resources and Beny Steinmetz calling the article defamatory and threatening further action unless we remove or substantially redraft the article. Scroll down for excerpts from the letter from Mishcon de Reya about certain statements in the article, our response and the changes made to the original article. MINING.com regrets any errors as pointed out by Mishcon de Reya in the original article. We also apologize for any offense we may have caused to any of our readers, officers of BSGR or Mr Beny Steinmetz.
Beny Steinmetz acquired half of the iron deposit underneath the Simandou mountains in Guinea in 2008.
Simandou is one of the richest concessions in all of mining. It is said to hold more than 26 billion tonnes of high grade ore worth more than $50 billion to whoever is granted the licence to mine it.
Steinmetz’s BSG Resources – spun out of the Steinmetz Diamond Group the young Beny inherited from his father Rubin – was awarded the rights days before the death of Guinea dictator Lansana Conté .
Conté had not long before stripped the Simandou blocks from Rio Tinto, which had held the exploration rights since the 1990s.
BSGR had a huge pay day in 2010 when BSGR sold 51% of its stake to Vale for $2.5 billion after spending $160 million exploring the concession.¹
To put that into perspective, the Guinean government’s entire annual budget in 2010 amounted to just $1.2 billion despite the country being the world’s number one miner of bauxite, used to make aluminum.
After forking out the first $500m the Brazilian giant has now stopped making payments to BSGR and has halted work on the project altogether.
The FBI probe and grand jury investigation in the US have been accompanied by allegations of shadowy dealings that took place to advance BSGR’s cause including a $2 million payment to one of Conté’s four wives Mamadie Touré (her brother Ibrahima Sory Touré was a VP for BSGR in Guinea) and a gift of a diamond and gold laden model of a Formula One racing car to a minister of the former French colony.² ³
Ibrahima Sory Touré and another BSGR employee Issaga Bangoura were arrested in Guinea’s capital Conakry in April as part of the probe. Earlier a French citizen Frederic Cilins who claims to have acted on BSGR’s behalf in Guinea, something BSGR denies was the case, was arrested in Florida for tampering with evidence – that is, destroying documents relating to the BSGR-Conté deal – and improperly influencing witnesses. 4
BSGR has called on ex-UK prime minister Tony Blair to intervene and rescue Touré and Bangoura from the “appalling conditions” they are held in. 5
Cilins has also been denied bail in the US because he’s a flight risk.
Parent firm, the Steinmetz Diamond Group has a long history in Africa and first came to prominence after tying up Angolan rough supply and making deals with Russia under De Beers’ nose.
But now BSGR’s dealings in Africa – the company is also in bed with fellow Israeli mining middleman Dan Gertler in the Congo – has also come under intense scrutiny from human rights organizations.
Global Witness has uncovered some damning video of a BSGR investment presentation and subsequent reception in September 2006 where BSGR officials, Cilins and the Tourés are present. 6
BSGR has also been gunning for another NGO, Revenue Watch, an organization backed by billionaire George Soros which is helping current Guinea president Alpha Condé rewrite the country’s mining code and review old contracts.
BSGR sued Mark Malloch-Brown, a former British government minister who is close to Soros and was vice chairman of his investment funds, for breach of contract and sharing confidential information on BSGR with Soros in Britain’s High Court.
On Monday Steinmetz scored an early legal victory after Lord Malloch Brown’s consulting firm was ordered to pay BSGR $120,000 plus legal costs to settle the dispute.
All along BSGR has steadfastly denied any wrongdoing, calling the allegations baseless and the current Guinean government illegitimate.
Vale, for its part, denies any knowledge of BSGR’s dealings.
Meanwhile Rio is staying committed to building a mine on its half of the concession and 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.
Rio Tinto in 2010 brought in Chinese investors and has so far spent more than $3 billion building open pits. At full production Rio’s Simandou mine would export up to 95 million tonnes per year – that’s a third of the No. 2 iron ore miner’s total capacity at the moment – using a newly built 700km railway across the country.
Rio’s target for the first shipment of ore by mid-2015 was cast in doubt this week as it continues to negotiate the investment with the Guinean government.
In the end a pragmatic solution would probably be found to move all of Simandou forward, it’s just too valuable.
President Condé, a veteran of the opposition in the African nation which has struggled for decades under dictatorship and sometimes brutal military rule, has offered Rio a “strategic partnership for 50 or 100 years” and is also seeking a way for Vale to resume work at Simandou.
Image courtesy of Rio Tinto Simandou
MINING.com has been contacted by Mishcon de Reya Solicitors, solicitors acting on behalf of BSG Resources and Beny Steinmetz calling the article defamatory and threatening further action unless we remove or substantially redraft the article.
Below are excerpts from the letter from Mishcon de Reya about certain statements in the article and our response.
1. Simandou has already brought Steinmetz vast wealth — he got half of the total concession area for nothing. Zero.
Mishcon de Reya: Wrong: This statement suggests our clients have the benefit of the land for nothing. This is untrue. You will be fully aware that it is the industry norm for concession to be awarded for no cost. A huge amount of time and cost is invested in exploring and developing such sites and BSGR spent $160 million on the exploration of Simandou. The deal referred to between Vale and BSGR committed both companies to a vast expenditure in Simandou of between $8 and $10 billion.
2. BSGR is now the subject of a US investigation under the Foreign Corrupt Practices Act
Mishcon de Reya: Wrong: As far as our clients are aware, there is now US investigation into BSGR in relation to the Foreign Corrupt Practices Act, or at all.
MINING.com: The investigation into Mr Cilins would fall within the ambit of the Foreign Corrupt Practices Act, but BSGR denies association with Mr Cilins, although Cilins himself has claimed to have acted as a representative of BSGR. The paragraph has been removed from the original.
3. The FBI probe has uncovered all sorts of shadowy dealings including a $2 million payment to Conté’s fourth wife Mamadie Touré (her brother Ibrahima Sory Touré was a VP for BSGR in Guinea) to help advance the Steinmetz cause.
Mishcon de Reya: Wrong: The FBI has “uncovered” nothing: the allegations made are based on forged documents. The inaccuracy of this sentence is illustrated by the fact that you are unaware of the identities of the individuals, for example, Mamadie Touré was not the fourth wife of Lansana Conte.
MINING.com: Mamadie Touré is described by among other Global Witness as one of the four wives of Lansana Conte. The paragraph has been corrected.
4. Earlier French citizen Frederic Cilins and BSGR’s agent in the country was arrested in Florida for tampering with evidence – that is, destroying documents relating to the Steinmetz-Conté deal – and improperly influencing witnesses.
Mishcon de Reya: Wrong: Mr Frederic Cilins is not an agent of BSGR. The FBI probe has made allegations against Mr Cilins and a number of charges have been brought against him in the US, and at present these allegations remain as such.
MINING.com: The original phrasing of the paragraph suggest the FBI investigation and the grand jury investigations have established facts surrounding the dealings of Frederic Cilins. The investigations are ongoing. The paragraph has been amended to show that the details emerging from the case are allegations.
5. Steinmetz certainly has friends in high places. The Israeli billionaire has called on none other than ex-UK prime minister Tony Blair to intervene and rescue Touré and Bangoura from the “appalling conditions” they are held in. No word yet if Blair has managed to help out.
Mishcon de Reya: Wrong: This is not a case of friends in high places and Mr Steinmetz has called on nobody. Mr Blair’s charity, African Governance Initiative(“AGI”), is an advisor to the Guinean President. BSGR has called upon Mr Blair to put pressure on the Guinean government to uphold international law as its employees are currently being held in breach of their rights under international law. Far from being “friends” BSGR believes that members of AGI are involved in a broader conspiracy to spread lies about BSGR and to force it out of Guinea.
MINING.com. Implying that BSGR is able to call on friends in high places was a misreading of the Bloomberg report about BSGR calling on Mr Blair to intervene. The sentence has been removed.
6. Global Witness has uncovered some damning video of a BSGR investment presentation in September 2006 which shows Cilins and the Tourés mixing business and pleasure.
Mishcon de Reya: Wrong: The Global Witness video to which you refer shows no such thing.
MINING.com: The video appears to show Mamadie Touré at a reception where top BSGR officials and Frédéric Cilins were also present. MINING.com has not independently verified the video. Global Witness’s edited video is here.
7. Mishcon de Reya also says MINING.com “wrongly attempt[s] to attribute allegations made about BSGR to Mr Steinmetz personally. No allegations have been made about Mr Steinmetz; he is not a director of BSGR and acts solely as a consultant to the the business.”
MINING.com: References to Beny Steinmetz have been amended to refer to BSGR, the company, and not Mr Steinmetz.