Brazil’s Vale (NYSE: VALE), the world’s top iron ore producer, is urging a US court to reject billionaire Beny Steinmetz’s attempt to open a new front in the battle over lost rights to the massive Simandou iron ore project in Guinea.
Steinmetz is the founder and owner of BSG Resources, the company embroiled in a long-drawn-out dispute with Vale over Simandou. He said in May he had fresh evidence that will help him reverse a London Court of International Arbitration $2bn award to Vale.
The diamond mogul asked the New York-based court to force Vale to provide documents, which could allegedly prove the company was aware of potential problems with how the rights to develop Simandou had been obtained.
Vale retaliated on Friday, asking the judge to dismiss Steinmetz’s request, which it said was just a “transparent publicity stunt” crafted to divert attention away from his alleged fraudulent behavior.
The case goes back to 2010, when Vale agreed to buy 51% of the iron ore licenses belonging to BSGR, Steinmetz’s mining arm.
Four years later, Guinea revoked both Vale and BSGR’s rights over the massive iron ore deposit.
Vale then filed a successful claim against its former partner company in the London Court of International Arbitration to recover an upfront payment to BSGR and money it invested in Guinea.
The figure requested and later awarded by a London arbitration court amounted to $1.25 billion plus interest and costs, totalling $2 billion.
Steinmetz says the evidence, gathered by private intelligence agency Black Cube, will also allow him to serve subpoenas on Rio Tinto (ASX, LON: RIO).
The Australian miner, the world’s second largest iron ore producer, still holds a 45% stake in the other half of Simandou, which it is actively planning to develop.
State-controlled Chinalco owns 40% and the Guinea government 15%.
Vale opened a new chapter in its battle with Steinmetz in early May. At the time, it asked a US court to determine whether funds paid to BSGR within the framework of their former Simandou partnership in Guinea were used for property investments in the US.
The company expects to prove its former partner in Guinea fraudulently funneled $500 million into Manhattan real estate magnates Aby Rosen and René Benko.
Steinmetz, in turn, alleges Vale is holding off key documents that would prove the company was aware of potential bribery or “red flags” when it entered into a partnership with BSGR, but “chose to close its eyes.”
At two billion tonnes of iron ore, with some of the highest grades in the industry, Simandou is one of the world’s biggest and richest reserves of the steelmaking material.