Vale mulls legal action over lost iron ore rights in Guinea
Brazil’s Vale (NYSE:VALE) is contemplating legal actions over lost iron ore rights in Guinea, after the West African nation officially cancelled Friday the miner’s iron ore licences in the mineral-rich Simandou mountains.
The move came two weeks after a government inquiry in the West African nation concluded that BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz’s empire, and Vale’s joint-venture partner, had obtained concessions to the Simandou and Zogota mining areas through corrupt practices.
BSG sold a 51% stake in its Guinean assets to Vale in 2010 in a $2.5bn deal. While the Rio de Janeiro-based firm was not found to be implicated in the bribery scheme through which BSG won the mining licenses, the company put the project on hold only two years after acquiring it, and had been silent on the issue ever since.
However, in its annual report published last month, the miner revealed for the first time that it was bracing itself to lose all its investment in the mine.
Upon receiving the official news, the world’s biggest iron ore miner said on Friday it was “actively considering its legal rights and options.” However, it did not dispute the Guinean inquiry’s findings.
BSGR continues to deny wrongdoing and says it is the victim of a plot to seize its assets. The company has vowed to “prove the allegations raised in Guinea’s rigged and illegitimate process are false,” threatening to take Guinea to international arbitration.
BSGR also faces investigations into the corruption allegations in the US and Switzerland.