World’s Two Largest Iron Ore Producers Battle Over Simandou Deposit

Thursday, May 1st, 2014
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Mining giant Rio Tinto is suing Brazilian miner Vale and an Israeli company over the rights to develop the massive Simandou iron ore deposit in Guinea.

Rio alleges billionaire Beny Steinmetz and his company BSG Resources bribed officials and conspired with Vale to steal mining rights to the multi-billion tonne Simandou deposit in the west African nation of Guinea.

Rio Tinto has not specified the amount it is seeking in damages after filing a law suit in the US District Court in New York on Wednesday.

“The complaint relates to the loss of half of Rio Tinto’s mining concession in the Simandou region of south-east Guinea in 2008,” Rio Tinto says.

Rio Tinto says it lost half its interest in the property in 2008 when the Guinean government said it planned to give the stake to BSGR.

The the Australian-listed company says Vale saw an opportunity to control one of the world’s largest untapped deposits after learning from Rio that Mr Steinmetz and BSG Resources Limited were attempting to steal Rio’s rights to Simandou.

In a 50-page complaint Rio alleges Vale, purchased a majority interest in BSGR’s Guinean subsidiary for $2.5 billion, the first $500 million of which was paid to BSGR in April 2010.

Two months later BSGR allegedly paid a $200 million bribe to the Guinean Minister of Mines Mahmoud Thiam, a US citizen, as payment for his assistance securing Rio’s Simandou rights, Rio alleges.

Negotiations between Rio Tinto and Vale, the world’s two biggest iron ore producers, over the Simandou project ended in June, 2009.

In March last year Rio said it was committed to developing Simandou and denied reports the project was “essentially frozen”.

Vale has reportedly said it’s up to Rio to show evidence of its allegations while Mr Steinmetz has denied Rio’s claims.

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