Rio sues Vale, BSGR over Guinea deal

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IOL bus may2 Rio Tinto Reuters File photo: Sheng Li

London - Rio Tinto had filed a complaint against competitor Vale, Israeli billionaire Beny Steinmetz and his BSG Resources (BSGR) conglomerate over mining concessions in Guinea, the Anglo-Australian mining giant said on Wednesday.

The lawsuit, filed in a New York court, relates to Rio Tinto’s loss in 2008 of half the rights to Simandou, in Guinea, one of the world’s most valuable iron ore deposits.

Rio alleged in its complaint that the defendants devised a fraudulent scheme to steal its rights over the northern half of Simandou. Steinmetz and BSGR dismissed the charge and Vale declined to comment.

Exploiting Simandou could help one of Africa’s poorest countries prosper but the mine development has been paralysed by concession battles.

Rio Tinto said in its complaint it had spent hundreds of millions trying to develop Simandou until 2008, when former president Lansana Conté’s government revoked its permit on the northern half of the deposit and transferred it to BSGR. At the time, the government told Rio it had moved too slowly. Rio maintained that it had complied with the terms of the leases.

BSGR then sold 51 percent of its Guinean assets to Brazil’s Vale in 2010, when they created a joint venture, VBG, in a $2.5 billion (R26bn) deal.

“Rio Tinto’s injuries are clear and definite and include the loss of billions of dollars in assets, as well as the lost investment of its activities in Simandou,” it said in the filing. “This is a case about the theft of Rio Tinto’s valuable mining rights by the defendants through a scheme in violation of the Racketeer Influence and Corrupt Organisations Act.”

Earlier this month, Guinea’s government stripped BSGR and Vale of their rights over Simandou and over the Zogota deposits after a panel charged with reviewing the nation’s mining deals said in its report it had found BSGR obtained the rights through “corruption”.

BSGR has repeatedly denied wrongdoing and said it would seek international arbitration.

Guinea’s President Alpha Condé said on Wednesday that Vale had had nothing to do with the corruption.

A spokesman for Steinmetz and BSGR called the lawsuit “baseless and bizarre”.

Vale chief executive Murilo Ferreira said it was too early to comment. He added it was reviewing its options over the role it would play in Guinea.

Damntantang Albert Camara, a Guinea spokesman, said: “This is between mining companies. The government has no intention of interfering or commenting.”

Reuters



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